How a Lady Bird Deed May Offer You More Flexibility and Control Over Your Estate When You Need Long Term Care…
The cost of long-term care can be overwhelming. Over the last few decades, the rates for this type of care have continued to rise astronomically. And for this reason, many people have started relying on Medicaid for financial assistance when it comes time to pay for their long-term care needs. This has seemed to work for those in need of long-term care as it ensures that those needs are met. However, depending on Medicaid does come with a catch. As we are aware, Medicaid is operated by the government and the budget given for long-term care comes directly from the individual receiving the help. For example, when a person has been relying on Medicaid to cover the expense of long-term care passes away, Medicaid will attempt to recover the costs of that care against their estate. This process is known as Medicaid estate recovery,
or the Medicaid Clawback.
Medicaid Estate Recovery
For most, their most valuable (and largest) asset in their estate is their home. Because of that, Medicaid often goes after their home in order to receive their reimbursement for the initial payment of their long-term care. When this happens, Medicaid is able to require that the sale of that individual’s home, as well as the proceeds from that sale, are used to reimburse the government. This can be quite an unsettling thought considering all the years a person devoted to obtaining their home. In today’s society, we value the disposition of a person’s property at their own discretion. Meaning we like the idea that we are able to decide who inherits our estate and everything in it when we pass. The thought of Medicaid having the option to interfere with our own decision is downright unpleasant.
Benefits Of Lady Bird Deeds
Thankfully, current Florida laws allow for a sort of loophole. What is that you might ask? It is the Enhanced Life Estate Deed, or more commonly referred to as, a lady bird deed. This type of deed is comparable to the traditional life estate deed provided that it enables you to transfer your ownership interest in your home to another person (usually your child, sibling, grandchild, or next of kin). All the while you are still able to continue living in your home. The person conveying the property through the deed will retain a present interest in the home, that being the right to live there, and the person who is receiving the deed will receive a future interest– ownership of the property after the decedent has passed. A lady bird deed differs from the traditional life estate in the fact that the grantor, the person deeding the property to their loved one, does not have to gain the approval of the party with the future interest in the property. In a traditional life estate deed, the grantor is required to seek the permission of the grantee before they are able to sell the property. Considering this, a lady bird deed offers the grantor more flexibility and control over the future of their estate.
Disadvantages Of Lady Bird Deeds
Now that you know the advantages of a lady bird deed, let’s discuss the not-so-desirable disadvantages. At present time, lady bird deeds are a sort of loophole in the law, however their future effectiveness may be called into question should laws change. There is always this chance; should that happen, these deeds will no longer be a viable option. With that in mind, it is important to note that lady bird deeds have been legal in Florida for many years and seem to be gaining popularity in other states. Lady bird deeds also require more work should you decide to make changes to your plan later and rename your grantee. In addition, there is a lack of asset protection associated with lady bird deeds enabling any creditor of the current owner to place a lien on the property. These are just a few things to consider when deciding how to set up your deed.
Contact Estevez Law Group For Your Estate Planning Needs
If the idea of losing everything you worked for through a Medicaid Clawback feels unsettling, schedule a consultation with us today at our Florida office. A lady bird deed might be a good option for you to consider depending on the specifics of your situation. If this isn’t the right option for your unique needs, our attorneys can help you find the best option to keep your assets protected. Contact Estevez Law Group today to schedule your consultation.
Contact Us (754-202-3067) for a Consultation Today!
About Estevez Law Group, P.A.
Helping clients with real estate, commercial real estate transactions, residential property purchases and sales, estate planning, and more! Skillful legal representation can simplify complex real estate transactions and solve problems that frustrate all parties involved. At the Estevez Law Group, P.A. our boutique real estate law firm and title agency assists clients with all types of residential and commercial property matters.
> Learn More