Lady Bird Deed vs. TOD Deed

In Texas, homeowners seeking to avoid probate have access to two major deed-based options: the **Lady Bird Deed** (Enhanced Life Estate Deed) and the statutory **Transfer on Death Deed** (TODD). While they sound similar and share the same goal, their legal foundations, flexibility, and treatment by title companies are vastly different.

1. Origin: Common Law vs. Statute

The most fundamental difference is how these deeds were created:

• Lady Bird Deed: This is a common-law instrument. It is not created by a specific Texas statute, but rather is recognized by Texas common law, court decisions, and state agency regulations (such as Medicaid rules). It relies on the traditional right of property owners to reserve a lifetime estate with "enhanced" rights.
• Transfer on Death Deed (TODD): This is a statutory instrument, formally authorized by the Texas Legislature in 2015 under Chapter 114 of the Texas Estates Code. It follows strict, state-mandated guidelines and language.

2. The 2-Year Creditor Lookback Trap (TODD Limitation)

This is the most critical difference and the primary reason estate planning attorneys often prefer Lady Bird Deeds over TODDs:

Under **Texas Estates Code Section 114.106**, a property transferred via a Transfer on Death Deed remains subject to the claims of the deceased owner's estate creditors for **up to two years after their death**.

Because of this strict statutory lookback period, Texas title insurance companies are extremely hesitant to issue a title policy or clear a property for sale within two years of the owner's death if a TODD was used, unless the heirs can prove the estate has absolutely no debts.

In contrast, a Lady Bird Deed is a common-law transfer and is not subject to this statutory two-year lookback restriction. Title companies are generally much more comfortable insuring a sale immediately or shortly after the grantor's death under a Lady Bird Deed.

3. Power of Attorney (POA) Restrictions

In elder law, planning is often done when an owner has lost physical or mental capacity, requiring an agent under a Power of Attorney to act:

• Lady Bird Deed: An agent acting under a valid, comprehensive Texas Durable Power of Attorney can generally execute a Lady Bird Deed on behalf of the principal (as long as the POA grants authority over real estate transactions and gifting).
• Transfer on Death Deed: Texas law strictly prohibits an agent under a Power of Attorney from executing a TODD. The deed must be signed by the owner themselves while they still have full mental capacity.

Summary Comparison Table