What is a Ladybird Deed?

 

Video Summary

What is a ‘Ladybird deed?’  A ‘Ladybird deed’ is a conveyance by an owner of real property, wherein they convey the property usually to a relative or a friend and they reserve to themselves a life estate.  In addition to a life estate, they also reserve additional powers and rights to the property, such as the ability to sell or transfer the property during their lifetime and to retain all the proceeds.

The reason why most people execute these deeds is to avoid probate.  With this deed, if they have their accounts as ‘payable on death’, there’s no probate involved.  If they have a brokerage account as ‘transfer on death’, where they have their real estate and don’t want to lose the benefits of their homestead exemption if in joint names (because of certain ramifications).  They also aren’t disqualified for Medicaid with a Ladybird deed; your homestead is not counted if you happen to have Medicaid.

The deed was developed by an elder law lawyer who set it up for the very purpose to avoid probate (which we use quite often), and also not disqualify the parties from obtaining Medicaid (as it being a conveyance of a gift).  You can use it on any real property that you like.

Some people say, “How did it get the name ‘Ladybird?’”  Well, the author (or the person who came up with this and published it in his elder law manual) named various deeds after famous persons.  And this deed’s named after Ladybird Johnson, and so therefore, the name ‘Ladybird’.

So it’s a Ladybird deed which is your ability to transfer the property after you pass away to a loved one (or whoever you’d like, for that matter) but retain all the rights of ownership during your lifetime as to not have it disqualify you from Medicaid; and/or to retain all of your rights, as far as homestead exemption is concerned.  So it’s a nice estate-planning tool if you have a simple estate.

If you’d like to have a Ladybird deed prepared or discuss it, give me a call at (727) 847-2288.  Thank you.