How does a Lady Bird Deed protect my property from Medicaid estate recovery in Texas?

If your elderly parent has transitioned into a nursing home, there might be concerns about the future of the family residence. The desire to pass it on to the children could be strong, yet achieving this requires forward planning. Fortunately, in Texas, the family home is safeguarded from being considered an asset to cover nursing home expenses during the parent’s lifetime. Nevertheless, if Medicaid contributes to the nursing home costs, the Texas Medicaid Estate Recovery Program (MERP) might stake a claim on the property posthumously to offset the expenses incurred. To circumvent this, certain strategies, like implementing a Deed to maintain interest in the property, are advisable. An Enhanced Life Estate Deed, often referred to as a Lady Bird Deed, stands out as a viable option.

Understanding the Lady Bird Deed

The crux of safeguarding the family home from MERP and other creditors lies in ensuring the property is not part of the deceased’s estate. Through the execution of a Lady Bird Deed, the residence is classified as a “life estate,” tied to the owner’s lifetime only. Following the owner’s demise, the Deed’s beneficiary gains immediate ownership, thus shielding the property from creditors. During the owner’s life, they retain full control over the property, including the liberty to sell, lease, or modify it, and even change the designated beneficiary. The Lady Bird Deed offers significant benefits, such as:

• Probate avoidance: Direct transfer of the property to the beneficiary upon the owner’s death circumvents the probate process.
• Creation through Power of Attorney: Should the homeowner be unable to make legal decisions, a designated Power of Attorney can establish a Lady Bird Deed.

While the Lady Bird Deed has its drawbacks, pairing it with a Revocable Living Trust can mitigate many potential issues. For tailored advice on this and other estate planning strategies, consider reaching out to the Law Office of Dana Baker at 979-310-5507.