The "Lady Bird Deed": A Texas Estate Planning Secret
For many Texans, their home is their biggest asset. They want to make sure it goes to their children without the hassle/cost of probate or the risk of the government taking it to pay for nursing home care. Enter the Enhanced Life Estate Deed, affectionately known as the "Lady Bird Deed."
What is a Lady Bird Deed?
This special deed allows you to transfer your property to a beneficiary (like your kids) but retain a "Life Estate" coupled with the power to sell, mortgage, or revoke the deed at any time.
In simple terms: "I own this house until I die. I can sell it or change my mind. But if I still own it when I die, it instantly belongs to my kids." This transfer happens automatically outside of probate, purely by operation of law.
Key Benefits
- Avoids Probate: The transfer happens automatically at the moment of death. No court order needed.
- Medicaid Protection (MERP): In Texas, the state can typically claim reimbursement for Medicaid costs (like nursing home bills) from your probate estate. Since a Lady Bird Deed transfers the home outside of probate, it is currently protected from this recovery claim.
- Retain Control: Unlike a traditional "Life Estate" where you potential need the kids' permission to sell the house, a Lady Bird Deed lets you do whatever you want with the property while you are alive.
Lady Bird Deed vs. Transfer on Death Deed (TODD)
Texas also has a statutory form called the Transfer on Death Deed (TODD)(Texas Estates Code § 114.001). While similar, the Lady Bird Deed is often superior for two reasons:
| Feature | Lady Bird Deed | TODD |
|---|---|---|
| Basis in Law | Common Law (Flexible) | Statutory (Rigid) |
| Warranty of Title | Can include Warranty | No Warranty allowed |
| Power of Attorney | Can be signed by Agent | Agent CANNOT sign* |
*This is critical. If mom has dementia and you have POA, you CAN sign a Lady Bird Deed for her, but generally NOT a TODD.
Potential Pitfalls
While powerful, Lady Bird Deeds can cause issues with title companies. Because the grantor (you) can revoke it at any time, some title insurers are hesitant to insure a sale from the heirs immediately after death without a "non-revocation" affidavit or a waiting period. It is crucial to have the deed drafted by an attorney who understands title insurance requirements.
Frequently Asked Questions
Does a Lady Bird Deed affect my Social Security?
No. It is not considered a transfer of assets for penalty purposes because you retain full control.
Can I sell the house if I change my mind?
Yes. You can sell, gift, or mortgage the home without your children's permission.
Legal Disclaimer
The information provided in this article is for general informational and educational purposes only and should not be construed as legal advice. Every legal situation is unique, and this content may not apply to your specific circumstances. For personalized legal guidance, please contact Ringo Legal to schedule a consultation with an experienced attorney who can evaluate your case.