For many Florida homeowners, protecting the family home is one of the biggest concerns when planning for long-term care. Medicaid provides essential benefits for nursing home and assisted living costs, but it also has rules that allow the state to recover some of those expenses after the recipient passes away.
A Lady Bird Deed — also called an enhanced life estate deed — is one of the most effective tools used in Florida to avoid probate and keep property in the family. But an important question comes up: Will creating a Lady Bird Deed affect Medicaid eligibility or trigger Medicaid estate recovery?
Lady Bird Deeds and Medicaid in Florida: The Basics
A Lady Bird Deed allows you to keep full control of your home during your lifetime and name beneficiaries who will automatically inherit the property when you pass away — all without going through probate.
Because you maintain full ownership rights while you’re alive, the transfer is not considered complete until your death. This distinction is crucial when it comes to Medicaid planning because Medicaid looks at “asset transfers” when determining eligibility for benefits.
What Is Medicaid Estate Recovery?
Medicaid’s Estate Recovery Program (MERP) is designed to recover costs the state paid for your care after you turn 55. In Florida, MERP typically applies to assets that go through probate. If a home is still in your name when you pass away and no estate planning tool is used, the property may have to be sold to repay Medicaid.
This is where a Lady Bird Deed can make a difference — it keeps the property out of probate, which generally protects it from estate recovery in Florida.
Why Florida Homeowners Use Lady Bird Deeds for Medicaid Planning
Florida is one of the few states where Lady Bird Deeds are legally recognized and frequently recommended for Medicaid planning. The main reasons homeowners choose this tool include:
- Avoiding Probate: The property passes directly to the beneficiaries, so it never enters the probate estate.
- Maintaining Medicaid Eligibility: Since the owner retains full control, the deed does not count as a disqualifying transfer during the Medicaid look-back period.
- Protecting the Homestead: The property remains protected under Florida’s homestead laws during the owner’s lifetime.
- Flexibility: The owner can sell, mortgage, or revoke the deed at any time without losing control of the property.
This combination of benefits makes the Lady Bird Deed a cornerstone of many Florida Medicaid plans.
Does a Lady Bird Deed Count as a Transfer for Medicaid?
One of the main concerns Florida homeowners have is whether signing a Lady Bird Deed will disqualify them from Medicaid benefits. The good news is that in Florida, a Lady Bird Deed is not considered a completed gift or transfer for Medicaid purposes.
Here’s why:
- You retain full control: During your lifetime, you can sell the property, take out a mortgage, or revoke the deed entirely.
- The transfer only happens at death: Because no ownership interest passes to the beneficiaries until you pass away, Medicaid does not treat it as a gift during its five-year look-back period.
- No penalty period applies: Unlike outright transfers or quitclaim deeds, a Lady Bird Deed does not trigger a Medicaid penalty period for asset transfers.
This makes Lady Bird Deeds one of the most Medicaid-friendly tools available for homeowners in Florida.
Lady Bird Deed and Medicaid Estate Recovery in Florida
Florida participates in the Medicaid Estate Recovery Program (MERP), which allows the state to recoup the cost of care from the estates of deceased Medicaid recipients over the age of 55. Typically, this applies to assets that pass through probate.
Because a Lady Bird Deed avoids probate, the home does not become part of the probate estate. This generally keeps the property out of reach for Medicaid recovery efforts, meaning your beneficiaries can inherit it free from state claims.
Special Considerations
While Lady Bird Deeds are powerful tools, there are a few things to keep in mind:
- Homestead Status Matters: If the property is not your homestead, other rules may apply.
- Proper Drafting Is Critical: If the deed does not include the correct enhanced life estate language, it may be considered a regular life estate, which could complicate Medicaid eligibility.
- Other States Have Different Rules: Florida’s favorable treatment of Lady Bird Deeds is not universal. If you own property outside of Florida, the same protections may not apply.
Working with an attorney ensures your deed is drafted correctly and recorded with the proper county to maximize protection.
Potential Risks and Pitfalls
Although rare, issues can arise when:
- The deed was never recorded before the grantor’s death.
- Beneficiaries are incorrectly named or no longer living.
- There are title issues, liens, or outstanding mortgages that need to be resolved.
A legal review can help catch these problems early and prevent costly complications later.
Steps to Protect Your Home with a Lady Bird Deed
A Lady Bird Deed can be one of the most powerful tools in Florida Medicaid planning — but only if it is executed properly. Here are key steps to make sure your home is protected:
Confirm Homestead Status
Florida’s homestead exemption provides strong protections for a primary residence. Confirm that your property is properly classified as your homestead before executing the deed. This ensures you preserve valuable creditor protections and property tax benefits.
Use the Correct Legal Language
The deed must contain the enhanced life estate language that gives you the right to sell, lease, mortgage, or revoke the deed without the beneficiaries’ consent. Missing or incorrect language can lead to:
- The property being treated as a regular life estate
- Medicaid counting the transfer as a gift
- Loss of flexibility if you need to sell or refinance
Record the Deed Promptly
An unrecorded deed may not be enforceable. Make sure your Lady Bird Deed is properly signed, notarized, witnessed if required, and recorded with the county clerk where the property is located. Recording creates a public record and confirms the validity of the transfer.
Keep Beneficiaries Updated
If you change your mind about who should inherit the property, execute a new Lady Bird Deed and revoke the previous one. This avoids disputes or confusion after your death.
Why Legal Advice Is Critical for Medicaid Planning
Medicaid planning is complex, and a mistake could disqualify you from benefits or expose your home to recovery claims. Working with a Florida estate planning attorney ensures that:
- Your Lady Bird Deed meets all legal requirements
- Your homestead protections remain intact
- The deed coordinates with your overall estate plan
- Other assets (bank accounts, vehicles, etc.) are handled to avoid probate as well
This holistic approach prevents gaps that could leave your estate vulnerable.
Integrating a Lady Bird Deed with a Complete Plan
For many clients, a Lady Bird Deed is just one piece of the puzzle. A well-rounded plan may also include:
- A durable power of attorney to handle finances if you become incapacitated
- A living will and health care surrogate designation
- A revocable living trust if you have multiple properties or significant assets
An experienced attorney can help you combine these tools to create a strategy that protects your home, preserves Medicaid eligibility, and avoids unnecessary court involvement.
Take Control of Your Florida Estate Plan
A Lady Bird Deed is one of the simplest and most effective ways to protect your home from Medicaid estate recovery — but only when it’s done right.
📅 Schedule a consultation with Woodstock Law today to create a legally sound Lady Bird Deed, safeguard your homestead, and secure your family’s future. Click here to get started.