What are the tax implications of using a Lady Bird Deed in Texas?

At the Law Office of Dana Baker, we want to inform Texas residents that a Ladybird Deed does not carry any Federal income tax consequences for the property owner. Should the beneficiary inherit the property, they might benefit from a stepped-up tax basis, potentially enabling them to sell the property without facing income taxes on the sale.

Furthermore, Ladybird Deeds do not activate Federal gift taxes since they are not considered completed gifts for tax purposes. However, the property remains part of the decedent’s taxable estate, which could lead to estate taxes if the overall estate is substantial enough to meet the estate tax threshold.

Additionally, these deeds do not invalidate the Texas homestead tax exemption, as the property title remains under the decedent’s name throughout their lifetime. For more detailed information or assistance, feel free to contact the Law Office of Dana Baker at 979-310-5507.