TODD or LADYBIRD - WHY NOT? LADYBIRD OR TODD - WHICH ONE GOES HOME WITH YOU? Patricia Flora Sitchler Law Offices of Patricia Flora Sitchler P.O. Box 999 La Vernia, Texas 78121 [email protected] www.patriciasitchler.com Texas Land Title Institute Friday, December 9, 2016 San Antonio, Texas copyright 2016 PATRICIA (PATTY) FLORA SITCHLER, CELA* THE LAW OFFICE OF PATRICIA FLORA SITCHLER P.O. Box 999 La Vernia, Texas 78121 (210) 816-1761 [email protected] *Certified as a Elder Law Attorney by the National Elder Law Foundation as recognized by the Texas Board of Legal Specialization EDUCATION J.D. Degree (magna cum laude), St. Mary’s University School of Law, 1990 B.A. Degree (mathematics), Trinity University, 1975 PROFESSIONAL ACTIVITIES Solo practitioner Adjunct Professor of Law, St. Mary’s University School of Law (1998 to present) Co-Chair, Long Term Care, Medicaid and Special Needs Trusts Committee of the Real Property, Trusts & Estates Section of the American Bar Association (2010-2013) Member, National Academy of Elder Law Attorneys (national and state chapters)(State Board of Directors, 2000 to 2006, 2009 through 2012, Texas Chapter President 2004-2005) Member, Special Needs Alliance Member of the College of the State Bar of Texas (1997 to present) Member of the State Bar of Texas, San Antonio Bar Association; Texas Trial Lawyers Association and San Antonio Trial Lawyers Association Planning Committee Chair, State Bar of Texas, Elder Law and Guardianship Course (2004) Planning Committee Member, State Bar of Texas, Elder Law Course (2000, 2001, 2003-2008, 2013-2016) Planning Committee Member, State Bar of Texas, Advanced Estate Planning Course (2008 & 2013) Planning Committee Member, The University of Texas School of Law Estate Planning, Guardianship and Elder Law Conference (1999 to present) Co-Director, The University of Texas School of Law Special Needs Trust Conference (2005 to present) Listed in the 2011 Inaugural Edition, Martindale-Hubbell Bar Register of Preeminent Women Lawyers (and in 2012-2014) Listed in Martindale-Hubbell Bar Register AV Preeminent (1999-2016) Listed in 2016 Martindale-Hubbell Bar Register AV Preeminent, Judicial Edition. Listed in Best Lawyers in America in Elder Law (2007-2016) Listed in Texas Monthly Super Lawyers 2004-2016 in Elder Law and Top 50 Lawyers in South and West Texas (2013). Listed in Scene in SA San Antonio’s Best Lawyers in Trust and Estate Law (2008-2016) Co-Author of Save My Home! Saving Your Home, Farm or Ranch from Medicaid Estate Recovery in Texas, Elder Law Trio Press, Houston, 2005. Co-Author of Elder Law, Texas Practice Series Vol.. 51, Thomson-Reuters (formerly West Publishing), 2008 to present. Named the Outstanding Attorney in San Antonio in Elder Law and Estate Planning (2013) by the San Antonio Business Journal. Named in Best Lawyers’ 2016-17 and 2014-15 San Antonio Trusts and Estates “Lawyer of the Year.” (only a single lawyer in each practice area in each community is honored as Lawyer of the Year). Law Office of Patricia Flora Sitchler named in Best Lawyers’ Best Law Firms 2016-17. LAW-RELATED PUBLICATIONS AND PRESENTATIONS Author, TODD or Ladybird - Why Not? Texas Land Title Institute, San Antonio, Texas, December 9, 2016. Author, Sex, Drugs & Rock-n-Roll: 2016 Top 10 Elder Law Issues for our Boomer-Clients, State Bar of Texas Estate Planning & Probate Drafting, Dallas, Texas, October 6, 2016. Author, Elderly/Disability Issues and Medicaid, SSI and Social Security Disability; 2015 Graduate Texas Trust School, Wealth Management & Trust Division of the Texas Banker’s Association, Dallas, Texas, July 2016. Author, Powers of Attorney: Recent Developments, State Bar Advanced Elder Law Conference, Dallas, Texas, April 15, 2016. Author, Sex, Drugs & Rock-n-Roll: 2016 Top 10 Elder Law Issues for our Boomer-Clients, Docket Call in Probate Court, San Antonio, Texas, February 12, 2016. Author, The SNT Process, National Structured Settlements Trade Association, Fall Educational Meeting, Phoenix, Arizona, October 29, 2015. Author, Creating the Trust: SSA Requirements to get a Self-Settled Trust Accepted and Funded- Doing it Right, Stetson University School of Law Basics of Special Needs Trusts, St. Petersburg, Florida, October 15, 2015. Author, Powers of Attorney: Recent Developments, University of Texas School of Law Estate Planning, Guardianship and Elder Law Conference, Galveston, Texas August 6, 2015 Author, Elderly/Disability Issues and Medicaid, SSI and Social Security Disability; 2015 Graduate Texas Trust School, Wealth Management & Trust Division of the Texas Banker’s Association, Dallas, Texas, July 2015. Author, Creating a SNT without Creating Malpractice, State Bar of Texas Advanced Elder Law Conference, Houston, Texas, April 9, 2015. Numerous presentations 1996 though 2014. Texas Land Title Institute Page 1 LADYBIRD OR TODD - WHICH ONE GOES HOME WITH YOU? The purpose of this presentation is to compare and contrast the Transfer on Death Deed adopted by the Texas legislature in 20151 with the Ladybird deed also known as a deed retaining a life estate with a power of appointment. These two deeds arose out of two separate purposes. The presentation will discuss those purposes and the potential use of each deed. The Ladybird deed has been around since about 2005, the year that the Texas Health & Human Services Commission adopted rules implementing the 2003 Medicaid Estate Recovery statute. Ladybird Deed is the slang name for an Enhanced Life Estate Deed or a Deed retaining a life estate with a power of appointment. A Grantor transfers property to a grantee retaining a life estate along with the power to sell the property retaining the proceeds of the sale thus cutting off grantee’s right to the property.2 The Transfer on Death Deed is statutory, passed by the 84th Legislature and was effective on September 1, 2015. In reviewing some of the estate planning legislation out of the 2015 legislature, there appears to be a mandate to provide a self-help means of transferring property at death. For example, Senate Bill 512 requires the creation of statutory Will forms while Senate Bill 462 ultimately enacted the Transfer on Death Deed that included a statutory form to transfer real property outside of probate. PURPOSES: The legislative history of SB 462 sets out the purpose for creating the statutory deed: Nearly all probate matters require legal counsel, and many beneficiaries are unable to afford legal counsel. As a result, otherwise inheritable real property is now passed through intestacy to pay for the decedent's estate. This problem can also lead to cloudy titles and complex unintended co-ownership structures that pose difficulties for owners, title companies, local governmental entities, and other real estate stakeholders. S.B. 462 creates a Transfer on Death Deed, which is a way for a real property owner to transfer real estate property while living, with or without a will. It will allow clean title to pass to the respective descendant or beneficiary without going through probate The Texas Legislature enacted portions of the Uniform Real Property Transfer on Death Act to set up a simple process for the non-probate transfer of real estate in Chapter 114 of the 1 SB 462, 84th Legislature. 2 Texas Estates Code §111.052. -1- Texas Land Title Institute Page 2 Texas Estates Code.3 Thus, the primary purpose of a ToDD is for estate planning as stated in the legislative history to provide an individual with a simple and inexpensive way of passing real property at death. Of course, using a ToDD to pass real property outside of the probate process could also avoid Medicaid Estate Recovery, as discussed below. While the Ladybird deed also passes assets outside of probate creating the same simple and inexpensive way of passing real property at death, the primary purpose of a Ladybird deed is to avoid Medicaid Estate Recovery. In order to understand the original purpose for executing a Ladybird deed, there needs to be a little background. MEDICAID ESTATE RECOVERY In 1987, the Texas Legislature buried an estate recovery law in a statute reorganizing a governmental department. The law allowed the State of Texas to place a lien on the home of a medicaid recipient in order to obtain reimbursement for state Medicaid expenditures made on behalf of the recipient. But, the law caused so much discord that it was repealed in the 1989 session as Senate Bill 1, effectively immediately. In 1993, in the Omnibus Budget Reconciliation Act, Congress mandated that states recover certain Medicaid expenditures made for a recipient over the age of 55. After the 1987 fiasco, the Texas Legislature resisted implementation of estate recovery for ten years. In 2003, though, an amendment authorizing estate recovery was attached to a 2003 state bill that reorganized a governmental department but this bill implemented an unsecured creditor statute to try to avoid the fire storm created by the 1987 statute. House Bill2292 was subsequently enacted into law, allowing the State of Texas to recover payments made on behalf of a person who receives Title XIX Medicaid benefits. The Medicaid federal laws are found in Title XIX of the Social Security Act. However, other Medicaid benefits are found in Title XX. Only Title XIX Medicaid is subject to Medicaid Estate Recovery. The 2003 state law effecting estate recovery was brief: "SECTION 2.17. Subchapter B, Chapter 531, Government Code, is amended by adding Section 531.077 to read as follows: Sec. 531.077. RECOVERY OF MEDICAL ASSISTANCE. (a) The commissioner shall ensure that the state Medicaid program implements 42 U.S.C. Section 1396p(b)(1). (b) The Medicaid account is an account in the general revenue fund. Any funds recovered by implementing 42 U.S.C. Section 1396p(b)(1) shall be deposited in the Medicaid account.