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The Lady Bird Deed

A Lady Bird Deed is a powerful estate planning tool that allows Texas property owners to transfer real estate to beneficiaries while avoiding probate. This unique deed also ensures that the original owner retains complete control over their property during their lifetime. Learn how a Lady Bird Deed works, its benefits, and whether it’s the right option for your estate planning needs.

What Is a Lady Bird Deed?

A Lady Bird Deed, also known as an Enhanced Life Estate Deed, allows a property owner to transfer real estate to beneficiaries while retaining:

  • Full ownership and control over the property during their lifetime.
  • The ability to sell, lease, mortgage, or change beneficiaries without needing consent.
  • The right to cancel or amend the deed at any time.

Unlike a traditional life estate deed, which limits the original owner’s rights, a Lady Bird Deed ensures that the beneficiary only receives ownership upon the owner’s death, avoiding probate court proceedings.

Why Is It Called a Lady Bird Deed?

The name originates from an example used by a legal scholar, who referenced a property transfer involving President Lyndon B. Johnson and his wife, Lady Bird Johnson. The term stuck and is now commonly used to describe this type of deed.

Benefits of a Lady Bird Deed in Texas

A Lady Bird Deed offers several advantages, making it a popular estate planning tool:

1. Avoids Probate

  • Propertyautomatically transfers to the named beneficiary without going through probate.
  • Eliminates legal fees and court delays associated with probate proceedings.

2. Retains Full Ownership Rights

  • Unlike a traditional life estate, the property owner retainsfull control over the property during their lifetime.
  • The owner can sell, refinance, or change beneficiaries at any time.

3. Preserves Medicaid Eligibility

  • Property transferred via a Lady Bird Deed is not subject to Medicaid Estate Recovery.
  • This allows individuals to receive Medicaid benefits without risking the loss of their home after passing.

4. Protects Against Creditor Claims

  • UnlikeTransfer-on-Death Deeds, a Lady Bird Deed prevents creditors from reclaiming the property after death.
  • Creditors cannot “claw back” the property to settle debts if the estate lacks sufficient funds.

5. Avoids Gift and Capital Gains Taxes

  • The transfer doesnot trigger gift tax since the property is not transferred until death.
  • Beneficiaries receive the property at a stepped-up tax basis, reducing potential capital gains taxes.

6. Cost-Effective Estate Planning

  • Unlike setting up a living trust, a Lady Bird Deed is a low-cost alternative for transferring property outside of probate.
  • No filing fees or ongoing maintenance costs.

7. Maintains Homestead Protections

  • The property owner can continue to claim homestead exemptions, reducing property taxes.
  • Homestead protections also prevent forced sale by most creditors.

How to Create a Lady Bird Deed in Texas

Creating a valid Lady Bird Deed requires careful drafting to ensure compliance with Texas property laws. Follow these steps:

Step 1: Prepare the Deed

The Lady Bird Deed must include:

  • The grantor’s name (property owner).
  • Thelegal description of the property.
  • Thedesignated beneficiary (remainderman) who will inherit the property.
  • A clause stating that the grantor retains full controland may revoke or change the deed at any time.

Step 2: Sign and Notarize the Deed

  • The property owner must sign the deed in the presence of a notary public.
  • Witnesses may be required depending on local recording rules.

Step 3: File the Deed with the County Clerk

Once the court approves the Muniment of Title:

  • Whilenot legally required, recording the deed in the county where the property is locatedhelps protect the beneficiary’s rights.

Lady Bird Deed vs. Traditional Life Estate Deed

Feature

Lady Bird Deed

Traditional Life Estate Deed

Avoids Probate?

✅ Yes

✅ Yes

Owner Can Sell or Mortgage Property?

✅ Yes

❌ No

Owner Can Change Beneficiaries?

✅ Yes

❌ No

Subject to Medicaid Recovery?

❌ No

✅ Yes

Creditor Protection?

✅ Yes

❌ No

Requires Court Proceedings?

❌ No

❌ No

Who Should Consider a Lady Bird Deed?

A Lady Bird Deed is an excellent option for Texas property owners who:

  • Want to avoid probate for their home.
  • Need to retain full control over their property while planning for the future.
  • Are concerned about Medicaid eligibility and estate recovery.
  • Prefer a low-cost alternative to a living trust.
  • Want to ensure their property passes directly to heirs with minimal legal complications.

Frequently Asked Questions About Lady Bird Deeds

Yes, it can be used for residential homes, rental properties, land, and commercial real estate in Texas.

 

No. The beneficiary has no legal ownership until the owner passes away.

 

Yes. The property owner can change or cancel the deed at any time.

s.

A Living Trust requires ongoing management and legal fees, while a Lady Bird Deed is a one-time, low-cost solution for transferring property outside of probate.

While not legally required, working with an experienced estate planning attorney ensures the deed is correctly drafted and legally enforceable.

Need Help Setting Up a Lady Bird Deed in Texas??

A Lady Bird Deed is a simple yet effective way to transfer property while avoiding probate and protecting assets. If you’re unsure whether this is the right estate planning tool for you, professional guidance can help ensure a smooth and legally sound process.

Schedule a Free Consultation Today!

Contact us to speak with an experienced estate planning attorney and find out how a Lady Bird Deed can benefit you.

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Disclaimer
This website is a general information resource curated from publicly available online sources. It is designed to help individuals understand the probate process in Texas and prepare for discussions with a licensed Texas attorney.
The content provided here does not constitute legal advice and should not be relied upon as a substitute for professional legal counsel. Probate laws are complex and vary based on individual circumstances. If you need legal advice or assistance with a probate matter, we strongly recommend consulting a qualified Texas probate attorney.

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