Estate Planning

FAQs About Estate Planning

What is a Lady Bird Deed?

by Rania Combs

A “Lady Bird Deed” is another name for an enhanced life estate deed, which allows a property owner to transfer property at death without the necessity of probate. People call it a “Lady Bird Deed” because, according to legend, President Lyndon B. Johnson conveyed some land to his wife using this type of deed, although there is no evidence that actually happened.

How Does It Work?

A Lady Bird Deed allows a property owner  to transfer a remainder interest in real estate to beneficiaries, but reserve a life estate (a right to occupy and use the property during his or her lifetime) and the right to sell or mortgage the property, or change the remainder beneficiaries, at any time. If the owner dies without revoking the deed, the property passes outright to the beneficiaries without probate.

How is an Lady Bird Deed Different Than a Traditional Life Estate Deed?

A property owner can transfer a remainder interest in the property to the beneficiaries, but retain a life estate using both a Lady Bird Deed and the traditional life estate deed. However, a traditional life estate deed does not reserve the right to sell or give away the property without the consent of the remainder beneficiaries. A Lady Bird Deed allows the property owner to reserve those rights.

Benefits of Lady Bird Deeds

Lady Bird Deeds offer many advantages over traditional life estate deeds. They

  1. Provide the property owner the flexibility to change the remainder beneficiaries at any time.
  2. Allow the property owner to sell or mortgage the property without the consent of the remainder beneficiaries.
  3. Protect the property from the creditors of the remainder beneficiaries during the property owner’s lifetime.
  4. Will not count as a gift for federal gift tax purposes. That’s because the owner of the property retains the right to take back the property during his or her lifetime.
  5. Preserve the  property owner’s ability to immediately qualify for Medicaid benefits. Transfers of assets within a “look-back” period may disqualify applicants from immediately qualifying for benefits. However, executing a Lady Bird Deed does not constitute a transfer for Medicaid purposes. That’s because the owner retains the right to sell the property or revoke the deed.

Beneficiaries Receive a Stepped-Up Basis

Because property will remain a part of the property owner’s estate, the cost basis of a property transferred using a Lady Bird Deed will receive a “step-up” in basis to the value of the property on the date of death. This may significantly reduce the amount of capital gains taxes due when the beneficiaries sell the property.

Potential Problems With Using Lady Bird Deeds to Transfer Property

I worked with a client whose mother had executed a Lady Bird Deed that transferred a remainder interest in her property to her children. The property still had a mortgage. So after their mother’s death, the children contacted the mortgage company, a large bank, to assume the mortgage.

Due on Sale Clause

Employees of the assumption department, located overseas, were not familiar with Lady Bird Deeds. Therefore, they suggested that the conveyance had triggered the mortgage’s due-on-sale clause. I was able to point them to the federal law that prohibits mortgage companies from enforcing due-on-sale clauses when the property is transferred to the borrower’s children or spouse. Eventually, someone from their legal department took over and the matter was resolved in my client’s favor.

I’m sharing this experience because if there is an outstanding mortgage on the property, and the beneficiary will be someone other than a spouse or child, there is a chance that the mortgage company will claim that the conveyance triggered a due-on-sale clause. Due-on-sale clauses allow the lender to declare the entire balance is due immediately if ownership of the property changes. Violation of the contract may be grounds for foreclosure.

Would it have mattered if  the beneficiary of the property had been someone other than a spouse or children? I don’t think so. Federal law prohibits lenders from exercising a due-on-sale clause when someone inherits a piece of property. The mortgage company may argue that there was a change in ownership when the homeowner signed the deed. However, since the homeowner can amend or even completely revoke a Lady Bird Deed, there is a good argument that the beneficiary’s interest does not vest until after the property owner dies. Nevertheless, to avoid any problems, you should check with your lender, and confirm in writing that they will not invoke the due-on-sale clause if you plan to to transfer the property to anyone other than a spouse or child.

Title Insurance

Additionally, some title companies, which are not familiar Lady Bird  Deeds, may be reluctant to insure a title during the property owner’s life without the remainder beneficiary joining in the transaction, or after the property owner’s death when the remainder beneficiaries wish to sell the property. However, not all title companies will refuse, especially as more people use these deeds.

Always talk to a lawyer about whether a Lady Bird Deed will accomplish your goals.

This article was originally posted on March 17, 2014 and updated on October 15, 2020.


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Comments

  1. Carol

    May 19, 2015 at 1:43pm

    What happens if the sole beneficiary in the ladybird deed (my client’s son) dies before the grantor (his mother) dies? Will my client then file a revocation and/or make a new ladybird deed to her remaining son? Or can she go ahead and provide in the ladybird deed that, if that son dies, her other son owns the property? There is no mortgage company.

    1. Rania Combs

      May 19, 2015 at 1:56pm

      It is important that the deed address what should happen to the property if the Grantee dies before the Grantor. If the deed creates a contingent remainder interest, the Grantee dies before the Grantor, and the Grantor does not take any action, then the disposition of the property will be governed by the Grantor’s Will. It is possible to draft the deed to specify that if the Grantee is not then living, full record title shall vest in a contingent beneficiary.

  2. Deborah Pack

    November 1, 2015 at 4:49pm

    Where can I get this deed?

    1. Rania Combs

      November 2, 2015 at 10:32pm

      You should contact your attorney for assistance.

  3. Samira

    November 11, 2015 at 3:24pm

    My mother executed an Enhanced Life Estate deed transferring her property to me. Due to her illness she hasn’t paid the property taxes for the last few years. Tax office postponed the taxes but the penalty and interest is adding up! What will happened to the taxes after her death? We both are living in the property and there is no mortgage.

    1. Rania Combs

      November 16, 2015 at 12:46pm

      Property conveyed by an enhanced life estate deed is typically passed subject to any outstanding liens against the property, as well as all valid restrictions, easements, and other encumbrances as they appear of record.

    2. Rania Combs

      December 31, 2015 at 7:19pm

      The conveyance is subject to any outstanding liens against the property, whether existing or to be created by Grantor in the future, and all valid restrictions, easements, and other encumbrances as they appear of record.

      1. Nancy Mathisen

        January 11, 2018 at 8:40am

        My father passed in July 2017 and deeded his property using the enhanced life estate deed. So this means the property was passed to his grandchildren. There were no taxes due for prior years and now at the end of 2017 and early 2018 at least one property owner is saying the estate must pay for the taxes. I have seen two items says 1. Estate must pay for taxes till his death and 2. Taxes are to be paid from the person who owns the property starting on Jan 1.

        The way I see this is this type of Deed removes all the land/property from any estate requirement to handle. Can you help with any advise?

        1. Rania Combs

          January 11, 2018 at 1:33pm

          Property that passes by Lady Bird Deed or Transfer does not become part of the probate estate. Rather, it transfers to the beneficiary or beneficiaries upon the death of the grantor.

  4. Martha

    February 19, 2016 at 1:08pm

    Can you name the trustees of a joint trust as the beneficiary of an enhanced life estate deed or does it have to be individuals?

    1. Rania Combs

      February 26, 2016 at 6:03pm

      Yes. It is possible to name the trustees of a joint trust as the beneficiary of an enhanced life estate deed.

  5. Tracee

    March 25, 2016 at 10:25am

    Can a Lady Bird Deed be done after the person is on Medicaid?

    1. Rania Combs

      June 16, 2016 at 8:04am

      Yes.

  6. jason

    April 7, 2016 at 3:23pm

    If the house with a lady bird deed is sold and the grantor is still living are the proceeds subject to Medicaid taking them away? Thank you so much.

    1. Rania Combs

      June 16, 2016 at 9:06am

      Please don’t take any action without consulting an elder law attorney about the ramifications of selling a home subject to the Lady Bird deed. Under current rules, Medicaid can only recover assets included in the deceased individual’s probate estate. The Lady Bird deed is a means of transferring the home to it’s intended beneficiary outside of probate.

  7. Christy Furr

    October 14, 2016 at 4:16pm

    Can you have a lady bird deed on a property that contains a mortgage? Do you need permission from the mortgage company to sign a ladybird deed? I recently got some legal advice and was told that putting a ladybird deed on a property with a mortgage could trigger the “due on sale” clause.

    1. Rania Combs

      November 30, 2016 at 4:28pm

      Federal law prohibits mortgage companies from enforcing due-on-sale clauses when property is transferred to the borrowers children or spouse. It also prohibits the lender from exercising the due-on-sale clause when someone inherits a piece of property. The mortgage company may argue that the deed caused a change in ownership when it was signed. However, since a Lady Bird Deed is completely revocable and modifiable, it can be argued that the beneficiary’s interest would not vest until after the homeowner dies.

      Nevertheless, to avoid any problems, you should check with your lender, and confirm in writing that they will not invoke the due-on-sale clause if you plan to to transfer the property to anyone other than a spouse or child.

  8. Ann

    November 8, 2016 at 4:59pm

    What effect will a Lady Bird Deed have if you already have a Last Will and Testament?

    1. Rania Combs

      November 30, 2016 at 4:04pm

      Property passed by Lady Bird Deed does not become part of the probate estate.

  9. David Beck

    November 14, 2016 at 12:00pm

    Hi, first of all this is a great place. I have learned so much. If the Lady Bird Deed is used, can the beneficiaries to a certain property be two people, even though the Will names eight beneficiaries? Is the Lady Bird Deed a unique instrument to remove that property from the rest of the estate? Thanks so much.

    1. Rania Combs

      November 30, 2016 at 3:58pm

      A Lady Bird Deed can transfer the property to more than one beneficiary. Property transferred by Lady Bird Deed will not become part of the probate estate.

  10. Stacy

    February 7, 2017 at 8:03pm

    Hi Rania….This site is so incredibly helpful! My first question is, do the beneficiaries have to reside at the property along with the Grantor when using a Lady Bird Deed or a Traditional Life Estate Deed? Secondly, can the property be granted to a beneficiary that is 17 years old via a trust?

    1. Rania Combs

      February 17, 2017 at 1:40pm

      I’m glad you find this site helpful. Remainder beneficiaries do not need to reside on the property with the property owner. It is possible to name a trust as a beneficiary of the property.

  11. Marvin Beechly

    April 18, 2017 at 1:41pm

    Would property in a living trust accomplish avoidance of Medicaid Estate Recovery?

    1. Rania Combs

      April 21, 2017 at 9:50am

      Putting a home in a trust avoids estate recovery by avoiding probate; however, it also causes he home to be a countable asset, which may prevent an applicant from qualifying for Medicaid.

  12. Gilbert

    May 5, 2017 at 1:12pm

    Does a Grantor have to live for a certain period of years before a ladybird deed becomes valid?

    1. Rania Combs

      May 9, 2017 at 2:42pm

      No.

  13. Joanne fordyce

    May 30, 2017 at 1:31pm

    We have one son and our home is paid for, no mortgage. We would like our son to have our home and not have to do probate. Is lady bird a better solution than a will? We are both in our 70s, retired military. I really don’t understand the Medicaid situation with an estate.

    1. Rania Combs

      May 30, 2017 at 3:43pm

      You should have a Will regardless of whether you have a lady bird deed. A lady bird deed will transfer real property outside of probate.

  14. Lorena Rodriguez

    June 28, 2017 at 10:36pm

    Great information! Thank You!!

  15. Mary Ann Gonzales

    July 14, 2017 at 7:21pm

    I have a general question about lady bird life estates…my husband and I own a second home ( not our primary residence) and we would like to deed that property to our six children, reserving life estates for both of us….can we use one deed form for both of us or should we each do our own deed form for each of our 1/2 interest? This is a great website. Thanks so much

    1. Rania Combs

      July 17, 2017 at 1:38pm

      You’re welcome! I’m glad you find my website helpful.

      An attorney can prepare one transfer on death deed that conveys a deceased spouse’s interest in the property to a surviving spouse with the remainder passing to children at the death of the surviving spouse.

  16. Rick

    July 17, 2017 at 2:39am

    If the home owner becomes unable to make his own decisions and has a ladybird deed with two beneficiaries and one beneficiary does not want to accept the property, can that beneficiary just decline the transfer? Thank you for all the info you have shared!

    1. Rania Combs

      July 17, 2017 at 1:31pm

      There is no law requiring a person to accept an inheritance. If someone doesn’t want the gift, it is possible to disclaim it. The following article explains: Do I Have To Accept An Inheritance?

  17. Sara Beth

    August 10, 2017 at 12:35pm

    Hello! This has been so helpful. I wonder if there is a limited amount of property (dollar value) that can be transferred by use of a lady bird deed?

    1. Rania Combs

      August 24, 2017 at 5:23pm

      No. Property of any value can be transferred by use of a lady bird deed.

  18. Donna

    August 20, 2017 at 6:19pm

    I love your site. How does the Texas Estate Code affect the Lady Bird Deed?

    1. Rania Combs

      August 24, 2017 at 5:19pm

      Thanks, Donna.

      I assume you are wondering whether a Lady Bird Deed can still be used in light of the transfer on death deed statute. If so, the answer is that it can. Attorneys still use Lady Bird Deeds in addition to transfer on death deeds

  19. Kim

    August 24, 2017 at 2:12pm

    My mother died and ladybird deeded her house to myself and brother problem is my brother is dying can he ladybird his half to me

    1. Rania Combs

      August 24, 2017 at 5:04pm

      The property interest vests in a beneficiary upon the death of the grantor. After that the grantee can convey his or her interest in property through a Lady Bird Deed.

  20. Reba Davis Smith

    September 11, 2017 at 2:23pm

    My dad signed a Lady Bird Will naming my brother as beneficiary. My dad died April 13, 2014 and my brother died two weeks ago. My mother is in a nursing home in the end stages of Alzheimer’s. I am getting a Guardianship to take care of her since my brother is deceased. What happens to the Lady Bird Will now that the grantor and grantee are deceased? Does Medicaid recognize a Lady Bird Will?

    1. Rania Combs

      September 12, 2017 at 12:21pm

      I’m not sure what you mean by “Lady Bird Will.” A Lady Bird Deed allows a homeowner to transfer a home to a beneficiary. When the homeowner dies, the property vests in the beneficiary. If the beneficiary dies thereafter, the property passes according to the terms of the beneficiary’s Will or through the intestacy statutes if the beneficiary does not have a Will and has not also executed a transfer on death or Lady Bird Deed.

  21. Cara

    September 11, 2017 at 2:53pm

    So there was a Lady Bird Deed filed the same day a Revocable Trust was formed. The Grantee of the Lady Bird Deed is the same as the Trustee of the Revocable Trust. 1. Why would these 2 things have to be filed? It sounds to me like they do the same thing. and 2. Does the Grantee/Trustee have more rights to all of the property under the Deed? The Trust says to split the property but the Deed leaves it all to the Grantee.

    1. Rania Combs

      September 14, 2017 at 3:48pm

      The Lady Bird Deed conveys the property to the Trustee of the Revocable Trust when the grantor dies.

  22. James

    December 28, 2017 at 1:25pm

    How long does it take for a Texas Lady Bird or Life Estate deed to be completed and ready to sign. I gave all the information to a local attorney about a month ago and haven’t heard anything back yet.

    1. Rania Combs

      December 31, 2017 at 2:32pm

      I generally can prepare the deed within a few days so long as I have all the appropriate information. I recommend that you follow up with your attorney as it may have fallen through the cracks.

  23. Dereck Borders

    January 5, 2018 at 10:01am

    I read thru the comments and this site is wonderful. Thanks for establishing it. I have a question. My mother completed and filed a lady bird deed on her farm and home to me about 2 months ago completely by herself. All I did was find her a firm and drop off the deed copies for her. At that time she was completely independent driving herself anywhere she wanted to go, living alone, holding a steady almost full time job and managing her own finances. She became suddenly ill, very weakened and is completing a hospital stay now and will enter a rehab facility with the expectation that at some point she will recover. My question is if she doesn’t or has to stay an extended amount of time can Medicaid come back and seize her land and home to pay for her care. I know there is a “look back” period of 5 years but opinion of non legal educated people we have spoken with seem to think we would be ok due to her pre illness independence. In short we did not rush out and complete the lady bird deed because we knew we would be admitting mom to a nursing home shortly to try to keep the family farm. Your educated expert thoughts please?

    1. Rania Combs

      January 11, 2018 at 2:08pm

      The “look-back” penalty does not apply to valid lady bird deeds because the person transferring the property retains a life estate, and the right to sell the property or completely revoke the transfer. Please note, however, that laws are always subject to change.

  24. Janice Jones

    February 13, 2018 at 2:59pm

    Mom has made a will leaving me in control of everything. Now I am learning if she needs help or needs Medicaid she must sign her home away to them. I was told to check out the Lady Bird Deed. Is it possible to change a will or can the Lady bird deed be also part of the will? Sorry I am confused on what to do…

    1. Rania Combs

      February 23, 2018 at 7:08pm

      Under current rules, Medicaid can only recover assets included in the deceased individual’s probate estate. The Lady Bird deed is a means of transferring the home to it’s intended beneficiary outside of probate.

  25. Barbara

    April 7, 2018 at 10:22am

    I live in NYState. Three years ago I signed my two properties to my three children keeping a life estate on both. They said there is a six year time period before this is official.
    How is this different from the ladybird deed?

    1. Rania Combs

      April 9, 2018 at 10:09am

      Please seek advice from an attorney in New York. I am only licensed to practice law in Texas.

  26. JAMES F EADS

    August 8, 2018 at 12:35pm

    Do you have to pay gift tax on a lady bird deed

    1. Rania Combs

      August 10, 2018 at 5:48pm

      There is no gift tax due when a lady bird deed is created.

  27. Joanne M Missry

    August 16, 2018 at 1:28pm

    Thank you so much for letting us draw so much valuable info from your wealth of knowledge! I would like to know that if a Lady Bird Deed lists 2 beneficiaries as JTWROS will the property get a step up in basis upon death of the homeowner.

    1. Rania Combs

      August 28, 2018 at 5:40pm

      When the transfer is deemed to have occurred at the donor’s death, the recipient of the property receives a step-up in basis to the value of the property on the date of death.

  28. Ellen

    September 26, 2018 at 6:03pm

    Can you transfer interest in other real property, such as rural acreage, through a Lady Bird deed or does it have to be a home?

    1. Rania Combs

      September 27, 2018 at 11:58am

      It is possible to transfer any real property.

  29. Brenda Campbell

    December 11, 2018 at 11:52am

    My parents have a Lady Bird deed because my mom has Alzheimer’s and is in a nursing facility, and is on Medicaid. My question is my brother would like for my dad to go ahead and deed the property over to us now. Will that do away with the Lady Bird deed and cause Medicaid to go away, since the LB deed is what was protecting the land, since Medicaid has to be reapplied to every year and a specific question is of you have transferred any assists in the past 5 years

    1. Rania Combs

      December 11, 2018 at 12:14pm

      It is important that no action be taken before consulting with a certified elder lawyer about the ramifications of such action.

  30. Jan Rutherford

    December 31, 2018 at 12:31pm

    Is there a way to trace to see if a property has Lady Bird deed. I passed on all the paper work to my dad for the lady bird several years ago, yet in his papers I see no copy of a deed.

    1. Rania Combs

      January 2, 2019 at 5:12pm

      Deeds are recorded in the county clerk’s office where the property is located. Some counties allow the public to search deed records online.

  31. Susan L Greenhaw

    December 31, 2018 at 1:34pm

    Thank you for allowing us to ask you questions regarding Ladybird Deeds. My Mother had a Ladybird Deed drawn up in 2014 but it never was signed. Do we need to have a new one drawn up since the unsigned one is from 2014? Also, I think I understand that a home in the Ladybird Deed will still count as the Grantor’s assests in the “look back” period for Medicaid application, is that correct?

    1. Rania Combs

      January 2, 2019 at 5:10pm

      Hi Susan. I recommend that you have the deed updated before you sign it to reflect the current date. Executing a Lady Birddeed is not considered a transfer for Medicaid purposes because the homeowner retains the right to sell the property or revoke the deed.

  32. Crytal

    March 26, 2019 at 1:24pm

    I’m reading up on the Lady Bird Deed to assist my parents, and at their request. Everything that I have read seems too good, and too easy, to be true. What, if any are the downsides or caveats to this deed?

    1. Rania Combs

      April 24, 2019 at 5:03pm

      Please refer to the “Potential Problems” section of the post.

  33. Elena Rivera

    June 21, 2019 at 9:52am

    Thank you for generously sharing your expertise. Just to be clear: With a Lady Bird Deed in Texas, I can sell or mortgage my home without involving the remaindermen/women, correct? I have read elsewhere that if I sell, the remaindermen gets a share based on my age. And that if I want to mortgage it (it’s paid off right now), I would need his approval.

    1. Rania Combs

      July 18, 2019 at 11:20am

      The grantor of a Lady Bird Deed reserves the right to sell the property without the joinder of any remainder beneficiaries; however, colleagues have shared stories of title companies who have refused to insure the sale without the joinder of the remainder beneficiaries.

  34. Elena Rivera

    June 21, 2019 at 9:55am

    I have named my son on the Lady Bird Deed. I read elsewhere that since he has an interest in the home, his legal problems could become mine. For example, if he is sued or owes taxes, a lien could be filed against my home. Also, it states that my son’s interest in the home would not be protected if he were to file bankruptcy. Is any of this true under a Lady Bird Deed in Texas?

    1. Rania Combs

      July 18, 2019 at 11:11am

      Lady Bird Deeds protect the property from the creditors of the remainder beneficiaries during the homeowner’s lifetime.

  35. Katie Spillers

    September 24, 2019 at 5:40pm

    We have a revocable living trust; my husband is in the nursing home.The cost is draining my finances. Can I have a Lady Bird Deed made even if we have a mortgage on our home and is the trust a problem. I would like to get him on Medicaid. We have several pieces of property. Do I need to have a Lady Bird Deed drawn up for them?

    1. Rania Combs

      October 14, 2019 at 10:52am

      A homestead, if not held in a revocable trust, is an excluded resource. A Lady Bird Deed can be used to transfer the property outside of probate so as to avoid medicaid reimbursement.

      Before taking any action, I recommend that you consult with a certified elder lawyer who can review your unique circumstances and advise you on the best course of action.

  36. Randy A Neumeyer

    April 1, 2020 at 3:00pm

    Is there a simple form online, without paying an attorney, to rescind, revoke or cancel a Lady Bird deed.? I had one with my wife on it. We are divorcing and I want to revoke it without having to pay $300.
    thanks

    1. Rania Combs

      April 7, 2020 at 6:18pm

      The Texas Access to Justice Foundation’s website, texaslawhelp.org, has a guided transfer on death deed cancellation form, which you can access by clicking on the link.

  37. Jason

    May 13, 2020 at 2:07pm

    There is a lady bird deed in the hands of 2 of my children. I want to revoke this and seek my home and want all proceeds to go to myself. How can this be done

    1. Rania Combs

      May 14, 2020 at 12:53pm

      Typically, a Lady Bird Deed reserves in the Grantor the full power and authority, without the consent or joinder of Grantee or any other person, to sell, convey, mortgage, lease, and otherwise dispose of the property in fee simple with or without consideration, to any person or persons whatsoever, and to keep absolutely any and all proceeds derived from the sale.

  38. Patricia Martin

    June 15, 2020 at 4:55am

    Hello, my name is Patricia.
    Thru a divorce decree my parents left 2 properties to my sister and I in a life estate. In 1983 that same month in August I turned 18.
    My mother had my sister and I sign over our share. On the second property that she resided in we didnt sign. Now mother has passed away from dementia. My brother wants to steal our property. Over 20 years later he took my mother and had a will made up giving him everything. I have all the original documents that clearly state my sister and I are the remainderman. Can you help me? I believe he did a quick claim title . Im really not sure.

    1. Rania Combs

      June 15, 2020 at 10:47am

      Based on the facts you’ve described, I recommend that you engage a lawyer in your community who can sit with you in person and advise you on the best course of action. The Texas Bar Lawyer Information Referral Service can provide a referral. They can be reached at: 800-252-9690.

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