People establishing estate plans often focus primarily on their largest assets. Frequently, their homes may be among their most valuable possessions. They want to protect their houses from creditor claims and other issues that could endanger their legal ownership.
Some people use their homes to fund a trust, creating a degree of separation between themselves and the property. In some cases, people primarily worry about the right person inheriting the home rather than protecting it from outside claims. In those situations, testators might draft deeds to add co-owners before they die or may address their homes in their wills. Occasionally, people may decide that they want to draft lady bird deeds as a means of protecting their homes and strengthening their estate plans.
What benefits can lady bird deeds offer those thinking about their future tenancy in their primary residence and the transfer of the property to their beneficiaries later?
The owner retains control
People sometimes refer to lady bird deeds as enhanced life estate deeds. They grant the person drafting the deed full control over the property. They also get to name beneficiaries who inherit the property immediately after their death without the home passing through probate court first.
Lady bird deeds are useful because the owner can make choices about the property during their lifetime. They can take out a mortgage or decide to sell their home without first obtaining approval from beneficiaries. Additionally, while the owner with the enhanced life estate interest in the property is still alive, they may be able to more readily qualify for Medicaid benefits if they need long-term care as they age.
When the owner with the enhanced life estate rights dies, beneficiaries don’t have to worry about the home becoming subject to creditor claims or Medicaid estate recovery efforts after their death in most cases. The deed can also limit the likelihood of estate taxes by diminishing the size of the estate.
Lady bird deeds are an effective solution that Michiganders can employ. Most other states don’t allow these unique deeds. They can be a beneficial addition to a will and other estate planning documents.
When people’s largest assets include real property, a lady bird deed could be a reasonable option for those thinking about their legacy after they die and the protection of their loved ones. Reviewing personal holdings and estate planning priorities with a skilled legal team can help people determine the best way to handle their most valuable assets.