What is a Lady Bird Deed in Texas? How Do Lady Bird Deeds Help With Medicaid?

A Lady Bird Deed (also known as an enhanced life estate deed) in Texas is a specialized real estate deed that lets you transfer your home or land to a beneficiary upon your death—while keeping full control during your lifetime. You can live in the property, sell it, mortgage it, change beneficiaries, or even cancel the deed entirely. No probate required.

Key Features in Texas

Feature	Details
Beneficiary Named	You designate one or more people (or a trust) to automatically receive the property at your death.
Owner Retains Full Control	Until death, you have complete rights: occupy, sell, refinance, modify, or revoke the deed.
Automatic Transfer at Death	If properly recorded, the property passes directly to the beneficiary—outside of probate.
Not a Completed Gift	Because you retain control, signing the deed doesn’t count as a taxable gift during life.
No Specific Texas Statute	Texas recognizes it under common law and the “enhanced life estate” concept—not a named “Lady Bird” law.

Why People Use It (General Benefits)

·  Avoids Probate The home skips the costly, time-consuming probate process.

·  Full Control While Alive Unlike traditional life estates, you’re not locked in—you can sell or change plans anytime.

·  Tax Advantage: Step-Up in Basis Beneficiaries inherit the property at its fair market value at death, reducing capital gains tax if they sell.

·  Preserves Texas Homestead Rights You keep homestead tax exemptions and creditor protections as long as you live there.

How Do Lady Bird Deeds Help with Medicaid and Estate Recovery in Texas?

Texas has a Medicaid Estate Recovery Program (MERP)—after death, the state can claim reimbursement from your estate for long-term care costs (like nursing homes).

A Lady Bird Deed helps in two critical ways:

1. Does NOT Trigger Medicaid Transfer Penalties

• Signing the deed is not considered a “transfer” for Medicaid eligibility.

• Your home remains a non-countable asset during the 5-year look-back period.

• You can qualify for Medicaid without penalty, even if the home is your primary asset.

2. Protects the Home from Estate Recovery

• At death, the property leaves your probate estate and goes straight to the beneficiary.

• MERP can only claim against assets in the probate estate.

• Result: The home is usually safe from being sold to repay Medicaid.

Real-World Impact: A senior can use Medicaid for nursing care, live in their home until the end, and still pass it to children—without the state taking it.

Important Limitations & Things to Watch

Issue	Explanation
Only Covers Real Estate	Bank accounts, cars, investments, etc., need separate planning.
Title & Marketability Issues	Some title companies hesitate; may require extra documentation when selling.
Must Be Properly Drafted & Recorded	Errors can invalidate it or cause probate/tax problems.
Not Bulletproof Against All Claims	Doesn’t protect against IRS liens, lawsuits, or private creditors.
Timing Matters	If done too late or incorrectly, Medicaid may still challenge it.
Selling or Refinancing?	The deed becomes void if you sell—must create a new one for a replacement home.

Summary: Is a Lady Bird Deed Right for You?

Yes, if you:

• Own a home in Texas

• Want to avoid probate

• May need Medicaid for long-term care

• Want heirs to inherit the home without state recovery

But always:

• Consult Eric Golle Medicaid Lawyer and Certified Public Accountant (CPA)

• Ensure proper drafting and recording

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Bottom Line: A Lady Bird Deed is a powerful, low-cost tool to protect your home, avoid probate, and preserve it for your family—especially in Medicaid planning. But it’s not DIY. Get professional help from Eric Golle Medicaid Attorney and CPA.

In short:

• A Lady Bird Deed in Texas allows you to name a beneficiary for your home while retaining complete control until death.

• It helps with Medicaid planning by (a) not being treated as a disqualifying transfer for eligibility, and (b) potentially removing the home from your probate estate so it isn’t subject to Medicaid estate recovery.

• It is a valuable tool, especially for homeowners concerned about long‐term care costs, preserving the home for heirs, and avoiding probate.

• But it must be done carefully, with proper legal advice, and it does not relieve the need to consider all other assets, all Medicaid rules, and other estate planning instruments.