Quick Answer
Texas law recognizes two non-probate transfer mechanisms for real estate: Transfer on Death Deeds (TODDs), which are statutory, and Lady Bird deeds (enhanced life estate deeds), which are recognized under Texas common law. Both allow real property to transfer to a named beneficiary upon the owner's death without going through probate. Each has different requirements, advantages, and title implications.
Educational Information
This article provides general educational information about Texas estate planning deeds. It does not constitute legal advice. Estate planning involves complex legal decisions with significant tax and property implications. Consult a qualified Texas estate planning attorney for advice specific to your situation.
Texas Lady Bird Deeds (Enhanced Life Estate Deeds)
A Lady Bird deed, also called an enhanced life estate deed, allows the property owner (grantor) to retain a life estate with the power to sell, mortgage, or otherwise deal with the property during their lifetime without the consent of the remainder beneficiaries. At death, the property automatically passes to the named remainder beneficiaries without probate. Texas is one of the few states that recognizes this type of deed.
Transfer on Death Deeds (TODDs)
Texas adopted the Transfer on Death Deed (TODD) statute (Texas Estates Code, Chapter 114) in 2015. A TODD allows a property owner to designate one or more beneficiaries who will receive the property upon the owner's death. The deed is recorded during the owner's lifetime but does not transfer any interest until death. The owner retains full control over the property during their lifetime, including the right to revoke the TODD at any time.
Key Differences
The primary differences between Lady Bird deeds and TODDs relate to form, revocation, and creditor protection. Lady Bird deeds are recognized under Texas common law, while TODDs are statutory. Both allow the owner to retain full control during lifetime. However, creditors may treat the deeds differently. Both require proper execution, recording, and compliance with applicable legal requirements.
Title Implications
When a property subject to a Lady Bird deed or TODD is sold, the title company must handle the deed and related documents appropriately. If the owner is selling during their lifetime, the Lady Bird deed or TODD does not prevent the sale. Upon the owner's death, the title company will need to confirm the validity of the transfer deed before insuring title for the beneficiary. The title company may require documentation demonstrating compliance with statutory requirements.
FAQs
Can a TODD be revoked in Texas?
Yes. A TODD can be revoked at any time by the owner during their lifetime by recording a revocation document in the county where the property is located. The owner may also sell the property, which effectively revokes the TODD as to that property.
Does a Lady Bird deed affect Medicaid eligibility?
Under current federal and Texas Medicaid rules, Lady Bird deeds may have implications for Medicaid eligibility and estate recovery. Consult an elder law or estate planning attorney.