You can preserve your home from Medicaid Estate Recovery by recording either a Transfer on Death or a Lady Bird Deed (formally called a General Warranty Deed Reserving Extended Life Estate). Both are revocable. Neither affects your homestead exemption or over 65 or disabled property tax limits (though sometimes a clerk at the county’s Central Appraisal District may just see the word “deed” and make a correctable mistake). You can still refinance your home or, in extremity, sign a reverse mortgage.
Both transfer title on death, free of probate and free of Medicaid estate recovery. But there are important differences.
Important differences between Transfer on Death Deed and Lady Bird Deed
A Transfer on Death Deed must be signed by you. A Lady Bird Deed can be signed by your agent under a Durable Power of Attorney, perhaps if and when you need to apply for Medicaid home health or nursing home Medicaid.
A Transfer on Death Deed must be recorded in the county deed records before you die.
A Transfer on Death Deed can specify what happens to the share passing to someone you name if they die. A Lady Bird Deed lets it pass to that person’s estate.
Naming a Trust as the Beneficiary
If you want your home to be sold and the value split among many people or if you fear that the people you name may not agree to sell the home, leading to an expensive and lengthy suit for partition, you can name a trust as the beneficiary. The person you name as trustee can sell the home and distribute the proceeds.
Elder law attorney, Terry Garrett, CELA, is a member of the National Academy of Elder Law Attorneys and is an Approved Guardianship Attorney. She assists people in elder law, estate and special needs planning, guardianship and settling estates. She graduated with honors from Cornell University. She was on the Dean’s List at Wharton Business School. She earned her J.D. at Columbia Law School, receiving the Parker Award and a Mellon Fellowship.