Lady Bird Deeds are becoming a more popular estate planning technique in Michigan as they are useful for transferring property to your heirs. When prepared correctly, it simplifies the transfer of your real estate to your heirs upon death. While you can’t name a beneficiary for your home, this is as close as you can get!
How It Works
A Lady Bird Deed is also known as an enhanced life estate deed; it works like this: You transfer, by deed, a life estate in your house to yourself and identify who will take the house upon your death. However, the beauty of it is that you are not locked in as you reserve the right to sell, lease, mortgage or change your mind.
Benefits of Having a Lady Bird Deed in Michigan
- Lady Bird Deeds avoid probate. Probate will be avoided as the house will be automatically transferred to the named beneficiaries in the deed.
- Does not uncap property taxes. Your property taxes will not be reassessed with this transfer. In fact, it isn’t even a reportable transfer to the city assessor.
- The property obtains the step-up in basis. Basically, the beneficiaries can sell the house on the death of the grantor and not pay taxes on the proceeds.
- Not a transfer for gift taxes. Because the transfer is not complete until the death of the grantor, it is not a lifetime gift and not subject to gift taxes.
- Not a Medicaid divestment. The Lady Bird Deed lets you keep your home as an exempt asset when you apply for Medicaid assistance.
- Avoids Michigan Estate Recovery. Because this is a transfer outside of probate, a claim cannot be filed against the house for Medicaid repayment.
Contact us to see if a Ladybird Deed is right for you.