Texas Lady Bird Deed vs Transfer-on-Death Deed (TODD)
A Complete Guide for North Texas Homeowners
Texas Lady Bird Deeds and Transfer-on-Death Deeds (TODDs) are two very popular probate-avoidance tools for Texas homeowners.
Both allow your property to pass outside the probate court system, but they function differently and carry different benefits.
This guide explains the differences, when to use each, and how they fit within a comprehensive estate plan.
What Is a Lady Bird Deed?
A Texas Lady Bird Deed (also called an Enhanced Life Estate Deed) is a special type of deed used that transfers your home automatically upon death while allowing you to retain full control during your lifetime. Texas is one of only a handful of states that allows for this unique deed type, in addition to the statutory Transfer-on-death-death (which is more common in other jurisdictions).
Key Features of a Texas Lady Bird Deed
A Texas Lady Bird Deed allows you to:
– Sell, mortgage, or refinance without beneficiary permission
– Qualify for certain Medicaid protections
– Avoid probate entirely
– Maintain full ownership rights during life
Once filed, you don’t really have to change your day to day at all – it’s still “your house”, but succession is all set to pass to the named beneficiaries should you pass away (and it won’t have to pit stop in Probate Court like it would with a Will alone).
What Is a Transfer-on-Death Deed (TODD)?
A TODD is a statutory deed created by the Texas legislature that allows your property to pass to beneficiaries upon death without probate. It became available in Texas in 2015 under Texas Estates Code.
While not every state allows for a Lady Bird Deed, most have adopted some form of TODD legislation by now. This is a crucial tool to allow simple estates to bypass the Probate system with very minimal setup costs.
Key Features of a TODD
A TODD:
– Transfers the property automatically at death
– Must meet strict statutory requirements
– Does not require beneficiary consent
– May carry more risk in Medicaid situations
Lady Bird Deed vs TODD — The Major Differences
While both deeds avoid probate, here are the key differences homeowners need to know.
Control During Lifetime
Both a Texas Lady Bird Deed and Texas TODD allow you to keep full control of property while you’re alive, but Lady Bird Deeds are often viewed as slightly more flexible due to some of the stricter requirements around execution of TODDs. There’s not a large distinction to draw here though, both will work to keep you in control of your property during your lifetime without much difference between the two.
Medicaid Considerations
Lady Bird Deed: Generally treated as a non-countable transfer for Medicaid and avoids MERP (Medicaid Estate Recovery Program)
TODD: May be subject to MERP depending on timing and circumstances
If you have any potential Medicaid implications in your long term care needs, using a Lady Bird Deed will likely be the better option for you between the two.
Ease of Execution
Lady Bird Deed: More flexible, can be exercised by a power of attorney acting on your behalf (with explicit authority to do so)
TODD: Must follow statutory form and requirements exactly and can only be signed by you
When pre-planning, execution will feel very similar between the two (sign and record the deed), but a Lady Bird Deed can have some key additional flexibilities offered when doing emergency planning.
Revocability
Both a Texas Lady Bird Deed and a Texas TODD can be revoked or changed easily, either by filing a revocation document, or by filing a new deed with different terms (which automatically cancels the prior one).
Enhanced Life Estate Deed vs. Life Estate Deed
A word of caution: do not mix up a Texas Lady Bird Deed (Enhanced Life Estate Deed) with a Life Estate Deed. If you unintentionally execute a Life Estate Deed instead of an Enhanced Life Estate Deed, the property is no longer yours and may not be freely amended or revoked on your own – you’ve made yourself a tenant in the property only. Working with an experienced estate planning attorney to do this for you properly is key to avoid this sort of nightmare.
Which Deed Is Better for You?
In most cases, North Texas homeowners choose a Texas Lady Bird Deed because it offers more flexibility and Medicaid advantages. TODDs are useful for simple situations or when flexibility is not needed.
When to Use a Lady Bird Deed
– You want complete control during life
– You want to avoid probate
– Medicaid planning is a concern
– You want flexibility with refinancing or selling
When to Use a TODD
– You want a simple probate-avoidance tool
– You do not expect to apply for Medicaid
– You want to use a statutory form
How These Deeds Fit Into a Comprehensive Plan
While both deeds avoid probate, they do **not**:
– Provide protections for children or detail deep contingencies
– Offer staged inheritances or legacy optimization
– Provide divorce or creditor protection
– Manage assets during incapacity
For full protection, consider a Trust. Learn more in the Texas Wills & Trusts Guide.
Deed Planning for Families With Children
If you have minor children, relying solely on a deed is never enough. A Trust-based plan ensures your home—and other assets—are protected. Even with adult children, a Trust-based plan can help protect the legacy you’re leaving behind for generations to come, or protect against life’s surprises that inevitably pop up between the time you execute a deed and when the transfer actually occurs (after your passing). Remember, probate avoidance is the low hanging fruit, not the end game to estate planning, and a beneficiary style deed only captures that low hanging fruit.
Explore child protection strategies at Protecting Children in Inheritance.
Transferring Property Into a Trust
There’s a common misconception when planning an estate that you must choose between a Lady Bird Deed, TODD, Trust, OR a Will – that’s simply not true. Many families combine all strategies to form a comprehensive plan and maximize protection.
Modern North Texas families will utilize a Trust to detail their legacy wishes and safeguard assets for their children, a Will to nominate guardianship and act as a safety net, AND a Texas Lady Bird Deed or TODD to move property into the name of their Trust after their passing. This keeps property in your name and control during your lifetime, and allows your Trust to shine after your passing with all contingencies and fine details covered for legacy management.
To compare Wills and Trusts directly, visit Revocable Living Trust vs Will in Texas.
Estate Planning Packages That Include Deeds
NTX Estate Law includes deed preparation in our flat-fee estate planning packages:
– Essentials Plan: Will + 1 Texas Lady Bird Deed or TODD
– Foundational Trust Plan: Trust + 1 deed
– Legacy Vault Plan: Trust + 2 deeds
Deeds for additional properties are available as well, as is coordination of deed work in other jurisdictions outside of Texas as well.
Learn more at Our Plans.
Schedule Your Discovery Call
If you want help choosing between a Texas Lady Bird Deed or a TODD, or need a comprehensive estate plan, Schedule a Discovery Call today.