Lady Bird deed may protect property for loved ones

It is understandable that Detroit residents would want assets they bequeath to their relatives given to them, without any of it being taken to pay off a debt. In some cases, the government may also dip its hand into an inheritance to pay taxes or repay certain benefits. There are, fortunately, a few ways to protect the legacy a family leaves to its heirs.

Senior citizens who rely on Medicaid for healthcare may be dismayed to learn that their property may be sold to repay benefits after their death. In this way, reports USA Today, the government may claim the family home, precious heirlooms and other belongings for benefits a Medicaid recipient received after age 55.

According to the Michigan Bar Journal, a form of estate planning called the enhanced life estate deed may protect real estate from being taken to repay Medicaid benefits, as well as help family members avoid probate. More commonly known as the Lady Bird deed, it allows grantors to transfer property to someone else, while allowing them full control over the property while they are still alive. The grantor will also retain the right to sell the property.

There are numerous complex rules surrounding Medicaid eligibility. For instance, a person wanting to apply for Medicaid must not have transferred any property to another person within five years of applying. Using a Lady Bird deed, rather than transferring the actual deed to a relative, may be an effective option for those who may need Medicaid during their senior years.