Lady Bird Deed vs Transfer on Death Deed Texas: Which Protects Your Home

Why This Comparison Matters for Texas Families

Both Lady Bird Deeds and Transfer on Death Deeds (TODDs) let your parent transfer their home to heirs outside of probate. Both avoid the cost and delay of a probate estate. But when Medicaid is involved — specifically, when your parent has received or may receive Medicaid long-term care benefits — careful selection and execution of the instrument matters for the Medicaid Estate Recovery Program (MERP).

Texas MERP is limited to assets in the probate estate. Any property that passes outside probate is excluded from recovery. Both deeds accomplish this, but they work differently and should be reviewed against the family's circumstances.

How a Lady Bird Deed Works

A Lady Bird Deed (technically an Enhanced Life Estate Deed) lets your parent retain complete control of the property during their lifetime. They keep:

• The right to live in the home
• The right to sell, mortgage, or lease the property
• The right to revoke the deed entirely
• The right to collect any rental income

At death, the property automatically transfers to the named beneficiaries without probate. Because your parent retained full control — including the power to revoke — Medicaid treats the home as the parent's asset during their lifetime, which means it remains exempt as a homestead. But at death, the transfer happens outside probate, so MERP cannot reach it.

The Lady Bird Deed is the more established tool in Texas for Medicaid planning. Elder law attorneys have used it for decades, and Texas courts have consistently treated it as a valid non-probate transfer.

How a Transfer on Death Deed Works

Texas authorized TODDs under the Texas Estates Code effective September 2015. A TODD is simpler — your parent signs a deed that says "upon my death, this property transfers to [beneficiary]." Like the Lady Bird Deed, the TODD is revocable during your parent's lifetime and the transfer happens outside probate.

Key differences from a Lady Bird Deed:

• Recording requirement: The TODD must be recorded in the county deed records before the parent's death. A signed but unrecorded TODD is void.
• Revocation: Revoked by recording a revocation instrument — or by recording a new TODD that supersedes the old one. Simply selling the property also revokes it.
• Medicaid planning: Both deeds are non-probate structures; have a Texas elder-law attorney review which instrument fits the family's circumstances.

The MERP Difference

For MERP purposes, the key point is the shared non-probate treatment:

Lady Bird Deed: The property passes entirely outside the probate estate. MERP, which is limited to probate assets under Texas law, has no statutory basis to claim it. This is well-established in Texas Medicaid planning practice.

TODD: The property also passes outside probate. A properly recorded TODD is a non-probate structure excluded from state recovery claims; have a Texas elder-law attorney review the deed and the family's circumstances before relying on it.

For families whose parent has received Medicaid long-term care benefits (STAR+PLUS HCBS waiver, Community Attendant Services, nursing facility care), either deed requires careful execution. Have a Texas elder-law attorney compare the instruments with the family's circumstances before choosing.

Cost and Complexity Comparison

Which One Should Your Family Choose?

Choose a Lady Bird Deed if your parent has received or will likely receive Medicaid long-term care benefits and a Texas elder-law attorney advises that it fits your family's circumstances. A properly executed Lady Bird Deed and a TODD are both identified as non-probate structures excluded from state recovery claims.

A TODD may be fine if your parent is not a Medicaid recipient and simply wants to avoid probate for the homestead. The TODD is cheaper, simpler, and works well when Medicaid recovery isn't a concern; if Medicaid is involved, have an elder-law attorney review the choice.

Either way, don't wait. Both deeds require the parent to have mental capacity to sign. Once dementia progresses past the capacity threshold, the family needs a court-ordered guardianship to execute any property transfer — and a guardianship-ordered transfer during the five-year look-back period creates a Medicaid eligibility penalty.

Getting the Homestead Protection Right

The Aging in Place in Texas guide walks through MERP protection strategies alongside the Miller Trust, spousal asset protections (CSRA), and the complete Medicaid eligibility framework. Protecting the home is one piece of a larger financial plan — the guide shows how the pieces connect.

See more Texas guides →