A "Lady Bird" deed offers a simple way to transfer real estate at your death, without probate, and with potential Medicaid benefits. If you're shopping around for a way to avoid probate for your house or other real estate, you might run across something called a "Lady Bird" deed.
Like a Lady Bird Deed, a trust avoids probate. Unlike a Lady Bird Deed, however, the assets that can be in a trust are more than just the family home. So, for those who have extensive assets or want to protect more than just the family home, a trust can be a good estate planning tool to use.
If the remainder beneficiary decides to sell the property, taxes are based on the estimated value of the home at the point when the deed was signed and they received ownership, not the current market value, which allows them to avoid steep capital gains taxes.
If there is a conflict between the provisions of a Lady Bird deed and a will, the deed typically takes precedence. This is because the Lady Bird deed transfers property upon the grantor's death without the need for probate, whereas a will does not take effect until after the grantor's death and often requires probate.
History of the Lady Bird Deed
It's a traditional method of transferring property rights that allows the grantor the right to use and control the property until their death, at which point the property transfers to the designated remainderman.
Creating a Lady Bird Deed is very inexpensive. In fact, the approximate “do it yourself” cost is only $30. Professional assistance is also very affordable, and on average, costs between $200 and $500. This includes drafting the deed and filing it with the local register of deeds.
It's possible to draft and record a ladybird deed without help from an attorney, but that doesn't mean you should. Consider these four pitfalls. Errors can make transfer difficult: One of the disadvantages of a ladybird deed is that mistakes can make it difficult to transfer titles and obtain title insurance.
Lady bird deeds are currently used only in Florida, Texas, Michigan, Vermont and West Virginia. Insurance companies in other states won't insure property that passes through a lady bird deed.
Attorney Holley Knapik: Vicky, I can answer that question for you. That is why the enhanced life estate deed that you have is a wonderful tool. You do not need the beneficiary's signature, knowledge, or consent to go forward and sell your home.
By using a “Lady Bird” deed, your property goes directly to your beneficiaries upon your death, bypassing the probate process entirely. This means your loved ones can avoid the time and expense of probate.
Timelines for transferring property after the owner's death vary by state and can range from a few months to over a year.
How does a Lady Bird deed affect taxes? A Lady Bird did will not uncap or affect your property tax and does not increase your property's taxable value. The Lady Bird deed does not transfer until the owner's death and therefore, since there is no transfer until death, the property tax is not uncapped.
Spousal Consent Requirement: “During the lifetimes of both Grantors, this Lady Bird Deed may not be revoked without the written consent of both Grantors. After the death of the first Grantor, the surviving Grantor may unilaterally revoke this deed.”
Typically, the grantor is also the current property owner. Prepare the deed: Either using a deed form, various ones are available online, or by working with an attorney, carefully prepare the deed. It must maintain specific language indicating that it's a Lady Bird Deed, not just a traditional life estate deed.
Lady Bird Deeds can protect a home from Medicaid Estate Recovery, but as of 2025 these deeds are only allowed in five states: Florida, Michigan, Texas, Vermont and West Virginia.
🏡 Can you name multiple beneficiaries on a Lady Bird Deed? ☝🏼Yes, but it comes with some considerations! 👥 The more people you name, the more complex it can get, especially when it comes to decision-making and potential legal challenges.
Another key difference: While there is no federal inheritance tax, there is a federal estate tax. The federal estate tax generally applies to assets over $13.61 million in 2024 and $13.99 million in 2025, and the federal estate tax rate ranges from 18% to 40%.
Current tax law does not allow you to take a capital gains tax break based on your age. In the past, the IRS granted people over the age of 55 a tax exemption for home sales, though this exclusion was eliminated in 1997 in favor of the expanded exemption for all homeowners.
Inherited properties can come with financial responsibilities such as existing mortgages, unpaid property taxes, maintenance costs, and insurance requirements. Be aware of hidden costs, including emergency repairs, property management fees, and legal expenses.