If your elderly parent has had to move into a nursing home, he may be worried about what will happen to the family home. His wish may be to leave it to his children, but he may not be able to do that unless he plans ahead. Because the house is exempt from assets that must be used to pay for nursing home care, he does not have to worry about it being sold to pay bills while he is alive. However, if Medicaid is paying for the nursing home, the Texas Medicaid Estate Recovery Program (MERP) may claim the home after his death to recoup some of what they have spent. There are a couple of ways to avoid this eventuality, including executing a Deed to hold interest in the house. An Enhanced Life Estate Deed, more commonly known as a Lady Bird Deed, is one possible solution.
How a Lady Bird Deed Works
Because MERP and other creditors can only claim assets in the deceased person’s estate, the family home must be removed from the estate in order to be protected. When a Lady Bird Deed is executed, the home becomes a “life estate,” meaning it is only part of the owner’s estate while he is alive. Upon his death, the beneficiary of the Deed takes ownership immediately, protecting it from creditors. While he is alive, the owner retains the right to sell, lease, or partition the home, and can change the beneficiary at any time. Additional advantages of the Lady Bird Deed include:
- It avoids probate. Because the house will pass immediately to the named beneficiary upon the death of the owner, it does not have to be probated.
- It can be created by a Power of Attorney. If the homeowner is incapable of making legal decisions for himself but has named a Power of Attorney, that agent can create a Lady Bird Deed on his behalf.
There are some disadvantages to a Lady Bird Deed, but when combined with a Revocable Living Trust, many of the disadvantages can be avoided.
Discuss a Lady Bird Deed With Ross & Shoalmire Today
If you or your loved one owns a home and is moving into a nursing home, a Lady Bird Deed could be an important estate planning document. Talk to the team at Ross & Shoalmire for information about this and other estate planning options. As elder law attorneys, we are committed to helping our clients as they get older. Schedule a consultation with our attorneys in Texarkana, Longview, or Tyler today.