Lady Bird Deeds
What Is a Lady Bird Deed and How Can It Protect Your Home?
A Lady Bird Deed (also called an Enhanced Life Estate Deed, Lady Bird Trust, or Transfer on Death Deed) is an estate planning tool that can protect a Medicaid recipient’s primary home from the Medicaid Estate Recovery Program. This allows the property to pass directly to a chosen beneficiary rather than be claimed by the state for repayment of long-term care costs.
While it’s a type of Life Estate Deed, it differs significantly from the traditional version, giving the homeowner more control during their lifetime.
Lady Bird Deed vs. Traditional Life Estate Deed
In both deed types, the property owner (life tenant or grantor) retains the right to live in the home for life, and upon their passing, ownership transfers automatically to the beneficiary (remainderman).
However, a Traditional Life Estate Deed limits control: the homeowner cannot sell or mortgage the property without the beneficiary’s consent. A Lady Bird Deed allows the owner to sell, mortgage, or change beneficiaries without approval. If the home is sold and another purchased, a new Lady Bird Deed must be created.
Important: Lady Bird Deeds are used to protect the home from Medicaid estate recovery, not to make someone eligible for Medicaid. Other strategies are used for eligibility planning.
Why Lady Bird Deeds Are Valuable for Medicaid Planning
Medicaid has strict asset limits—often $2,000 for a single applicant in most states. A primary home is usually exempt if the applicant or spouse lives there, but after death, Medicaid may try to recover care costs through the estate.
Traditional Life Estate Deeds can violate Medicaid’s Look-Back Rule because the beneficiary gains immediate rights. Lady Bird Deeds avoid this penalty since full ownership remains with the Medicaid recipient until death, meaning no disqualifying gift occurs.
How Lady Bird Deeds Avoid Estate Recovery
Normally, Medicaid can place a claim on the home through probate after the owner dies. A Lady Bird Deed bypasses probate, transferring the home directly to the beneficiary, preventing most recovery attempts—though some states use expanded definitions of “estate” that still allow recovery.
Which States Allow Lady Bird Deeds?
Only a handful of states currently permit Lady Bird Deeds, often due to title insurance limitations or expanded estate recovery laws.
| State | Lady Bird Deed Allowed? | Notes |
|---|---|---|
| Florida | Yes | Commonly used for Medicaid protection |
| Michigan | Yes | Recognized under state law |
| Texas | Yes | Widely used in elder law planning |
| Vermont | Yes | Allowed with proper drafting |
| West Virginia | Yes | Recognized and enforceable |
| All Other States | No | Use alternative planning tools |
How Much Does a Lady Bird Deed Cost?
DIY preparation can cost as little as $30. Professional assistance generally ranges from $200 to $500, which includes drafting and recording the deed.
Is Professional Help Required?
While not legally required, professional guidance—especially from a Certified Medicaid Planner—is highly recommended. Each state has unique rules, and mistakes can lead to Medicaid disqualification or failed asset protection.
Alternatives if Your State Doesn’t Allow Lady Bird Deeds
- Child Caregiver Exemption: Transfer the home to an adult child who has provided care without triggering a penalty.
- Sibling Exemption: Transfer the home to a sibling without violating the Look-Back Rule.
- Medicaid Asset Protection Trust (MAPT): An irrevocable trust that protects assets but must be established well before Medicaid is needed.
- Long-Term Care Partnership Program: Combines long-term care insurance with Medicaid protection for assets equal to policy payouts.
