Lady Bird Deeds, Transfer on Death Deeds, and Keeping the Home Out of Probate
Texas offers two remarkable deed tools that let your real estate pass to a named beneficiary at death without probate, while you keep full control during your lifetime: the statutory Transfer on Death Deed (TODD) and the enhanced life estate deed, better known as the “Lady Bird” deed. Paired with beneficiary designations on financial accounts, they can form the backbone of a simple non-probate plan.
What each deed does
Both instruments leave you in complete control while you are alive: you can sell, mortgage, lease, or change your mind, and the beneficiary has no enforceable interest until you die. The TODD is a creature of statute with prescribed requirements and a built-in revocation procedure. The Lady Bird deed accomplishes a similar result through an enhanced life estate: you keep a life estate plus the retained power to sell or convey without the beneficiary’s consent.
The differences that matter
They are not interchangeable, and the differences show up at inconvenient times. Execution is one: a TODD generally must be signed by the owner personally and cannot be signed by an agent under a power of attorney, while a Lady Bird deed may be executed by an agent if the power of attorney authorizes it, which can be decisive once a parent has lost capacity. The mechanics of contingent beneficiaries and revocation differ between the two. And title companies treat the instruments differently in practice, which can affect how smoothly a later sale or refinance closes. Which deed fits depends on your facts, not on which form is easier to find online.
The Medicaid estate recovery angle
For many families, the cost of long-term elder care is now the single biggest threat to the estate. Texas’s Medicaid estate recovery program seeks reimbursement for certain long-term-care costs from a deceased recipient’s estate, but generally only from assets that pass through probate. Property that passes at death by TODD or Lady Bird deed generally passes outside probate, which is one reason these deeds appear in long-term-care planning. Timing matters enormously: transfers made too close to a Medicaid application can create penalty periods, so this planning belongs years in advance, not weeks.
When these deeds are not the answer
Property passing outside probate can still be reached by creditors of the estate for a period after death, so the deeds are not an asset-protection force field. They fit awkwardly with minor or spendthrift beneficiaries, complicated family situations, or a portfolio of multiple properties. In those cases a trust does the job better. And an uncoordinated deed can quietly contradict your will, sending the house one direction while the will assumes another.
Yes. Both tools leave you in full control during life. A sale simply defeats the future transfer; the beneficiary receives nothing because there is nothing left to transfer.
As to that property, yes. The deed controls, whatever the will says. That is exactly why the deed and the will need to be drafted as one coordinated plan.
Generally yes. The deed transfers your interest, not a clean slate; existing liens ride along with the property.
If keeping the home out of probate matters to your family, get the right deed and get it coordinated with the rest of your plan. Call or text 512.761.8479.
Get in Touch With Us Today
Fill out the contact form or call us at 512.761.8479 to schedule your free consultation.
