How Lady Bird Deeds Help with Estate Planning?

Lady Bird deeds, also known as enhanced life estate deeds, offer several benefits that make them a valuable tool in estate planning:

1. Avoids Probate:

   • Lady Bird deeds allow property to pass directly to designated beneficiaries upon the owner's death, bypassing the probate process. This helps expedite property transfer and reduces the associated legal costs and delays.

2. Retains Control:

   • The grantor retains complete control over the property during their lifetime, including the ability to sell, mortgage, or change beneficiaries without anyone's consent. This flexibility ensures that the grantor can manage the property as needed.

3. Medicaid Planning:

   • Property transferred via a Lady Bird deed is not subject to Medicaid estate recovery, which can help protect the home from being used to repay Medicaid benefits. This helps in preserving the property for the beneficiaries.

4. Cost-Effective:

   • A Lady Bird deed is typically less expensive and more straightforward than setting up a trust. It offers a straightforward solution for those primarily concerned with transferring real estate.

5. Privacy:

   • Unlike the probate process, which is public, the transfer of property through a Lady Bird deed is a private transaction. This helps maintain the privacy of the grantor and the beneficiaries.

6. Tax Benefits:

   • Beneficiaries receive a stepped-up basis for the property, which can reduce capital gains taxes if the property is sold after the grantor's death. This means the property's value is stepped up to its market value when the grantor's death, potentially lowering the taxable gain.

While Lady Bird deeds provide numerous benefits, consulting a real estate attorney is highly recommended to ensure all legal requirements are met. An attorney can provide expert guidance tailored to specific situations, ensure the deed is properly drafted and recorded, and help you navigate complex legal nuances, protect your interests, and integrate them with an estate plan.