Medicaid Estate Recovery and the Florida Lady Bird Deed

A national personal-finance story this week put Florida's enhanced life estate deed back in the spotlight as the one signature that keeps a home out of Medicaid's reach. Here is how recovery actually works in Florida, what happens at the closing table when the owner has died, and the ways a badly drafted deed defeats the whole plan.

Why this is in the news

On September 4, 2026, 24/7 Wall St. published a piece on the enhanced life estate deed, better known as the Lady Bird deed, describing it as a single signature that moves a house past Medicaid estate recovery in the five states that recognize it. Florida is one of the five, with Texas, Michigan, Vermont and West Virginia. The article quoted Suze Orman answering a Florida listener and noted that most families in those states have never heard of the tool.

The story is accurate as far as it goes, and it is the reason our phones have been ringing. What it does not cover is the Florida-specific mechanics: how the state actually recovers, what the recorded deed has to say, what a title company requires when the beneficiary sells, and the ways the plan fails. That is what this guide adds. For the deed itself, its advantages and how it compares to the alternatives, start with our Florida Lady Bird deed guide.

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How Medicaid estate recovery works in Florida

Federal law requires every state to seek repayment of Medicaid long-term-care costs from the estates of recipients who were 55 or older. Florida does this through the Medicaid Estate Recovery Act, and the Agency for Health Care Administration files its claim the same way any creditor does: as a claim in the probate estate. Florida uses the narrow definition of "estate." It does not reach assets that pass outside probate, such as property held jointly with right of survivorship, property in a revocable trust, or a home that passes to a named beneficiary under a Lady Bird deed.

Two other Florida rules matter. Recovery is deferred while a surviving spouse, a child under 21, or a blind or permanently disabled child is living. And Florida's constitutional homestead protection means a home that qualifies as protected homestead and passes to the owner's spouse or heirs is generally exempt from creditor claims in probate, which can block recovery even without a Lady Bird deed. The catch is that homestead protection depends on facts (who inherits, whether the owner still lived there) that a nursing-home stay can complicate. The Lady Bird deed removes the argument by keeping the house out of probate altogether.

Florida does not place a lien on a living recipient's home the way some states do. During the owner's life the home is an exempt asset for eligibility (subject to the federal home-equity limit), and the state's only path to it is the probate claim after death.

What the deed changes, and what it does not

An enhanced life estate deed conveys a remainder interest to a named beneficiary while the owner keeps a life estate plus the power to sell, mortgage, lease, gift or revoke without the beneficiary's consent. Because the beneficiary receives nothing enforceable until death, Medicaid does not treat the deed as a transfer for less than fair value, so the five-year look-back is not triggered. The owner keeps the homestead exemption, the Save Our Homes cap and control of the property. At death the beneficiary takes with a stepped-up basis.

What it does not do: it does not shelter the home from the federal home-equity cap on eligibility; it does not protect against the owner's own creditors during life; it does not override Florida's rules on married owners and minor children, discussed below; and it does not help if the deed is drafted or recorded wrong. It is one tool for one problem, and it belongs inside a plan reviewed by an elder-law attorney.

What happens at closing when the owner has died

This is the part the national coverage skips, and it is the part we handle every month. When the beneficiary under a Lady Bird deed sells or refinances after the owner's death, the title examiner is checking four things.

• The recorded deed contains the enhanced powers. The language reserving the right to sell, convey, mortgage and revoke without joinder of the remainderman is what makes it a Lady Bird deed. A deed that only reserves a life estate created a traditional life estate, and the analysis changes.
• Proof of death. A certified death certificate without cause of death is recorded in the county where the property sits. No probate order, letters of administration or court involvement is required when the deed is valid; the beneficiary already owns the remainder.
• The estate-tax affidavit. For most estates a Florida Department of Revenue affidavit confirming no federal estate tax is due (form DR-312) is recorded alongside the death certificate.
• Nothing happened during life to change the answer. The examiner confirms the owner did not later revoke the deed, convey the property, or record a mortgage that must be paid at closing, and that the beneficiary named in the deed is the person signing.

With those in the file, the beneficiary signs the new deed, the buyer receives a full owner's title policy, and the sale closes on a normal timeline. Doc stamps are paid on the sale price like any other sale. If the home was the owner's homestead, the buyer reapplies for the exemption and the assessment resets to market value the following January, as it would after any sale.

Selling or refinancing while the owner is alive

Because the owner keeps every power of ownership, a living owner can sell without the beneficiary signing and can revoke or change the beneficiary by recording a new deed. Title insurers are comfortable with this. Some lenders are not: a few underwrite a Lady Bird deed as if it were a life estate and ask the beneficiary to join the mortgage. If you plan to refinance, tell the lender about the deed early and ask us to send the deed language to the closer so the file does not stall at the end.

The mistakes that undo the plan

• A form deed missing the enhanced powers. Online templates often produce a plain life estate. The beneficiary then has a vested interest, the owner cannot sell without them, and the transfer may count as a gift for the look-back. This is the single most common defect we see.
• A married owner signing alone. Florida requires a spouse to join in any conveyance of homestead. A Lady Bird deed of homestead signed by one spouse is defective, and it surfaces on the title search after death.
• A minor child. Florida's constitution restricts what a homestead owner with a minor child can do with the property at death. A Lady Bird deed does not get around it. Get an attorney's opinion before relying on the deed in that situation.
• No contingent beneficiary. If the named beneficiary dies first and the deed names no alternate, the remainder may lapse and the house lands in probate, the exact result the deed was meant to avoid.
• Several children, no plan. Naming three children as co-owners with no agreement produces the heirs-cannot-agree problem at the worst possible time.
• The deed was never recorded. An unrecorded deed found in a drawer after death is a litigation invitation. Record it the week it is signed.
• Property already in a trust or an LLC. The deed has to be signed by the current record owner. A deed from an individual who no longer holds title conveys nothing.

Lady Bird deed vs. trust vs. joint ownership in Florida

Florida has no transfer-on-death deed statute for real estate, so the beneficiary-deed approach used in about half the states is not available here; the Lady Bird deed fills that role. A revocable living trust also keeps the home out of probate and can hold other assets, but it costs more to set up and requires retitling. Adding a child as joint owner avoids probate but is a completed gift (look-back applies), exposes the home to the child's creditors and divorce, and forfeits the stepped-up basis on the child's half. For the house alone, the Lady Bird deed is usually the cleanest answer; for a fuller estate, the trust wins. See which deed do I need for the deed-by-deed comparison.

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