Lady Bird Deeds

A Lady Bird Deed is an estate planning tool available in a few states that you might find useful.

In Which States Are Lady Bird Deeds Available?

The following states allow Lady Bird Deeds:

Florida Michigan Texas Vermont West Virginia

If neither you nor anyone in your family is in any of those states, the rest of this post probably doesn't apply to you.

Who Is Lady Bird?

Lady Bird was the nickname of Claudia Alta Johnson, the first lady of the United States from 1963-1969. She was called Lady Bird as a child because she was as cute as a “lady bird.” As a slang term, it means a “kept woman” or a mistress. When it comes to the deed, we're literally talking about Mrs. Johnson, who was mistakenly thought to be used as a hypothetical example by Florida elder law attorney Jerome Ira Solkoff when discussing the deed. In reality, Solkoff used a hypothetical couple named “Linton” and “Lady Bird” in his 1982 materials. There is no evidence that Lady Bird or President Lyndon Johnson ever used a Lady Bird Deed.

More information here:

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What Is a Lady Bird Deed?

A Lady Bird Deed is another name for an enhanced life estate deed. Perhaps the best way to think of it is as a “Transfer On Death” (TOD) account for your house. An enhanced life estate deed is filed with the county recorder, naming a beneficiary to inherit the property without the property going through the time-consuming, expensive, and public process known as probate. The beneficiary can be changed at any time before death. The beneficiary has no responsibility, ownership, or control of the property prior to death.

To understand what an enhanced life estate deed is, you must first understand the definition of a life estate deed. A life estate deed is when you give a property to a beneficiary (remainderman) but retain the right to live there until death as a “life tenant.” The enhanced life estate deed allows the property owner to retain certain additional rights, including:

Full control of the property, including the power to mortgage or even sell the property Revoke the deed or change the beneficiary without their consent

That's the enhancement.

What Does a Lady Bird Deed Cost?

A Lady Bird Deed is not particularly challenging or expensive. You can probably do it yourself for $30, or you can hire a pro to do it for you for just a few hundred. Note that this is dramatically cheaper than the typical fees to form a revocable trust, another technique often used to avoid probate.

When to Use a Lady Bird Deed

One can use a Lady Bird Deed just to avoid probate, much like one would use a revocable trust. However, it appears that most uses of Lady Bird Deeds these days involve Medicaid planning. Medicaid planning is the process where a person arranges their financial affairs in such a way that they legally appear to be sufficiently impoverished enough to qualify for Medicaid benefits (typically for long-term care in situations involving Lady Bird Deeds). This typically means they have less than $2,000 in assets. If they have more in assets—at least in assets that count—they must spend down until they have less than $2,000.

Note that Medicaid law, like asset protection and estate planning laws, is always state-specific. You can find state-specific Medicaid eligibility laws here. Note that many states have a 2-5 year “look-back” period where you can't have transferred assets (gifted or sold for less than fair market value) to someone else just to qualify for Medicaid. Since Lady Bird deeds seem to be most popular in Florida, let's look at Florida's Medicaid eligibility limits.

Institutional/Nursing Home Medicaid: $2,000 (single or married with only one spouse applying, $3,000 married with both spouses applying) in assets and $2,982 in income (single or married with only one spouse applying, $5,964 in income married with both spouses applying)

Regular Medicaid/Medicaid for Aged and Disabled: $5,000 (single, $6,000 married) in assets and $1,171 (single, $1,588 married) in income

The following assets count:

Cash Stocks Bonds Investments Bank accounts Real estate (other than main residence)

The following assets do not count in Florida: personal belongings, household furnishings, automobiles, retirement accounts in “payout status” (you're making regular withdrawals), and your primary home (up to a home equity amount of $752,000 in 2026). All assets are considered jointly owned, although there is a “community spouse resource allowance” of $162,660 (in 2026) for nursing home Medicaid.

The following sources of income count:

Wages Alimony Pension payments Social Security payments Retirement account (including Roth) withdrawals Stock dividends Interest

The following sources of income do not count: Holocaust restitution payments and VA Aid and Attendance payments above and beyond the Basic VA Pension. Non-applicant spousal income does not count, and there is a “Minimum Monthly Maintenance Needs Allowance” of $2,644 that does not count.

While home equity (at least $752,000) is “protected” from Medicaid while you're alive, that is not the case for home equity after death. There is a Medicaid estate recovery program where Medicaid goes after the estate after death to reimburse itself. That typically means Medicaid (aka the taxpayer) gets a bunch of that home equity. This is where the Lady Bird Deed comes in. If there is a Lady Bird Deed on the home, it never goes into the estate; it goes directly to the beneficiary. It is thus not available to the Medicaid estate recovery program. Voila! For $30 and a little hassle, you've legally cheated the taxpayers out of what would otherwise be rightfully theirs. Note that numbers and laws may be slightly different in the other four states, but the process works basically the same way.

If you're trying to qualify for Medicaid to pay for long-term care for yourself or a loved one and you have significant home equity, consider a Lady Bird Deed for the home equity. It's even better if you do it in advance, since some states require you to have an “intent to return” to the home or still be living there when the deed is put in place.

Hopefully, most white coat investors become wealthy enough that they can pay for their own long-term care and, for those who do not, can purchase the best long-term care policy they can find. But that may not be the case for your parents or other loved ones who would prefer you to be their heir instead of the taxpayer.

Note that the “enhancement” (retained control) is what allows Lady Bird Deeds to avoid the look-back period laws.

More information here:

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Alternatives to Lady Bird Deeds

For those of you in the other 45 states, territories, or other countries—and even some of those in the five Lady Bird Deed states—you're going to need a different strategy if you have a home and want to have Medicaid pay for your nursing home care. Here are some options to still qualify for Medicaid without Medicaid coming back after your home equity after death.

Child caregiver exemptions: Some states allow the child who gave care to the elderly homeowner to inherit the home equity without paying any to the state Medicaid recovery program. Sibling exemption: In some states, it matters who inherits the home, and if it is a brother or sister, the Medicaid recovery program will consider the home equity exempt. Medicaid Asset Protection Trust: This must be set up in advance of any look-back period (generally 2-5 years before a need for Medicaid), but it is simply an irrevocable trust set up to allow someone to qualify for Medicaid because they gave away all their assets. Note that neither you nor your spouse can be the trustee, and retirement accounts cannot go into these trusts. Note that any income from the trust going to you still counts toward countable income for Medicaid. Buy a long-term care insurance policy: You only need to consider a Lady Bird Deed if you're planning on Medicaid paying for you. Pay for your own long-term care: You only need to consider a Lady Bird Deed if you're planning on Medicaid paying for you. Revocable trust: Easily used to avoid probate with an asset like your home, although it won't help with Medicaid planning.

Lady Bird Deeds won't be used by most white coat investors, but it's still worth knowing what it is and how it works, in case you know someone that the technique could help.

What do you think? Do you know anyone who has used a Lady Bird Deed? How did it work out? 

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