The Lady Bird Deed in Michigan, also known as a beneficiary deed, is a great way to avoid probate. Ever hear of a Lady Bird Deed? It’s an odd name so chances are if you have, you remember it even if you aren’t exactly sure what it is or what it does. They are becoming a more popular estate planning technique in Michigan useful for transferring property to your heirs. When drafted properly, they simplify transfer of your real estate to your heirs upon death.
How a Lady Bird Deed Works
A Lady Bird Deed, also known as an enhanced life estate deed, works like this. You transfer, by deed, a life estate in your house to yourself and identify beneficiaries (legally known in real estate law as “remaindermen”) who will take the house upon your death. However, you are not locked in as you reserve the right to sell, lease, mortgage or change your mind.
Benefits of a Lady Bird Deed in Michigan
- Ladybird Deeds avoid probate. While probate isn’t as scary as most people think it is, probate will be avoided as the house will be automatically transferred to the named beneficiaries in the deed.
- 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 house as an exempt asset when you apply for Medicaid assistance.
- Does not uncap property taxes. Your property taxes will not be reassessed with this transfer.
- Avoids Michigan Estate Recovery. Because this is a transfer outside of probate, a claim cannot be filed against the house for Medicaid repayment.
Hire a Lawyer and Don’t Do It Yourself
I have had several clients meet with me and proudly present the deed they drafted themselves. I can honestly tell you, not one has done it properly. In fact, one ladybird deed caused a significant problem that required probate in two states the cost of which far exceeds what I would have charged to do it right in the first place. Please hire a lawyer to draft your deeds.
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Chris McAvoy is a Michigan attorney who helps people with bankruptcy, divorce, and estate planning. To find out more or set up an appointment, click here for contact info. Our attorneys help people in Taylor, Allen Park, Southgate, Lincoln Park, Riverview, Taylor, Trenton, Flat Rock, Wyandotte, Brownstown, Belleville, Dearborn, Dearborn Heights, Westland, Garden City, Canton, Plymouth and the Downriver, Michigan area.
i just wanted to know if you can have a lady bird deed in Michigan if you have a mortgage on your home? and if you get one do they send a copy to the mortgage company
Yes, you can do one even if you have a mortgage on your home. I don’t send a copy to the mortgage company but it is recorded at the Register of Deeds.
I like to get a lady bird done . but don’t have much money, can you tell me what it would cost. thank
A deed is probably the least expensive way to transfer property. Keep in mind, in addition to attorney fees, there are recording fees at the Register of Deeds. Overall, probably less than $200 for everything.
It’s my understanding that if my Fater In-Law was to sign a Quick Claim Deed to his daughter that the State could see this as a method of hiding assets and result in not allowing the fater in-law to obtain medicare assistance for a nursing home for approx 5 years. This is why we files a lady Bird Deed. In addition I’m of the understanding that not only is the home protected should the state attemtp to recover funds for nursing hme care but in addition up to 40% of a persons 401k can also be spared. True?? Avg cost of a nursing home is $7,500 / month.
There is a five year look back period when applying for Medicaid and a transfer of real estate could delay eligibility so that’s true. It’s also true that a lady bird deed is currently a good way to avoid nursing home recovery costs.
Can this deed be done for someone who has no children and would like a life estate done making it joint with nieces?
Yes. You can name anyone as the beneficiary of the deed.
Three years ago I went through a divorce in AZ. With my proceeds I purchased a house in Michigan and then had a Lady Bird Deed drawn up. The divorce decree ordered us to sell a second property and a 5th wheel RV but my ex refused to sell so they were repossessed and foreclosed on. He did not pay any of his credit cards either. Now the creditors are after me to pay. I am disable and am on SS. Will my home be safe from these creditors with the ladybird deed? If I need to go into a nursing home will my home be protected from the state of Michigan? Thank you
Please consult with an attorney as your question may involve legal advice outside the scope of a comment page.
Can you create and file a Lady Bird deed after a person has been approved for Medicaid?
Yes.
My grandmother created a Revocable Trust in 2002 with her attorney. She then created a “Ladybird Deed” in 2010 through a different lawyer out of Troy,MI. (responding to a brochure she recieved in the mail) Then, in 2013 “amended her first Revocable Trust from 2002 removing/changing her beneficiaries or trustrees. She passed away July 2014 and the estate is being settled acknowledging the 2010 Ladybird. Why would the 2010 trump the most recent 2013?
Most recent deed controls.
I’m interested in writing up a lady bird deed (LBD)but am wondering if this deed is legal/recognized in Michigan. I understand the LBD language was removed from the Michigan State Tax Commission guidelines as of 7/14/2014. My siblings and I are trying to protect my elderly mother’s house since she recently went on medicaid and may need to go into a nursing home in the near future
First off, your mother has to do it, not you. Yes, they are recognized in Michigan. Your mother should speak with a lawyer for estate planning advice.
You state that with a Ladybird deed “The property obtains the step-up in basis.” Some attorneys’ support this, however, others say that when the home is sold the basis in the property is that of the decedent and is subject to capital gains tax unless the sale qualifies as the sale of a home which requires that the recipient has lived in the home 2 out of the 5 previous years ??
It’s impossible for me to refute a point that you read on another website. You should speak with a CPA or an attorney for more information and not rely on the internet for legal advice.
Is it beneficial to put a house into a Lady Bird Deed if it is already in a trust?
It may have medicaid benefits to retain a life estate and have the trust as the remainderman. You should speak with your estate planning lawyer to get more information.
So I am living in my home, then set up a ladybird deed, now a few years later I need to move into a nursing home. What happens to the home? I assume it will no longer be an exempt asset if I am no longer living there. And if the home is sold while I am living the proceeds would come to me, and no longer be exempt. What am I missing here?
You are missing out on talking to an elder law attorney that can discuss exempt assets and medicaid.
Good Afternoon, My father has left me a parcel in MI that is in a “Life Estate”. The lawyer who drew it up, will not engage with me. My brothers had another will drawn up at some point by a second lawyer, that I was unaware of. My brother, an Atty., had drawn up a will on 16 June, 2015. My brother informed me I need to start paying the taxes. (There are past due taxes as well) The power was shut off last fall, and I have been unable to find out the past amt due, to turn the power back on. I do not have the “password”. Where the heck do I stand in all this. Is the Estate responsible for all past due bills? Or am I?
You should see a lawyer and not rely on a quick response on a website.
My parents divorced several years ago and my father has since remarried. He has real estate up north along with a house down south. He has said that the property up north will be mine upon his passing and his wife will get the house down south. He stated that the property up north is stated to pass to me in his will. Is this sufficient or is a lady bird deed better to prevent the wife to challenge the will in probate?
A Will may not work because his wife has a spousal election to reject the Will and inherit intestate. Your father should see an estate planning lawyer to discuss his options.
I own one third ownership in a family cottage in nothern Michigan. I would like to transfer my ownership to my 2 children at this time. I want them to feel and take more ownership and want the transfer upon my death to be easier. I am 67 years old. Is the Lady Bird Deed an appropriate way to do this or is there a better way?
You should see an estate planning lawyer to discuss all of your options.
I am on my Mom’s bank account I write out her checks..do her banking.she just entered nursing home.for rehab or possibly long term,.we had to file for medicaid.I’m told by office people at nursing home I cannot pay her bills or touch her bank account to pay her bulls or buy her clothing etc…since she’s in nursing g home and applying for medicaid.I was told that would be considered gifting ..and would be denied medicaid.I was told I’d need to use my money for her.I don’t have power of attorney.at her death in will I do.
You should see a elder law attorney.
Can you get a lady bird deed on a modular home that is deeded through the Secretary of State?
You should sit down with a lawyer to review what you have as you are mixing terms and need some help understanding if you have a deed or a title.
Does listing a child on the Lady Bird Deed encumber that child with any liabilities of the mortgage or a credit line?
The real estate is encumbered by the lien (the mortgage) and will remain attached the real estate until paid off but the deed does not transfer personal liability on the note.
I own farm land in Illinois with my 2 siblings, can I/we do a Lady Bird Deed?
You should ask a lawyer in Illinois as I am not licensed to practice there. Sorry.
Christopher,
My mother had a Lady Bird drawn up. She passed last month and we got busy with other details. What does one do at this point? Both my brother and I are named on the Lady Bird. Thanks for your time, Bill
Typically you file the death certificate with the register of deeds but you should see a lawyer if you have any questions and not rely on a quick answer on a website.
Thank you.
You should see a lawyer if you have questions.
You should see a lawyer if you have questions.
My mother owns two pieces of property. She may have to go into a nursing home and apply for Medicaid in the near future. Would it be possible for her to trade her property for our house using the ladybird deed and putting me as the beneficiary ? Would it affect her eligibility for Medicaid? Or does she have to sell the property to someone else and buy another property to live in?
A quick answer on a website is a poor substitute for speaking with an attorney that does elder law. Please speak with an attorney that can answer this and the many other questions your family has.
My mother is in a nursing home and has executed a “transfer on death” deed and registered with the Register of Deeds in Michigan. The language says: quit claims upon her death a life estate to (insert boyfriends name) with remainder to, (list three of four children).
Is the life estate legal to the boyfriend inasmuch as he is not a blood relative or legal spouse? If it is, is he responsible for all the bills including the mortgage upon our mother’s death?
You can transfer a life estate to a non-relative.
Husband and wife named on deed, husband had a stroke, can just the wife sign a Lady Bird deed?
A spouse does not have inherent legal authority to sign the other spouse’s name. Both of them will need to sign or she needs legal authority to sign for him, e.g., power of attorney or conservatorship.
A grantor on a lady bird deed typically reserves the right to change the deed and name a new beneficiary. You would have to draft a new deed. This isn’t taking into consideration any property rights awarded in the Judgment of Divorce which may affect ownership of the property in question.
I would suggest creating a trust for the children and naming the trust as the beneficiary of the lady bird deed as a better solution.
Is a lady bird deed the same as a transfer on death deed for Michigan? I was able to make a transfer on death deed through rocket lawyer, but I don’t want to finish if it’s not the same. thanks
I have never seen the rocket lawyer transfer on death deed so I wouldn’t know. I am not a fan of DIY legal documents for clients. On the other hand, I make a lot more money fixing the problems that they create so I guess I shouldn’t complain.
My sister wishes to Lady Bird Deed her Condo to me. However the condo is at least $45,000 “underwater” and I could never get enough to payoff the mortgage. She has no other assets. Would I be liable for the difference? I have no assets either. I do not want the condo or anything to do with it. Would transferring the condo to her Revocable Trust be a better option?
Thank You
Tell her you don’t want it. But no, you wouldn’t be liable for the difference. It would avoids probate to have you as the beneficiary on the deed.
Question…Say the person you name in the LBD has bad credit…accounts in collections…or being sued for some other matter…can the home within this LBD be taken for payment for other issues or have a lien filed against it?
The beneficiary (or remainderman) of the deed does not have a property right until the grantor dies, just a future interest. This future interest cannot be attached by a creditor until after the completion of the transfer.
My husband and his two siblings are on a lady bird deed thru passing of his mother.. We are in process of divorce .. Is his portion, considered martial assets?
You should ask your lawyer and not some guy on the internet…but I would it is not a marital asset as the grantor reserves the right to change their mind whenever they want. What would you pay for someone’s future interest that the grantor could take away any time they wanted? Probably not a lot.
My mother named my son on a LBD on her Michigan condo. My son may be moving to another state. Upon her death, he said he’ll ask me to sell it for him. Will that be too complicated, or would it be easier if Mom changed the LBD to me? (She chose my son, because he’s living with her, but if he moves, she’s fine with either of us. None of us want Medicare to get proceeds from the sale.
Your mom should seek legal advice as it is her property.