A Ladybird Deed, sometimes called an Enhanced Life Estate Deed, is a deed filed in the property records of the county where the Texas real property (home) is located. The deed is a protection from Medicare reimbursement claims should the owner of the Texas real property be placed in a nursing home or incur Medicare expenses. Keep in mind that the State is only able to make a claim for reimbursement for assets in a person’s estate. The Ladybird Deed causes the real property to transfer ownership outside of a person’s estate. The deed essentially makes the real property a non-probate asset and therefore not subject to State or Medicare reimbursement claims. (See Probate blog for definition of probate and non-probate assets.)
What does this mean?
This means that when you apply for Medicare, an evaluation will be done on your assets as well as transfers of assets that took place five years before applying. The benefit of having a Ladybird Deed is that it is not considered a transfer under Medicare’s definition therefore the transfer does not need to be reported.
Another benefit is the owner of the Texas real property retains all power to sell, convey, or mortgage the real property without the consent of the beneficiary. Essentially the Ladybird deed permits the Texas real property owner complete control of their Texas real property, avoid probate at death and avoid their Texas real property from being subject to a Medicare reimbursement claim.
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