A Lady Bird deed is a type of real estate deed that names who will inherit your property when you die while letting you keep complete control of it during your life. You can sell the home, mortgage it, lease it, or revoke the deed entirely without asking the person you named. When you die, the property passes to that person automatically, outside probate. Only five states recognize this tool: Florida, Michigan, Texas, Vermont, and West Virginia.
The formal name is an enhanced life estate deed. The “enhanced” part is what sets it apart from a traditional life estate, where naming a future beneficiary locks you out of selling or borrowing against the home without their signature. A Lady Bird deed keeps every meaningful ownership right in your hands until the moment you die.
What Control You Keep During Your Lifetime
Once the deed is recorded, you remain the owner in every practical sense. You can sell the property to anyone and keep all the proceeds. You can take out a mortgage or home equity line of credit. You can lease the home and collect rent. None of this requires the beneficiary’s knowledge, consent, or signature.
The deed is also fully revocable. If you change your mind about who should inherit, you record a new deed with the county naming a different person. If you want to cancel the arrangement completely, you can do that too. The person you named, called the remainderman, has no vested rights while you are alive. Their interest exists only on paper and only takes effect if you still own the property at death.
Homestead exemptions and property tax caps generally stay intact after recording the deed. Because ownership does not shift during your lifetime, the county does not reassess the property or strip existing tax benefits. After you die and the home passes to the new owner, the county will typically reassess at current market value, and your assessment caps do not carry over.
What Happens When You Die
Ownership passes to the remainderman automatically and immediately. There is no probate petition, no court hearing, and no executor involvement. The remainderman files your death certificate with the county recorder’s office, and the property records are updated to reflect the new owner. That is the entire transfer process.
Stepped-Up Tax Basis
Property passing through a Lady Bird deed receives a stepped-up tax basis equal to its fair market value on the date of your death.1Office of the Law Revision Counsel. 26 U.S. Code 1014 – Basis of Property Acquired from a Decedent This matters when your heir eventually sells. If you bought the home for $150,000 and it was worth $400,000 at your death, your heir’s basis is $400,000. Capital gains tax applies only to appreciation above that stepped-up amount. For homes that have been in the family for decades, the step-up can erase a large share of what would otherwise be taxable gain.
An Insurance Gap to Plan For
Your homeowner’s insurance policy typically does not cover the new owner after you die. Ownership shifts the instant you pass, and if the home suffers damage before the remainderman secures their own policy, the claim may be denied. The safer approach is to contact the insurance company while you are still alive and add the remainderman as an additional insured. Coverage then continues through the transition.
Medicaid Planning
Lady Bird deeds are one of the most commonly used tools in Medicaid planning. Medicaid imposes a 60-month look-back period before approving long-term care benefits, reviewing all asset transfers made during that window.2Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets A traditional life estate counts as a transfer because the remainderman immediately gains a vested interest, which can trigger a penalty period that disqualifies the applicant from coverage.
A Lady Bird deed avoids this. Because you keep full control and can revoke the deed, Medicaid does not treat it as a completed transfer. Recording the deed does not start the look-back clock and does not create a penalty period.
The second Medicaid issue is estate recovery. After a Medicaid recipient dies, the state attempts to recoup long-term care costs by filing claims against the recipient’s estate. In states that define “estate” narrowly as property passing through probate, a Lady Bird deed keeps the home out of reach because the transfer happens automatically outside probate. Some states use an expanded definition of “estate” that includes non-probate transfers like life estates and survivorship interests.2Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets In those states, a Lady Bird deed alone may not shield the property from recovery. Checking which definition your state uses is essential before relying on this strategy.
Tax Treatment
Because you retain complete control and can revoke the deed at any time, the IRS does not treat recording it as a completed gift. No gift tax is owed when the deed is signed, and no gift tax return needs to be filed.
The property does remain part of your gross estate for federal estate tax purposes. Under 26 U.S.C. ยง 2036, any property in which the decedent retained a life estate is included in the taxable estate.3Office of the Law Revision Counsel. 26 USC 2036 – Transfers with Retained Life Estate For 2026, the federal estate tax exemption is $15,000,000 per person, so only estates exceeding that threshold owe federal estate tax.4Internal Revenue Service. What’s New – Estate and Gift Tax Most families will never approach that number.
Estate inclusion is actually a benefit here. Because the property is part of the gross estate, the person inheriting it qualifies for the stepped-up basis.5Internal Revenue Service. Publication 551 (12/2025), Basis of Assets If the property bypassed the estate entirely, your heir would inherit your original cost basis and potentially face a much larger capital gains bill on a future sale.
Where Lady Bird Deeds Are Available
Only Florida, Michigan, Texas, Vermont, and West Virginia recognize Lady Bird deeds. If your property is in another state, you cannot use this tool. The closest substitutes are transfer-on-death deeds, available in roughly 30 states, and revocable living trusts, which are available everywhere.
Limits and Risks
No Protection from Your Own Creditors
A Lady Bird deed does not shield the property from your creditors or from claims in a divorce. Because you keep full control, creditors can pursue the home just as they could before the deed was recorded. This is an estate planning tool, not an asset protection tool.
Whether the remainderman’s creditors can attach liens to the property during your lifetime is less settled. Some title insurers treat the remainder interest as vested and subject to liens from the moment the deed is created. Others view it as a mere expectancy that creditors cannot reach until you die. If liens do attach, your ability to sell the property with clean title may be compromised.
If the Remainderman Dies Before You Do
The situation gets complicated. The deceased remainderman’s interest may pass to their own heirs or estate, which could require a probate proceeding for the remainderman’s estate before the property can transfer cleanly. If you named multiple remaindermen and one dies, probate of that person’s share is likely unless they held their interest as joint tenants with right of survivorship.
The simplest fix is to record a new Lady Bird deed naming a different remainderman. Because the deed is revocable, this is straightforward. Many owners don’t realize they need to act, and the resulting title complications can be expensive to untangle.
How It Compares to Other Probate-Avoidance Tools
A transfer-on-death deed accomplishes the same core goal: the property passes to a named beneficiary at death without probate, and both deeds are revocable. The differences are procedural. A transfer-on-death deed can specify what happens to a beneficiary’s share if that beneficiary predeceases the owner, while a Lady Bird deed typically does not. A Lady Bird deed, on the other hand, can be signed by an agent under a durable power of attorney, which matters if you need to execute the deed at a time when you lack capacity, such as when applying for Medicaid nursing home benefits.
A revocable living trust is more powerful but more complex. A trust can hold all types of assets, not just real estate, and it offers more detailed control over how and when beneficiaries receive their inheritance. The trade-off is cost and upkeep. Setting up a trust typically costs several thousand dollars in attorney fees, and you must actively transfer assets into it. A Lady Bird deed costs far less, covers a single property, and requires no ongoing management. For someone whose main concern is keeping the family home out of probate, the deed is often the more practical choice.
How to Create One
The deed must include your full legal name, the full legal name of every remainderman, and the property’s legal description exactly as it appears in your existing deed or county records. The critical language is what makes it “enhanced”: the deed must explicitly state that you retain the power to sell, mortgage, lease, and otherwise transfer the property during your lifetime without the remainderman’s consent. If that language is missing, a court may interpret the deed as a traditional life estate, stripping you of unilateral control.
You sign the deed before a notary public, who witnesses the signature and applies their seal. The completed deed then gets filed with the county recorder’s office in the county where the property is located. Recording is what makes the deed effective against the rest of the world. Until it is recorded, the deed may be valid between the parties but invisible to creditors, title companies, and future buyers.
An attorney familiar with your state’s requirements is worth the cost. Lady Bird deed law varies between the five states that recognize them, and errors in the deed language can create the exact problems the deed was supposed to prevent. Filing fees for recording a deed generally range from $10 to $70 depending on the county, and the attorney’s drafting fee is typically the larger expense.