Quick answer: A transfer-on-death (TOD) deed — sometimes called a Lady Bird deed or enhanced life estate deed in Texas — lets you name a beneficiary for real property who automatically inherits title at your death, bypassing probate entirely. You keep full ownership and control during your lifetime: you can sell, mortgage, or change the beneficiary at any time. The heir receives a stepped-up basis at your death, preserving the capital gains tax benefit.
How It Works in Texas
Texas enacted the Real Property Transfer on Death Act (Texas Estates Code Ch. 114) effective 2015, which formally authorizes statutory TOD deeds. You execute a deed naming yourself as current owner and designating a beneficiary (or beneficiaries) to receive the property at your death. The deed is recorded in the county deed records where the property is located. No transfer occurs during your lifetime — the deed is essentially a written declaration of intent that becomes effective only at death.
The beneficiary must outlive you by 120 hours (the Texas survival period) to inherit under the deed. If they don't survive you, the property passes under your will or by intestacy.
Advantages Over a Quitclaim or Joint Tenancy
- No loss of control during lifetime — unlike a joint tenancy or adding children to title, the beneficiary has no current ownership rights
- Fully revocable — you can record a revocation or a new TOD deed at any time while you're alive and competent
- Stepped-up basis preserved — because the transfer occurs at death, not during life, the beneficiary gets a full step-up in basis
- Medicaid consideration — in some states, TOD deeds help preserve Medicaid eligibility; consult a Texas elder law attorney for specifics, as Texas Medicaid estate recovery rules apply to probate estates
Limitations to Know
TOD deeds work well for simple situations — transferring a home or small tract of land to a single adult heir. For more complex estates with multiple heirs, minor beneficiaries, or significant creditor protection concerns, a revocable living trust may be more appropriate. TOD deeds also don't prevent Medicaid estate recovery in all scenarios. Work with a Texas real estate attorney to draft and record the deed correctly — a defective deed recorded in the wrong county or with incorrect legal descriptions can create significant problems at death.
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Kyle Ellison is a licensed financial professional in TX, CA, NV, MT, UT, NM helping families protect and pass on what they've built.