Livonia, Northville, and Plymouth’s Lady Bird Deed Lawyer
Lady Bird Deeds, also known as enhanced life estates, are a simple but effective part of estate planning in Michigan. Lady Bird Deeds primary purpose is effectively passing property at the time of passing. The tool allows the grantor (the person transferring the property) to retain full control of property during life while designating who the property will transfer to after death.
Lady Bird Deed Benefits for You & Your Family
Probate Avoidance: Lady Bird Deeds direct where you would like your property to go after your passing. This avoids getting the probate court involved thereby saving significant time and expense for your loved ones.
Medicaide Benefits & Long Term Care: Clients must not make divestment's of their property within certain amounts and time frames or be subject to penalty (typically 5 years). Using a Lady Bird deed is not considered a divestment, so no penalty results. This can save your family a lot of money should a loved one require nursing home care.
Control During Life: Lady Bird Deed is a property transfer that allows an individual, while living, full use of the property, including the ability to sell or mortgage the property. In Michigan it is permitted by Michigan’s Land Title Standard Section 9.3.
Tax Friendly Benefits: Lady Bird Deeds are tax friendly in three ways. First, because a lady bird deed is a transfer on death there is no gift during life, therefore no gift tax. Second, the property taxes are not “uncapped”. Third, the property obtains a “step up” in basis which means the beneficiaries can sell the house on the death of the grantor and not have to pay taxes on the proceeds.
Creditor Issues with Beneficiaries: Because the beneficiary does not receive the ownership in the property until the death of the grantor, a creditor of the beneficiary (e.g. child with financial challenges) cannot attach to the grantor’s real property in satisfaction of the debt of the beneficiary.
Is a Lady Bird Deed Right for You?
The Lady Bird Deed serves as a common solution to the competing problems presented by Medicaid, probate transfers, and estate recovery. The deed is also the best means by which to give ownership to children and loved ones without specifically naming as a co-owner of the property with the grantor.
While every person’s estate plan has different individual estate plan goals and specific needs, a specialized deed is one very important tool in the estate planning toolbox. These deeds must be drafted carefully and every estate plan is different. Matt Devitt Law, PLC looks forward to assisting you with your estate plan and any questions you may have.
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