Lady Bird Deed
A Lady Bird Deed is a simple and inexpensive tool used to pass real property, such as your home, to your heirs upon your death. A Lady Bird Deed avoids probate. Meaning, your real property passes to your named heirs automatically—without court involvement. Lady Bird Deeds are very common in Michigan and have a number of other notable benefits.
How Does a Lady Bird Deed Work?
In Michigan, a Lady Bird Deed is very easy to use. You sign a deed giving your property to your chosen heirs, but in the deed you retain a life estate for yourself. In other words, you retain the right to use the property during your lifetime. You also retain the right to sell, give away, or mortgage the property. During your lifetime, you keep all rights to the property and the authority to dispose of it. Any interest you own in the property at the time of your death will pass directly to your named heirs.
Benefits of A Lady Bird Deed in Michigan
A Lady Bird Deed will not increase your property taxes because it does not uncap your property tax. This is because you still own the property until your death. Since there is no transfer until your death, your property tax is not uncapped. Similarly, you will not lose your homestead exemption from using a Lady Bird Deed.
Capital Gains Taxes
Using a Lady Bird Deed can save your heirs thousands of dollars of capital gain tax. This is because the beneficiaries of the deed receive a step up in tax basis on the value of the real property when you pass.
Using a Lady Bird Deed can help prevent your heirs from having to go to court and incurring the added expense of hiring a probate attorney. Probate is a court supervised process which transfers title of your assets to your heirs. Probate is time consuming, cumbersome and can cost your heirs thousands of dollars. A Lady Bird Deed is one way to avoid probate and the associated headaches.
A Lady Bird Deed can be an extremely effective way to pass real property to the heirs of a Medicaid recipient. Using a Lady Bird Deed is not considered a Medicaid divestment. Further, you will not lose your home exemption for using a Lady Bird Deed.
Michigan’s Medicaid Recovery or Estate Recovery Laws allow the State of Michigan to collect against the probate estate of a Medicaid recipient for money paid on his or her behalf. You can take steps to prevent estate recovery by preventing your property from going through probate. This includes using a Lady Bird Deed.
Do I Need A Lady Bird Deed In Michigan?
A Lady Bird Deed is an incredibly effective tool for estate planning. This is particularly true given their relative ease and low cost.They do, however, have drawbacks. They are not a one size fits all solution to everyone’s estate planning needs. Determining whether or not you need a Lady Bird Deed would require a comprehensive review of your estate by a qualified estate planning attorney.
Cost of a Lady Bird Deed
The cost of a Lady Bird Deed in Michigan is very reasonable given how effective it can be as an estate planning tool in the right situation. The fee to prepare one can range greatly. Ordinarily, however, it should only cost a few hundred dollars. This price typically includes the time spent researching your deed, preparing the Lady Bird Deed, and the time spent to sign and record the deed. Your county will charge a recording fee to record the deed. The fee in Michigan is typically $30.00.
Lady Bird Deed vs Revocable Trust
The goal of most estate plans is to avoid probate, reduce estate and income taxes, provide protection for a spouse or children, and provide for disability planning. The comparison of revocable trusts and Lady Bird Deeds largely depends on your respective estate planning goals. If your goals can be accomplished using a simple Lady Bird Deed, then it may be the best option for you. If your estate planning goals cannot be accomplished using a Lady Bird Deed, then you must consider the use of a revocable trust, along with other estate planning techniques.
Lady Bird Deed Lawyer
Would you like to learn more about Michigan Lady Bird Deeds? At Atlas Law, PLC, we can help you determine if a Lady Bird Deed is right for you! Our Michigan office serves all of Michigan, Novi, Northville, Plymouth, Canton, Salem Livonia, Farmington, Farmington Hills, West Bloomfield and more. If you have a question about Lady Bird Deeds or need assistance with your estate plan call us now. We offer free consultations. Call today (248) 773-5555
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