Legal FAQs
What is a Lady Bird deed?
A Lady Bird deed is a type of real estate deed. It says who will inherit the property when the owner dies. It is known as an "enhanced" life estate deed, where the owner retains full ownership and control of property while they are alive. They can live on the property, sell it, and change or revoke the deed at any time.
Lady bird deeds may sometimes be used to protect real property from Medicaid estate recovery claims.
See the article Lady Bird Deeds by the legal publisher Nolo to learn more.
How is a Lady Bird deed different from a will?
Estate planning tools like wills and Lady Bird deeds allow the owner to say who inherits their property after their death. Special documents like Lady Bird deeds and transfer-on-death deeds (TODDs) can transfer real property outside of the probate process.
Transferring property listed in the will requires court approval and is done through a process called probate. Probate can be lengthy and expensive. Lady Bird deeds and TODDs can make real estate transfers quicker and more efficient, but they may not be the right choice in every situation.
How is a Lady Bird deed different from a TODD?
Both Lady Bird deeds and TODDs designate a beneficiary who will inherit the property after the owner dies. With both, the owner retains full control of the property during their lifetime.
We note a few key differences, but other differences may also be important.
| Lady Bird Deed | Transfer-on-Death Deed |
|---|---|
| Governed by common law. | Governed by Chapter 114 of the Texas Estates Code (Texas Real Property Transfer on Death Act). |
| Cannot include alternate beneficiaries. | May include alternate beneficiaries who will inherit the property if the primary beneficiary dies before or at the same time as the owner. |
| May sometimes trigger a mortgage "due on sale" clause when the owner dies. | Does not trigger a mortgage "due on sale" clause. See Section 114.101(5) of the Estates Code. |
| May be created by a person who has the power of attorney over the owner (as long as the power of attorney document authorizes such transfers). | May only be created by a competent property owner. Cannot be created through the use of power of attorney. See Section 114.054 of the Estates Code. |
| May be drafted as a general warranty deed, a special warranty deed, or a deed with no warranty. | Cannot come with a warranty of title. See Section 114.103(d) of the Estates Code. |
| May be difficult to sell the property without the beneficiary’s approval. | For two years after the owner’s death, the property is subject to estate creditor claims (in case the estate cannot pay its debts). It may be more difficult to sell the property during this time period. See Section 114.106 of the Estates Code. |
How is a Lady Bird deed different from a life estate deed?
Both Lady Bird deeds and life estate deeds designate a beneficiary who will inherit the property after the owner dies. However, there are some major differences.
With a standard life estate deed, the beneficiary receives an interest in the property right away. This usually means that:
- the beneficiary must approve all important decisions regarding the property;
- the owner cannot sell the property or take out a mortgage without the beneficiary’s consent;
- if the property is sold, the proceeds will be shared between the owner and the beneficiary;
- if the beneficiary dies, the owner has no control over who inherits the beneficiary’s interest;
- if the beneficiary gets a divorce, the court may award a part or all of beneficiary’s interest to their ex-spouse; and
- if the beneficiary doesn’t pay their debts, the creditors may place a lien on the property.
While "enhanced" life estate deeds can be generally be changed or revoked at any time, standard life estate deeds are mostly permanent.
Where can I find a form for a Lady Bird deed?
To protect your legal rights, we strongly recommend that you talk to a lawyer before creating or signing a new deed. Errors or mistakes can have significant consequences. See our Legal Help page if you need help finding a lawyer.
There is no official form for a Lady Bird deed, but legal publications have sample language that can be used to create one. See Form 5-2 from Texas Estate Planning and Form 2:15 from Davis's Texas Estate Planning Forms for a template. For more information, visit our Transfer Property After Death page.
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Last updated July 23, 2024
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