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TODD v. Lady Bird Deeds in Texas By Chris Johnsen

Both a transfer on death deed (TODD) and a lady bird deed allow a grantor to transfer real property outside probate while retaining control over the property during the grantor’s lifetime. TODDs and lady bird deeds are the most commonly used methods of achieving these goals. But what’s the difference between the two types of Texas deeds?

Before we go into the primary differences, it’s important to understand what TODDs and lady bird deeds are. A TODD is authorized by Texas statute and allows a grantor to designate a beneficiary of real property at death, much like a payable-on-death designation on a bank account. A lady bird deed is recognized by case law (not statute) and allows a grantor to retain an enhanced life estate with complete control over the property and to pass the property to a beneficiary at death. The ultimate outcome with both deeds is essentially the same, but there are some stark differences between the two deeds.    

The following table summarizes the main differences:


TODD

Lady Bird

Transfer Effective

The transfer of real property is effective upon the grantor’s death and only if a valid TODD is recorded before death.

The transfer of real property interests (the remainder interest) is effective immediately.

Effect on Transfer Restrictions

Because the transfer is not effective immediately, a TODD cannot trigger any transfer restrictions, such as those in a deed of trust. The statute affirms and restates this.

Because the transfer is effective immediately, a lady bird deed might trigger transfer restrictions. Any transfer restrictions should be reviewed before proceeding with a lady bird deed.

Power of Attorney

No. A TODD cannot be created by using a power of attorney. 

Yes. A lady bird deed can be entered into through a power of attorney.

Creditor Claims

Creditors which cannot be paid from the estate may seek payment from the real property by filing a claim within two years. This potentially affects insurability of the property.

No statutory creditor period.

Title Warranty

No. A TODD cannot provide for a warranty of title. This results in no access to title insurance in the chain of title.

Yes. A lady bird deed can provide for title warranties. 

Effect of Divorce

Divorce revokes deed.

Divorce does not revoke deed.

Unequal Interests

No. A TODD can only transfer interests to the beneficiaries in equal amounts.

Yes. A lady bird deed can transfer interests in unequal amounts.

Right of Survivorship

No. A TODD cannot transfer the interests to the beneficiaries with right of survivorship.

Yes. A lady bird deed can transfer interests with a right of survivorship.

Either a TODD or a lady bird deed may be an appropriate component of an estate plan. Johnsen Law prepares these deeds and handles other aspects of estate planning. Contact Johnsen Law to learn more.



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