texas ladybird deeds
$300 including county clerk’s office filing fees. We help clients throughout the State of Texas
what is a texas ladybird deed?
A Texas Ladybird Deed, formally known as an Enhanced Life Estate Deed, is a deed that allows real property owners with several advantages over a standard warranty deed in Texas.
Unlike traditional Texas warranty deeds, the Texas Ladybird Deed allows a property owner to maintain complete control over their home or property during their life, while ensuring a seamless transfer to their chosen beneficiaries upon their death.
Advantages of a texas ladybird deed
With a Texas Ladybird Deed, you maintain the ability to rent, lease, sell, or mortgage your home without needing your beneficiaries to sign off on a deed. This gives property owners a unique ability to adapt to changing circumstances in their lives.
One of the primary reasons, and most significant benefits of a Texas Ladybird Deed, is the ability to bypass probate and potentially bypass Medicaid Recovery. By properly drafting a Texas Ladybird Deed, you can eliminate the delays and expenses associated with the probate process for your home.
Unlike other Texas warranty deeds that transfer a home to a beneficiary immediately during life, the Texas Ladybird Deed allows you to enjoy and use your home for the remainder of your life.
Upon your death, the Texas Ladybird Deed will seamlessly transfer your interest in your home to your beneficiaries. Generally, we recommend that the beneficiaries file an Affidavit of Death to ensure a proper link in the chain of title on your home.
Texas ladybird deeds and medicaid recovery
No one wants to think of potentially using Medicaid to pay for costs of healthcare, but it is a reality for many Texas, especially when dealing with costs associated with long-term care. While Medicaid can be a benefit, it does come with a drawback known as Medicaid Estate Recovery. This is a process in which the government actively seeks reimbursement for expenses incurred on behalf of the Medicaid recipient after the recipient passes away.
The Texas Ladybird Deed can play a vital role in both qualifying for Medicaid and providing asset protection from Medicaid Estate Recovery. Regarding qualification for Medicaid, a crucial consideration is the look-back period in which the government examines a Medicaid applicant’s financial transactions. In Texas, the look-back period is 5 years. The goal of the look-back period is to examine whether the Medicaid applicant has tried to improperly dispose of assets to beneficiaries for the purpose of qualifying for Medicaid benefits.
At our firm, we commonly encounter situations where well-meaning estate planners deed real estate via a gift deed to a beneficiary and we’re hired to unwind the gift deed and instead use a Texas Ladybird Deed to achieve the same result, but prevent a potential Medicaid applicant from being penalized for disposing of their home because the Texas Ladybird Deed is a future transfer, not a present transfer.
Simply put, the Texas Ladybird Deed indicates that a home won’t transfer to the beneficiaries until the current homeowner dies. This is distinctly different from how most Texas real property deeds work and one of the primary advantages of Texas Ladybird Deeds with Medicaid planning.
After a homeowner dies, the Texas Ladybird Deed also protects a Medicaid recipient’s home from being recaptured and subject to a forced sale due to the automatic transfer contained within the Texas Ladybird Deed. It’s important to note that Medicaid Estate Recovery contemplates recovery assets from a Medicaid recipient’s probate estate and not assets that are transferred outside the probate process.
Richard has been practicing estate planning, real estate, and tax law since 2016. He is currently pursuing an LLM in Taxation from Georgetown University Law Center in Washington D.C., holds a J.D. from Texas A&M School of Law, an M.A. Cert. in Homeland Security from the Texas A&M University Bush School of Public Service, and an M.A. in Texas Legal History from Baylor University.
He is currently a Lecturer at the University of North Texas where he teaches Business Law, Business Ethics, Estate Planning, and Negotiations.
He spends approximately 70% of billable hours per year on estate planning matters, has drafted over 100 Texas Ladybird Deeds and Transfer on Death Deeds in his career, and has personal experience utilizing the Texas Ladybird Deed to pass his parents’ home upon his father’s death in 2019.