Lady Bird Deeds

A Lady Bird deed is a type of real estate deed. You use it to name who will inherit your home after you die. It is also known as an enhanced life estate deed. You keep full ownership and control of the property until you die. You can live on the property, sell it, or change or cancel the deed at any time. Lady Birds Deeds can protect your home from Medicaid estate recovery claims. Read Medicaid Estate Recovery | Texas Law Help for more information about estate recovery claims.

Estate planning tools like wills, Lady Bird deeds, and transfer on death deeds (TODDs) all allow you to say who inherits your property after you die. Lady Bird deeds and TODDs transfer property without having to go to probate court.

Transferring property listed in a will requires court approval. This requires a process called probate. Probate can take a lot of time and is often expensive. Lady Bird deeds and TODDs transfer properly quickly and are much less expensive than probating your will.

Both Lady Bird deeds and TODDs name who will inherit your real property after you die without your survivors having to go to probate court. With both, you keep full control of the property during your lifetime.

There are some key differences:

• Lady Bird deeds do not allow you to name more than one beneficiary. In a TODD, you can name alternate beneficiaries to inherit your property if the first beneficiary dies before you.
• Your agent acting under a power of attorney can sign Lady Bird deeds, but only you can sign a TODD.
• Lady Bird deeds may trigger a mortgage “due on sale” clause which would force the beneficiary to pay the mortgage immediately. TODDs do not trigger a “due on sale” clause. See Section 114.101(5) of the Texas Estates Code.
• If you use a TODD to transfer your property, the property is subject to estate creditor claims for two years after your death. It may be more difficult to sell the property during this time. See Section 114.106 of the Texas Estates Code.

Lady Bird deeds and life estate deeds name who will inherit your property after you die. However, there are some major differences.

With a standard life estate deed, the beneficiary has an interest in the property right away. You will no longer have complete control over the property. This means that:

• The beneficiary must approve all major decisions about the property.
• You cannot sell the property or take out a mortgage without the beneficiary’s consent.
• If you sell the property, the beneficiary will get a share of the proceeds.
• If the beneficiary dies, you have no control over who inherits the beneficiary's share of the house.

It is best to talk to a lawyer to learn which deed is the best one for you to use. Errors or mistakes in deeds can cause problems for you and your beneficiaries.