Companion Bill Could Salvage Ladybird Deeds

Originally published by Mike.

Senate Bill 462 (companion bill)  has been introduced so that new rights are not granted to the Medicaid Estate Recovery Program that would have occurred if the Transfer on Death Deed Act bill passes. As previously mentioned in the January issue of the Texas Elder Law E-letter, if the Transfer on Death Deed Act passes in its original form, then it could be fatal to those using Ladybird (Enhanced Life Estate) deeds and joint tenancy with right of survivorship Deeds often used to protect the Medicaid recipient’s homestead from a reimbursement claim by the state. The original bill is applicable even to those who prepared Ladybird Deeds before the law was even proposed – so there would be no “grandfathering”. Title Companies have indicated if the original bill passes, then they will not issue title insurance on Ladybird Deeds for at least two years after the death due to concerns that the courts could require extended estate recovery.

It is anticipated that the new companion bill will alleviate these concerns. Apparently the author of the original bill did not realize the collateral damage that would occur if the bill, in its original form, passes. Therefore, it is anticipated Ladybird deeds and joint tenancy with right of survivorship deeds may still be safe – but stay tuned.

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