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What is a Lady Bird Deed?

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Lady Bird deeds have become very popular in the last few years. They are used extensively and I use them extensively. Basically, you can create a deed whereby you transfer property to a child, for example, and you retain a life estate, and the child gets the remainder interest. That’s a typical life estate deed. However, if you apply for Medicaid and you did one of those deeds, it’s going to create a period of ineligibility because it was considered a gift.

A Lady Bird deed is basically the same thing except that in addition to the parent reserving a life estate, they also reserve the right to sell or mortgage the property, keep the money and terminate the remainder interest in the child. Because of that provision, Medicaid does not consider it a completed gift, therefore it doesn’t create any period of ineligibility. It also means that at death that property is immediately owned by the child without any delay, no probate, no legal process at all.

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