Estate Planning: Lady Bird Deed

The term "Lady Bird Deed" is a nickname given to the Enhanced Life Estate Deed which is used to convey property to your heirs outside of probate. The nickname "Lady Bird" was given to the deed after President Lyndon B. Johnson allegedly used this type of deed to convey some of his real property to his wife Lady Bird. So why would President Johnson use this type of deed?

Lady Bird Deed Features
The Lady Bird Deed is a variation of the quitclaim deed with certain "enhanced" features. These features include:
(1) allowing the property owner to retain his homestead creditor and tax exemptions;
(2) keeping the property owner's home exempt from Medicaid claims during his lifetime;
(3) allowing the property owner to pass the property to his heirs outside of probate upon death free of Medicaid claims and liens; and
(4) allowing the property owner to sell or otherwise dispose of the property without the consent of the beneficiaries.

It is a specially designed instrument that is only available in certain states. Like the traditional Life Estate Deed there is often no capital gains tax if the property is sold shortly after your death. It goes beyond a life estate deed, because not only does the property owner get to live there for life, but the owner also reserves the right to sell or otherwise dispose of the property without the consent of the heirs. See also my articles on the Florida Enhanced Life Estate Deed, Texas Enhanced Life Estate Deed, Ohio Enhanced Life Estate Deed, and Kansas Enhanced Life Estate Deed.

Texas Enhanced Life Estate Deed

Texas is one of several states that recognizes the Enhanced Life Estate Deed (a/k/a Ladybird Deed) as a means of transferring property to your heirs when you pass away.  In simple terms, the Enhanced Life Estate Deed changes the way the property is owned from the usual form of ownership (like the General Warranty Deed or Quitclaim Deed) where the house or property is disposed of by the courts using the probate process into an ownership that transfers the property directly to a named beneficiary when the current owner passes away. 

Unlike Beneficiary Deeds in other states, the Texas Enhanced Life Estate Deed does not give the beneficiary any rights in the property while the current owner is alive.  This means the current property owner can sell the property at any time without the beneficiary's consent and the beneficiary's creditors cannot attach liens to the property while the owner is alive.  There is no creation of a "Life Estate," nor is a Trust required.

Avoiding Probate
Instead of probate, the beneficiary need merely file the death certificate in the local county records for the property to be transferred.

See also my articles on the Florida Enhanced Life Estate Deed, Ohio Enhanced Life Estate Deed, and Kansas Enhanced Life Estate Deed.