Lady Bird Deed

- Avoids Probate

A Lady Bird Deed allows you to avoid probate and pass your property to your family and leave an inheritance while allowing you to have full title rights during your life.

- Maintain homestead advantages

Many states offer asset protection and taxation benefits for a person's principal residence. These benefits may be lost with certain types of ownership transfers, but not with a Lady Bird Deed.

- Tax savings

Designating a beneficiary is not an immediate transfer, so no federal gift tax is owed. With a Lady Bird Deed, the beneficiary acquires ownership on the current owner's date of death. If the beneficiary later sells the property, any capital gain will be based upon the value of the property at the original owner's date of death, not the value when the original owner acquired the property.

- Maintain Medicaid eligibility

If a person applying for Medicaid has made a gift of property within a certain period before applying, that gift may delay the receipt of benefits. Upon a Medicaid recipient's death, the government may seek reimbursement from the recipient's probate estate. Fortunately, a Lady Bird Deed is not usually considered a gift of the property, nor is the property part of the probate estate subject to reimbursement.

** Keep in mind that as long as you’re alive, a Lady Bird Deed has no impact on (or benefit for) your Beneficiary.

He or she has no legal rights to the property until after you pass away. That means you pay the property taxes on it until you die.

An additional downside to a Lady Bird Deed is it’s not an effective tax beneficial tool. However, the threshold is quite high, and the majority of Beneficiaries do not pay taxes on Lady Bird Deeds. They will, however, take over any financial obligations on the property once they are owner, such as mortgage payments and property taxes.