In the vast realm of estate planning, the Michigan Ladybird Deed stands out as a unique and powerful tool. Also called an "enhanced life estate deed," this lesser-known document offers Michigan residents a flexible way to manage real estate after death.
Named after First Lady Ladybird Johnson, a Ladybird Deed is a type of deed used to transfer property without the requirement of going through the probate process. The probate court process can be time-consuming, expensive, and emotionally taxing for the family left behind after a death. The Ladybird Deed provides an elegant solution to avoid probate while retaining control over your property during your lifetime.
One of the most significant advantages of a Ladybird Deed is its flexibility. Unlike other deed transfers, it allows you to retain full control over your property while you are alive. For example, a life estate grants an interest in the property to both the owner and the beneficiary, or remainderman. The owner of the property is unable to sell the property without the remainderman’s approval, and the owner would only get a portion of the proceeds of such a sale. In contrast, with a Ladybird Deed, you can sell, mortgage, lease, or even give away the property without needing to seek permission from the beneficiaries named in the deed.
Additionally, the Ladybird Deed provides an advantage when it comes to Medicaid planning. Medicaid, the state and federally funded program that provides healthcare coverage to eligible low-income individuals, has strict asset limits. Utilizing a Ladybird Deed allows you to potentially qualify for Medicaid assistance while preserving your home for your heirs after death.
The Ladybird Deed also allows you to change your mind about the property's beneficiaries at any time. You can simply create a new Ladybird Deed, modifying the beneficiaries or their shares of the property, giving you flexibility in your estate planning strategy.
Just like with any legal instrument, a Ladybird Deed requires careful consideration and proper execution. It is important to consult with an experienced estate planning attorney to ensure that the deed is drafted correctly and in compliance with Michigan law. Contact our office today to discuss whether this is the right tool for you and your family.
In July, I sat down with Connor Bauserman, host of the Wealthy HOMES Podcast to discuss the importance of estate planning. In particular, we discussed why it is so important for parents of young children to have an estate plan in case the unimaginable was to occur. An estate plan allows you to nominate guardians and direct the distribution of assets over time for the benefit of your children. Listen below:
For many people, starting the estate planning experience may be daunting. The prospect of discussing hard topics, such as death and dying, is intimidating to many people. On the other hand, knowing that there is a plan in place for their family after death grants some a sense of peace for the future. Whatever your reason for deciding to embark on the estate planning journey, knowledge of what to expect at your initial consultation may help ease your concerns. Here are four tips to help you through the process:
1. Fill out Client Intake Forms Prior to Your Consultation
Upon scheduling your consultation, your law firm will likely provide you with client intake forms. These may ask a variety of questions about yourself, your spouse or partner, your children and other potential beneficiaries. Additionally, a client intake form will likely ask for information about your property, assets, and current beneficiary designations. You may be asked to provide names and contact information for other professional advisors, such as your CPA or financial planner.
This information gives your attorney some background information as they begin the estate planning conversation with you. It will assist them in beginning to form a picture of what type of estate plan you and your family may benefit from. Failing to bring the completed forms to your consultation may end up slowing down the estate planning process.
2. Be Open and Honest
At your initial consultation, your attorney will likely ask you a lot of personal questions. Questions that, at times, may even feel intrusive and intense. It is important to answer these questions as honestly as you can. Your attorney will advise you on the best estate plan for your situation based on the answers to some of these questions. Questions may include asking whether you have concerns about any of your beneficiaries, for example, are they financial stable, healthy, is divorce or creditors a concern, is there any concern about drug, gambling or other addictions. In situations involving second marriages, or other prior relationships, questions may be asked about how you wish inheritance to be divided between children and step-children.
Additionally, when talking about death and dying, your attorney may encourage you to think about your specific wishes with regard to incapacity, funeral and burial plans, advanced care planning, i.e., end of life planning and other hard to discuss topics. While these questions may be difficult to address, having a solid plan in place will create peace of mind for you and your family members.
3. Consider Who Your Trusted Agents Will Be
A large part of estate planning is deciding who will act as your agent for various matters and decision making. For some people, adult children are the perfect persons to appoint to these roles. Others prefer to appoint other family members or friends. For those who do not have a trusted family member or friend, a corporate trustee may be the best option. Here are some of the roles that your estate plan may need to include:
4. Follow Up With Additional Information Quickly
If you decide to retain the attorney you meet with, they may ask you follow up questions to confirm the selections you made during your consultation. Additionally, they may ask you to provide account statements, contact information for your beneficiaries, agents, trustees, and your financial advisors. Providing all the information requested in a timely manner, ensures that the attorney is able to start work on your documents as soon as possible, meaning you are one step closer to having a completed estate plan and peace for the future.
Starting the estate planning process doesn’t need to be overwhelming. Eliminate stress by carefully considering your options and providing all the information you can to your attorney. Doing so will allow them to guide you to the best plan for your family and situation.