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Alternatives to Probate - The Lady Bird Deed

A Lady Bird Deed, also known as an Enhanced Life Estate Deed, is a good probate alternative when you want to leave property to someone after you pass away, but want to retain ownership throughout your lifetime. It is an inexpensive probate alternative for real estate. The beneficiary does not get any rights until you pass away. It is commonly used in Texas because you do not need the beneficiaries consent to convey, sell, or mortgage the property.

It also may help preserve your eligibility for Medicaid, while preserving assets for your family that would otherwise be taken by the state through the Medicaid Estate Recovery Program. This program is a joint State-federal Program to recover nursing home costs you receive from Medicaid during your lifetime.

The features of a Lady Bird Deed include:

1. Avoiding probate for this piece of real property; and

2. Allowing you to keep her homestead exemptions; and

3. Allowing you to sell, convey, or mortgage the property during your lifetime; and

4. Possibly allowing you avoid a Medicaid claim.

In the Medicaid Eligibility process, you are required to disclose any assets you have given away in the "look back period". This is to prevent you from giving away assets to qualify for Medicaid benefits. Because the Lady Bird Deed is revocable, it does not currently count as a transfer for Medicaid purposes. If you did give away property, you may be disqualified from Medicaid for a certain period of time.

An alternative to a Lady Bird Deed is a Transfer on Death Deed. The Texas Legislature passed Senate Bill 462 in the 84th Regular Legislative Session (2015) which specifically allows Transfer on Death Deeds.

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