WHY YOU WANT A LADY BIRD DEED
Michigan is one of the growing number of states that recognize the use of a lady bird deed (also known as an enhanced life estate deed). It is a great estate planning tool for transferring real estate upon death, as it is simple and inexpensive.
A lady bird deed transfers the life estate in real property to yourself and upon your death the property passes to the beneficiary of your choosing. In plain language, it means that you get to use the real property while you are living, you can even sell, mortgage or change the beneficiary of your real property, and when you die, if you still own the property, it transfers to the named beneficiary.
Benefits of a lady bird deed:
Probate avoidance – your property will automatically transfer to your named beneficiary upon your death, provided you still own the property
Not a Divestment for Medicaid – your primary residence will still be considered an exempt asset, when you apply for Medicaid assistance.
Step up in Basis – your beneficiaries will not pay taxes when they sell the property upon your passing.
No gift tax – grantor pays no gift tax as there is no completed transfer while he is living.
No uncapping of property taxes – your property taxes will not be reassessed.
No Michigan estate recovery – since the real property passes outside of probate, there is no estate recovery for Medicaid purposes
So why not consider using a lady bird deed?