Lady Bird Deed: 5 Proven Rules to Protect Your 2026 Sale

A Lady Bird deed lets you keep full control of your home for life, then passes it to a named heir at death without probate. It works in five states. These five proven rules protect the sale, whether you are the owner or the heir. I’ll cover what the deed does, then the rules, then the money.

Most pages on this topic are written by estate lawyers for people who are still planning. The readers I hear from already have the deed. Their mother signed one in Florida or Texas, she has passed, and they want to list the house next month. This page is for them, with a statute or a state agency cited for every claim.

What a Lady Bird deed does, in plain words

A Lady Bird deed is a life estate deed with the owner’s control added back. The Texas State Law Library puts it plainly. The owner “retains full ownership and control of property while they are alive.” They “can live on the property, sell it, and change or revoke the deed at any time.”¹ When the owner dies, the home passes to the person named in the deed. No probate. No court date.

The plain life estate deed is the one to compare it with. Under a standard life estate, the heir gets a vested interest the day the deed is signed. The owner cannot sell or borrow against the house without the heir’s consent. If it does sell, the proceeds are split.¹ The enhanced version keeps all of that with the owner. Michigan’s courts describe it as reserving “the rights to sell, commit waste, and almost everything else.”²

Only five states use it: Florida, Texas, Michigan, Vermont and West Virginia.³ Vermont wrote it into statute in 2020 as the Enhanced Life Estate Deed Act.⁵ Florida and Texas run on case law, and Nolo notes the deed is “quite common” in both.³

My rule is simple. If your house is not in one of those five states, do not sign one. A deed no title company will insure is worth nothing at the closing table, and you will have paid a lawyer for nothing.¹⁷ Read about the transfer on death deed instead.

One line in that table matters more than the rest.¹⁴ A transfer on death deed can name a backup heir. This deed cannot.

The 5 rules before you sell or inherit under one

Here are the five rules. This section covers the first two, and the next two sections take the rest.

1. Rule 1: The owner sells alone. While the owner is alive, the heir has no vote and no share of the proceeds.
2. Rule 2: The heir records the death first. A death certificate, plus an affidavit of death in Texas, goes into the county records before the house is listed.
3. Rule 3: Check the mortgage. The deed can wake up a due-on-sale clause at death. Federal law shields transfers to family, but the loan still has to be paid.
4. Rule 4: Learn your state’s Medicaid recovery rule. Florida files its claim in probate and Texas exempts the enhanced life estate transfer. Other states can reach further.
5. Rule 5: Price the sale from the date-of-death value. The heir’s tax basis steps up to fair market value at death, so a quick sale usually carries little taxable gain.

Rule 1 is the point of the deed. Michigan’s Court of Appeals held that the reserved powers let the grantor “deal with the property as if the grantor had remained the sole owner.”² That included swapping out the heir without telling them. So if you hold the deed and want to sell, you sign the listing agreement, you sign at closing, and the money is yours.

I’ve watched adult children assume the deed gave them a say in a parent’s sale. It doesn’t. Pushing the point costs them the relationship and gains them nothing. Their interest starts the day the owner dies, not one day before. If you are the heir, the best thing you can do while the owner is alive is nothing.

Rule 2 is where inherited sales stall. A Florida practitioner writing in The Florida Bar Journal put it in one line. Title passes “by simply filing a death certificate in the official records.”⁷ In Texas, the state law library’s probate guide lists “an affidavit of death and a copy of the death certificate” as the paperwork that moves title after the owner dies.⁸ Record it before you list.

A title company will pull the chain of title the week you go under contract. I would rather you find the gap now than the week before closing. My guide on selling an inherited house covers the rest of that file.

The mortgage and the Medicaid claim after death

Rule 3 first. The Texas law library flags that a Lady Bird deed “may sometimes trigger a mortgage due on sale clause when the owner dies.”¹ A due-on-sale clause lets the lender call the whole loan when the property changes hands.

Federal law limits that. Under the Garn-St Germain Act, a lender may not enforce the clause on “a transfer to a relative resulting from the death of a borrower.”⁹ The same protection covers a transfer “where the spouse or children of the borrower become an owner of the property.”⁹ If the heir is family, the lender cannot demand a payoff just because the deed did its job.

What the lender can still expect is the payments. Nothing in that statute forgives the loan. My advice to heirs is blunt: call the servicer in the first week, send the death certificate, and keep paying until the sale closes. A loan that goes unpaid while a family grieves is how a clean inheritance turns into a distressed sale.

Rule 4 is why most of these deeds exist. Federal law makes every state recover long-term care costs from a deceased recipient’s “estate,” and it defines that word two ways. Every state must reach the probate estate. A state “may include, at the option of the State,” property that passed outside probate through a “life estate, living trust, or other arrangement.”¹⁰ Which option your state took decides whether the deed protects the house.

Florida’s Medicaid Estate Recovery Act says recovery “shall be accomplished by the agency filing a statement of claim against the estate of a deceased Medicaid recipient as provided in part VII of chapter 733.”¹¹ Chapter 733 is Florida’s Probate Code. As I read it, a house that never enters probate is outside that claim.

Texas HHS says its program “does not apply to all property that a person may own.”¹² That’s about the claim after death.

A separate Texas rule matters while the owner is alive: transferring the home by an enhanced life estate or Transfer on Death deed does not trigger Medicaid’s penalty for giving assets away, as long as the regional attorney signs off.¹³ Michigan State University Extension says a home passed by the deed “is technically not considered to be part of the grantor’s probate estate.”⁶ Under current rules, it “will not be ‘recoverable’ by Medicaid.”⁶

Texas adds a few floors. The state will not file a claim at all when a spouse survives, when the estate is worth $10,000 or less, or when the Medicaid costs were $3,000 or less.¹² I’m not your lawyer, and Texas HHS says its own staff cannot give legal advice either. Spend one hour with an elder-law attorney before you count on any of this.

What the sale nets: the step-up and the commission

Rule 5 is good news. Property acquired from a decedent takes a basis equal to “the fair market value of the property at the date of the decedent’s death.”¹⁴ IRS Publication 551 says the same.¹⁵ Why does this deed qualify? Because the owner kept the power to sell or revoke, the house is included in the owner’s estate for tax purposes, and the heir takes it “by reason of death.”²

Sell soon after the death and the taxable gain is the gap between that date-of-death value and your sale price. Often that is close to zero. My page on capital gains tax on a home sale walks through the arithmetic.

The commission is the line you control. NAR’s July 2026 report puts the median existing-home price at $434,100.¹⁶ A 3% listing fee on that house is $13,023. HomeRise lists the same house on the MLS for $95 up front, plus $495 at settlement only if it closes, $590 in total. That leaves $12,433 in the estate instead of in a brokerage check.

The deed decides who gets the house. The listing agreement decides how much of it they keep.

If I inherited a house under one of these deeds, I would list it flat-fee and spend a few hundred dollars of the savings on that elder-law hour. That trade buys an answer on the one question that can still shrink what the heir keeps.

Where a Lady Bird deed is the wrong tool

Start with the backup heir. When a caller asked Suze Orman how to leave her house to her son, Orman said she “most certainly would be doing a living revocable trust instead.”⁴ If your named heir dies before you, the deed has no one to pass the house to. A transfer on death deed can name a backup and is available in 29 states.⁴ Nolo calls it “a simpler and more readily accepted way to avoid probate.”³

Then the title company. Nolo warns that in some places “title companies may be reluctant to insure property transferred using a Lady Bird deed.”³ The American Council on Aging goes further: “If a title insurance company will not insure the title, the Lady Bird Deed may not be considered valid.”¹⁷ So call the title company you would close with and ask one question. Will you insure a sale under this deed? If the answer is no, the deed is a wish, not a plan.

Cost is the argument for it. A do-it-yourself version runs about $30, and an attorney typically charges $200 to $500 including filing.¹⁷ The Florida practitioner above prices one at “roughly the same as a simple will.”⁷ Recording it in Florida costs $10 for the first page and $8.50 for each page after that, adding up the three charges in the clerk’s fee statute.¹⁸

Now the part that works against my own business. A flat fee removes the listing side of the commission and nothing else. If your buyer brings an agent, that fee is negotiated in the offer, and you can pay some, all, or none of it. And if the heirs live out of state and the house needs work, a $95 listing does not show it for them. In that case, I’d hire a local full-service agent and eat the fee. The deed saved you probate, not the chores.

If the house is in one of the two big Lady Bird states, my flat fee MLS Florida and flat fee MLS Texas pages cover the local boards and forms. The for sale by owner pillar and my step-by-step on how to sell a house by owner take it from listing to closing.

The best version of this deed is the one nobody thinks about for twenty years. Then, in one week, it spares a family a probate case. In the next, it hands them a sale they get to run themselves.

Frequently Asked Questions

Can you sell a house with a Lady Bird deed?

Yes. The owner can sell at any time without the heir’s consent and keeps all of the proceeds. After the owner’s death, the heir records the death certificate and can then sell the home like any other owner.

What is the downside of a Lady Bird deed?

It cannot name a backup heir, so if your heir dies first the deed has no one to pass the house to. Only five states recognize it, and some title companies are reluctant to insure a sale made under one. A transfer on death deed or a living trust solves all three problems.

How much does a Lady Bird deed cost?

A do-it-yourself version costs about $30, and an attorney typically charges $200 to $500 including filing. Florida’s clerks charge $10 to record the first page and $8.50 for each page after that. One Florida lawyer prices the deed at roughly the same as a simple will.

Can Medicaid take your house if you have a Lady Bird deed?

In Florida, Texas and Michigan, a home passed by the deed is treated as outside Medicaid’s reach because it never enters the probate estate. Federal law lets a state reach non-probate property if it chooses, so the answer depends on where you live. Confirm your state’s rule with an elder-law attorney before you count on it.

Is a Lady Bird deed better than a trust?

A living trust works in every state, can name backup beneficiaries, and can hold more than one asset, so Suze Orman told a caller she would choose it. The deed is cheaper and simpler when the house is the only real asset and you live in one of the five states. Pick the deed for a single house and the trust for a whole estate.

Sources

1. Texas State Law Library, Legal FAQ: What is a Lady Bird deed? (2024)
2. Michigan Bar Journal, “Ladybird deeds: Key features and uses”
3. Nolo, Lady Bird Deed: How It Works and Which States Allow It (2026)
4. Realtor.com, What Is a Lady Bird Deed and Which 5 States Have Them?
5. 27 V.S.A. § 652, Vermont Enhanced Life Estate Deed Act
6. MSU Extension, Overview of Lady Bird Deeds in Michigan
7. The Florida Bar Journal, Lady Bird Deeds, Vol. 92 No. 9 (2018)
8. Texas State Law Library, Probate Law guide: Real Property Deeds
9. 12 U.S.C. § 1701j-3(d), Garn-St Germain due-on-sale exemptions
10. 42 U.S.C. § 1396p(b)(4), Medicaid estate recovery, definition of estate
11. Florida Statutes s. 409.9101, Medicaid Estate Recovery Act
12. Texas HHS, Your Guide to the Medicaid Estate Recovery Program
13. Texas HHS, MEPD Handbook I-3100, Transfer of Home
14. 26 U.S.C. § 1014(a), basis of property acquired from a decedent
15. IRS Publication 551, Basis of Assets: Inherited Property
16. NAR, Existing-Home Sales report for July 2026 (August 11, 2026)
17. American Council on Aging, Lady Bird Deeds: How They Work and Which States Allow Them (2025)
18. Florida Statutes s. 28.24, clerk service charges for recording