A Lady Bird Deed is an estate planning tool available to name a “beneficiary” on your real estate. A Lady Bird Deed protects your property from probate court by allowing a direct transfer of the real estate to the person(s) you designate or your revocable living trust. This protects your privacy and avoids unnecessary administrative costs.
A Lady Bird Deed is also used in Medicaid planning. If a Medicaid applicant owns a home, it will only be an exempt asset if it is not in a trust. If the Medicaid recipient is the sole owner of the property, without the use of a Lady Bird deed, upon his or her death, the home becomes part of the probate estate. A Michigan Medicaid recipient’s probate estate is subject to estate recovery. Estate recovery is when the state attempts to recover expenses spent on long-term care, when the Medicaid recipient dies. In Michigan, estate recovery is limited to assets that are part of the probate estate. Because a Lady Bird deed protects your home from going through probate, it also protects the home from estate recovery.