You own your home. It may be your most valuable asset – and the place where your family’s memories live.
Maybe you’ve heard that Lady Bird Deeds (also called an enhanced life estate deed) can help you transfer property to your loved ones while avoiding probate. And that’s true.
But here’s what we often see here in the Texas Hill Country:
People are told a Lady Bird Deed is a complete solution – when in reality, it’s just one piece of a much bigger estate planning puzzle.
Let’s walk through what Lady Bird Deeds actually do, how they compare to transfer on death deeds (TODDs), and what gaps you’ll want to address to truly protect your family.
What Is a Lady Bird Deed (Enhanced Life Estate Deed)?
A Lady Bird Deed is a way to split the ownership of a piece of property across a timeline. Here is how it works:
When you create a Lady Bird Deed, you divide the ownership between two parties:
- The Life Tenant (You): You retain full ownership of your real property during your lifetime. You have the right to live there, maintain it, pay taxes, AND sell it.
- The Remainderman (your Heir): This is the person (or people) who will automatically inherit the home the moment you pass away. They have an “ownership interest” now, but no right to live there until you are gone.
One reason people use Lady Bird Deeds is to avoid probate. Since the Deed designates what happens to the property at your death, the property is not subject to the probate process.
One of the biggest reasons people explore Lady Bird Deeds is to help avoid Medicaid estate recovery. In Texas, Medicaid may seek reimbursement after death for long-term care costs. If your home passes through probate, it could be subject to those claims. Because a Lady Bird Deed transfers property outside of probate, it may help shield your home from Medicaid estate recovery – while still allowing you to retain full ownership during your lifetime.
It’s important to understand, though:
- A Lady Bird Deed does not help you qualify for Medicaid
- It does not protect other assets like bank accounts
- It’s just one tool – not a full plan to “avoid Medicaid”
Transfer on Death Deeds (TODDs) in Texas
When you create a Transfer on Death Deed or TODD, you are creating a real estate version of a “Payable on Death” instruction. You are signing a document now stating who should get your property when you die but it has zero effect until you die.
A TODD is completely revocable so you can sell the property, mortgage it, tear it down without asking your beneficiary for permission because your beneficiary has no legal right to the property while you are alive.
A TODD transfers the property without a warranty of title. This means you are essentially saying to your beneficiary: “You get whatever interest I have in this house at the time of my death but I’m not making any legal promises about how clean the title is”. Since the beneficiary gets the property without a warranty, they are essentially accepting the house “as-is” regarding any debts attached to it.
A TODD allows the property to pass outside of probate but it is important to note that Texas law allows a creditor to “claw back” the property transferred via a TODD for up to two years after the owner’s death if the rest of the estate isn’t large enough to pay off the deceased person’s debts.
Because there is no warranty and the claw back period applies to TODDs, it can sometimes be trickier for the beneficiary to get title insurance if they decide to sell the house immediately after you pass.
Transfer on Death Deed (TODD)
- Recognized under Texas law
- Must comply with Texas Estates Code requirements
- Allows you to name alternate beneficiaries
- Does not transfer ownership until death
- May still be subject to certain creditor claims in a “claw back”
- Does not contain a warranty of title
- The law views a TODD as a testamentary act – similar to signing a Will – so a TODD cannot be signed by a power of attorney
Lady Bird Deed (Enhanced Life Estate Deed)
- Not specifically defined in Texas statute, but commonly used
- May offer stronger protection in certain Medicaid scenarios
- Can be more flexible in how ownership rights are structured
- Generally contains a warranty of title
- Cannot be used to satisfy unsecured debts (credit cards, medical bills)
- Treated like a standard real estate conveyance. As long as the Power of Attorney authorizes the agent to sell or transfer property, the agent can typically sign the Deed.
In both cases, you retain control during your lifetime and the property goes to your beneficiaries at your death – but neither replaces a full estate planning strategy.
Why a Deed Alone Isn’t Enough
This is where we see the biggest misconception.
Whether you use a Lady Bird Deed or a transfer on death deed, you’re only addressing one category of assets: your real property.
That leaves important gaps.
1. It Only Covers Real Property
Your home may avoid probate – but what about:
- Bank accounts
- Investments
- Vehicles
- Personal belongings
- Digital assets
Without additional planning, those assets may still go through probate.
2. No Protection During Incapacity
A deed only works at death.
If you become unable to manage your affairs due to illness or injury, your family may need court involvement unless you’ve put the right documents in place.
That’s where a power of attorney becomes essential—so someone you trust can step in and handle financial and legal decisions.
3. No Guidance for Your Family
A deed transfers ownership – but it doesn’t answer questions like:
- Should the home be kept or sold?
- How should proceeds be divided?
- What if siblings disagree?
Without clear instructions, even well-intentioned families can find themselves in conflict.
4. Outdated or Missing Beneficiaries
Life changes.
If a beneficiary passes away before you – or circumstances shift – your plan may not work as intended unless it’s reviewed and updated.
While TODDs allow for alternate beneficiaries, many deed-based plans still fall short without ongoing guidance.
A Better Approach: A Complete Estate Plan
Think of a Lady Bird Deed or a transfer on death deed as one tool in the toolbox – not the entire solution.
A comprehensive estate planning strategy in Texas typically includes:
- A will or trust
- Proper beneficiary designations
- A power of attorney (financial and medical)
- Healthcare directives
- Planning for incapacity
- Coordination of all assets—not just real property
Because the goal isn’t just to transfer assets – it’s to create clarity, ease, and peace of mind for your family.
Even those with limited or simple estates need a complete plan. Here is a free resource designed to help Texans pass on certain assets without going through probate.
The Next Step: Planning That Works When It Matters
If you’ve been told a deed is all you need – or if you’ve already created one – it may be time to take a closer look.
At Packsaddle Law, we help Texas families build plans that go beyond documents. Plans that work when your loved ones need them most.
Because around here, we believe your legacy should be more than just passing down property—it should be passing down clarity, care, and confidence.
Take advantage of our complimentary 15-minute introductory call to evaluate your needs..
This material was created by Packsaddle Law PLLC for educational and informational purposes only. It is not intended as tax, legal, or investment advice. For legal advice tailored to your specific situation, please consult a qualified attorney.