What a Lady Bird Deed Is
A Lady Bird deed is the everyday name for an enhanced life estate deed. You sign a deed that splits your home into two pieces: you keep a life estate, meaning the right to own and live in the property for the rest of your life, and you name one or more people as remainder beneficiaries, who take the house automatically when you die.
What makes it "enhanced" is that you also keep the power to sell, mortgage, give away or revoke the whole property during your life without the beneficiaries' consent. With an ordinary life estate deed, the remainder beneficiaries own a real interest from day one, and you can't sell or refinance without their signatures. A Lady Bird deed removes that problem. Until you die, the beneficiaries have an expectation, not an ownership stake.
When you die, the home passes to them outside probate, usually by recording a death certificate (and in some states an affidavit) with the county.
The name is a bit of legal folklore. A Florida attorney popularized the technique using Lyndon and Lady Bird Johnson as the names in his sample deeds. The Johnsons almost certainly never used one, but the name stuck.
Which States Allow Lady Bird Deeds
Only a handful of states recognize them:
| State | Status | Notes |
|---|---|---|
| Florida | Recognized (case law and title practice) | The most common Lady Bird state. Florida has no transfer on death deed statute, so this is the main probate-avoidance deed. See Lady Bird deeds in Florida. |
| Texas | Recognized | Texas also has a statutory transfer on death deed, so residents can choose either. |
| Michigan | Recognized | Popular for Medicaid planning. Michigan's estate recovery has historically been limited to probate assets. |
| Vermont | Recognized | Less common in practice; use a Vermont attorney. |
| West Virginia | Recognized | Also has a transfer on death deed statute. |
If your home is anywhere else, a Lady Bird deed is generally not an option. In most of those states the closest equivalent is a transfer on death deed, which about 32 states and DC now allow. See transfer on death deeds by state. What counts is the state where the property sits, not where you live, so a Florida condo can carry a Lady Bird deed even if you live in Ohio.
These rules depend on case law and title-insurance practice as much as statute, and they change. Confirm with a local attorney before relying on any list, including this one.
Lady Bird Deed vs. Transfer on Death Deed
Day to day they behave almost identically. You keep full control, you can revoke, and the house skips probate at death. The differences are in the details:
| Lady Bird deed | Transfer on death deed | |
|---|---|---|
| Legal basis | Mostly case law and custom | A specific state statute |
| Where available | FL, TX, MI, VT, WV | About 32 states plus DC |
| Beneficiaries' interest while you live | A remainder you can defeat at any time | None at all |
| Medicaid recovery | Often outside recovery in FL, MI and TX (state-specific) | Depends on the state; some reach it |
| Title insurance at death | Well understood in FL and MI | Varies; some insurers wait out creditor periods |
In Texas and West Virginia, where you can choose either one, the decision usually comes down to Medicaid planning and what local title companies prefer. That is a question for an elder law or real estate attorney.
What Happens to Your Property Tax
Because you keep a life estate, you're still treated as the owner for property tax purposes. In practice:
- Your homestead exemption stays in place. Signing a Lady Bird deed doesn't take away the Florida homestead exemption or the Texas homestead exemption, because you still own and occupy the home.
- No reassessment when you sign. In Florida, keeping the life estate means the deed isn't a change of ownership that resets your Save Our Homes capped value. In Michigan, it doesn't "uncap" taxable value.
- At death, the rules shift. In Florida the transfer to your beneficiaries generally is a change of ownership, so the Save Our Homes cap is lost and the home is reassessed at market value on the next January 1 (a surviving spouse is the main exception). Michigan exempts transfers of a residence to relatives by blood, marriage or adoption from uncapping, as long as the property isn't used commercially. In Texas the heir must file a new homestead application in their own name if they move in.
For what the heirs should expect after the transfer, see property taxes on an inherited house. To see what the home actually costs in tax today, look up your county on property-tax.info.
Gift Tax and Capital Gains
This is where Lady Bird deeds clearly beat the "just put the kids on the deed" approach.
- No completed gift. You kept the power to take the house back, so for federal tax purposes nothing has been given away. There's no gift tax return to file and none of your lifetime exemption is used.
- Full step-up in basis. Because the house is still part of your estate when you die, your beneficiaries get a basis equal to its market value on the date of death. If you paid $90,000 in 1992 and the house is worth $480,000 when you die, they can sell for $480,000 and owe essentially no capital gains tax. Had you deeded it to them outright while alive, they'd take your $90,000 basis and could owe tax on most of $390,000. We walk through that math in quitclaim deed vs. transfer on death deed.
- You keep the home sale exclusion. If you sell during your life, you still qualify for the $250,000/$500,000 exclusion on a primary residence. See capital gains tax when you sell your home.
The house does count toward your taxable estate, but with a federal estate tax exemption of $15 million per person in 2026, that matters to very few families.
Medicaid: The Main Reason People Use Them
In Florida, Michigan and Texas, Lady Bird deeds are a standard elder law tool for two reasons:
- No look-back penalty. Since you can revoke the deed, signing it is generally not treated as a transfer of assets under Medicaid's five-year look-back.
- Avoiding estate recovery. After a Medicaid recipient dies, the state can try to recover what it paid for long-term care. In states that limit recovery to the probate estate, a house that passes by Lady Bird deed is outside its reach.
Both points depend on state law and on how your state's Medicaid agency reads it at the time you apply. Some states have tried to expand recovery to non-probate assets. If Medicaid is the reason you're considering this deed, have an elder law attorney draft it.
Disadvantages and Common Mistakes
1. Only five states
If the property isn't in Florida, Texas, Michigan, Vermont or West Virginia, the deed may not do what you intended. Copying a Florida form for a home in Georgia is how people end up with a deed that a title company won't accept.
2. Generic forms
Searches for a "Lady Bird deed form" or "template" are common, and the free forms are where most problems start. The deed needs specific reserved-power language, a correct legal description and your state's execution formalities. Florida, for example, requires two witnesses in addition to a notary. A mistake may not surface until after your death, when nobody can fix it.
3. Florida's homestead devise rules
Florida's constitution limits who can receive a homestead if you're survived by a spouse or minor child. If you're married, your spouse usually needs to join in the deed or sign a valid waiver, or the deed can be challenged.
4. Several beneficiaries can deadlock
Leave the house to three children and they inherit it together. They then have to agree on selling, renting, or who pays the taxes and insurance in the meantime. The deed doesn't settle any of that.
5. No backup beneficiary
If your only beneficiary dies before you and you named no alternate, the remainder can fail and the house goes back into probate. Name a contingent beneficiary, and review the deed after any death or divorce in the family.
6. Debts don't disappear
Beneficiaries take the home subject to any mortgage and liens. A mortgage doesn't block a Lady Bird deed, and federal law (the Garn-St Germain Act) generally keeps lenders from calling the loan due on a transfer to relatives at death. The loan still has to be paid or refinanced, though.
How to Get One
- Hire a local real estate, estate planning or elder law attorney. Fees are usually a few hundred dollars up to about $1,000, far less than a trust (see living trust vs. Lady Bird deed vs. TOD deed) and far less than probate.
- Name primary and contingent beneficiaries exactly as their names should appear on title.
- Sign with your state's formalities: a notary everywhere, plus two witnesses in Florida.
- Record it with the county recorder or clerk right away. Recording fees are modest, and transfers for no money typically owe little or no transfer tax.
- Keep paying the property tax and insurance as usual. Nothing changes until your death.
Bottom Line
If your home is in Florida, Texas, Michigan, Vermont or West Virginia, a Lady Bird deed is one of the cheapest ways to keep it out of probate. You keep complete control, your homestead exemption stays, your heirs get a stepped-up basis, and in several states it helps with Medicaid. The catches are real but avoidable: use a local attorney rather than a template, get your spouse to join in Florida, and name a backup beneficiary. Anywhere else, look at a transfer on death deed instead.
This is general information, not legal or tax advice. Property, Medicaid and estate law vary by state and change frequently. Consult an attorney licensed where your property is located.