Florida Lady Bird Deeds and Medicaid Eligibility
A retained life estate (sometimes referred to as a “Lady Bird Deed”) transfers title to your heirs, typically your children, or others (called “remaindermen”) together as owners of real estate, typically your residence. The transfer to your children does not become effective until your death. This avoids the costs and delays of probate. (The term Lady Bird deed is believed to have originated from a 1980s legal case in which former U.S. President Lyndon B. Johnson transferred the property to his wife, Lady Bird Johnson, using this type of deed.)
Additionally, when you transfer Florida property by a Lady Bird Deed, the Department of Children and Families does not consider the property to have been “transferred” for purposes of the 60-month (five years) lookback period, even though you have signed and recorded the deed. This means that a Lady Bird Deed does not disqualify you from receiving Medicaid benefits you would otherwise receive. This is clearly stated in Section 1640.0613.01 of the Florida ESS Policy Manual, which governs Florida’s Medicaid program.
When an individual retains a life estate using a lady bird deed, he or she retains full ownership powers in the property, including homestead benefits, and it is only upon his or her death that the property transfers ownership to the remaindermen. Because you retain the rights to your property during your lifetime, the deed is simply disregarded for Medicaid purposes. This means that a transfer by Lady Bird Deed will not negatively affect your Medicaid eligibility.
Lady Bird Deeds have another important benefit: protection from Medicaid recovery. Most states—including Florida—have a program in place that allows the government to seek reimbursement from your assets after your death. If, for example, Medicaid paid $100,000 in benefits during your lifetime, the Department of Children and Families may file a claim against your assets after your death for $100,000 to reimburse Medicaid for the benefits paid. This claim reduces the assets that would otherwise pass to your children or other loved ones. But in Florida, unlike other states, Medicaid recovery is limited to the assets included in the probate estate. When property is transferred using a Lady Bird Deed, the property passes automatically at your death, outside probate. This means that property transferred using a Lady Bird Deed is not included in your probate estate and, as a result, is not subject to Medicaid recovery at your death
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