“Lady Bird” Deeds and Other Methods of Transferring a Texas Decedent’s Real Estate Holdings

For many Texans, the most valuable asset they own is their home. Whether it’s the family residence, a vacation home or an investment property, transferring real estate is often a primary consideration during estate planning. Families with substantial wealth might need to consider federal estate taxes when deciding how real estate should be distributed upon an owner’s death. Even if this is not a concern, facilitating a smooth, prompt transfer can make things easier for everyone during a trying time.  

One simple, common method of shifting real estate title is through a transfer-on-death deed. This legal instrument, authorized by statute, allows a property owner to name one or more beneficiaries who will assume title upon the owner’s death. This transaction occurs outside the probate process, so the recipient(s) will not have to wait until the estate is settled to take control. While the original owner is alive, they retain exclusive title to the parcel and can revise or revoke the transfer-on-death designation at any time. 

A “Lady Bird” deed, also known as an enhanced life estate deed, has many similarities to a transfer-on death deed, including the benefit of probate avoidance. However, a Lady Bird designation might offer advantages when it comes to protecting beneficiaries from creditors. Also, should the original owner be unable to execute the deed, their agent can do so. This is not allowed with a transfer-on-death instrument. 

There are also options that give eventual beneficiaries a legal interest in the property while the original owner is still alive. Under joint tenancy with right of survivorship, two or more owners possess the title and must consent to transactions, such as sales and loans secured by the property. When one owner dies, the other(s) take full ownership without the parcel going into the decedent’s estate. In situations where the joint owners are married spouses, this can be referred to as community property with right of survivorship. 

You can also help your loved ones bypass probate by transferring real estate into a trust. Terms of the trust can state that you are able to enjoy the property during your lifetime, then have it shifted to people you name once you pass away. A strategic gift is another possibility. 

As each tool has advantages and possible pitfalls depending on your situation, you should speak with a knowledgeable estate planning attorney concerning which option works best for you, as well as other ways to transfer assets outside of the probate system.  

Grob & Associates Law Firm PC handles a wide range of estate planning and probate matters for North Texas residents from offices in Rockwall and Wylie. Please call us at 972-777-5701 or contact us online to make an appointment.