A Lady Bird Deed, also called an Enhanced Life Estate Deed, is a type of Quitclaim Deed that can be an important part of an estate plan in Michigan. It is a method for transferring real property to another individual, trust, or entity upon the death of the owner. While other states have similar estate planning practices, Michigan is only one of five states (Florida, Texas, Vermont, and West Virginia) that offer Lady Bird Deeds.

How does a Lady Bird Deed work?

In a Lady Bird Deed, an individual (also known as the Grantor) retains ownership of the property for the Grantor’s lifetime, and immediately upon the Grantor’s death, the property is transferred to the designated beneficiaries, known as the Grantees. It is a simplified way to transfer real property. An important benefit to this type of deed is that it will avoid probate. The Grantor of the Lady Bird Deed has the authority to retain full control of the property while living, including the right to use, transfer, and profit from the property. The deed can also be terminated or revoked by the Grantor at any point.

What are the benefits to a Lady Bird Deed?

There are many benefits to having a Lady Bird Deed. They allow you to:

*Avoid probate. The probate process can cost a lot of time, be extremely expensive, and can cause a lot of frustration.

*Inexpensively provide for transfer of real property at your death.

*Retain full control of the property during your lifetime. You can leave the property to your Grantees (children or other beneficiaries) without probate and without making them co-owners with you. This helps reduce risk to you and your property while you are living. If the Grantees go through any financial trouble such as bankruptcy or are sued, it will not affect you or the Lady Bird Deed because they do not have present ownership of your assets.

*Transfer the property to your Grantees at your death without increase in the property tax, so long as the property is not used for commercial purposes and the Grantees are your relatives.

*Transfer the property without incurring gift tax because the transfer occurs only upon your death.

*Qualify for Medicaid benefits while preventing your home from being subject to Medicaid recovery at your death. If your home does go through the probate process, the State of Michigan can attempt to recoup some of the money they paid to you through Medicaid.

In what circumstances would a Lady Bird Deed not be the best option?

If you have more than one Grantee, then a Lady Bird Deed might not be the easiest or most flexible option under those circumstances. Also, if you have more than one main property that you will be leaving to beneficiaries, then this type of deed might not be the best solution. Lady Bird Deeds do not address what you want to happen if the Grantee does not survive you.

Contact Beier Howlett Estate Planning attorneys today with any questions you have.

While there are many benefits to a Lady Bird Deed, it is not necessarily for everyone. It is important to discuss all your estate planning needs with an experienced estate planning attorney who can properly guide and counsel you through the process and so you have everything in order upon your death.

Written by Katherine Albrecht

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