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A Lady Bird deed, also known as an enhanced life estate deed, is a special type of life estate frequently used in estate planning. The individual who creates the Lady Bird deed, often referred to as the life tenant, retains full control over the property during their lifetime, which means they can sell or mortgage the property without requiring permission from the remainder beneficiaries.
One of the features of this type of deed is how ownership of the property is handled after the death of the life tenant. With a Lady Bird deed in place, the property transfers immediately and automatically transfers to the named remainder beneficiaries upon the life tenant's death. This transition avoids probate, making it a streamlined way to transfer ownership interest in the property.
The legal description of the property must be accurately stated in the deed to ensure there are no ambiguities regarding which property is being discussed. Furthermore, a significant advantage of the Lady Bird deed is its potential impact on Medicaid eligibility. In many jurisdictions, the use of an enhanced life estate deed allows the life tenant to potentially qualify for Medicaid without the property being counted as a disqualifying asset.
To summarize, after the death of the life tenant, a Lady Bird deed ensures that the ownership of the property automatically transfers to the remainder beneficiary without the need for probate. It offers the life tenant the flexibility to sell or mortgage the property while alive and can be advantageous for Medicaid planning purposes.
Published: Nov 24, 2022
Updated: Aug 11, 2023