Monday, May 20, 2013
A so-called "ladybird deed" has become quite popular with Michigan elder law and estate planning practitioners in the past decade. What is it? A ladybird deed (also known as a "transfer on death deed") is a real property transfer wherein the grantor (usually the elder client) reserves all rights of ownership until his or her death.
A common ladybird deed might read, "Joe Smith transfers blackacre to HIMSELF, during his lifetime, and then to his children, Jim Smith and Jeff Smith as co-tenants."
A ladybird deed is do popular because it serves many functions. For estate planning, a ladybird deed avoids probate by automatically vesting ownership with the grantees at the time of the elder client 's death, while preserving the elder client's control of the asset during his or her lifetime. Unlike a life estate reservation, an elder client may sell, mortgage or otherwise transfer the real estate during his or her lifetime without the permission of the grantees.
The retention of control by the grantee also serves an important purpose for long term care planning: if the real estate is a homestead, the property will remain "exempt" for Medicaid eligibility AND will importantly avoid the so-called Estate Recovery law of Michigan. At the time of publishing, the ladybird deed is a critical component of of any long term care plan.
Ladybird deeds are not for everyone. But for individuals with long term care issues or elder's with small to mid-size estates, a ladybird deed can be an extremely important tool. If you're wondering if a ladybird deed is right for you, contact me and let's discuss. I'm happy to help explore the options and see if it's a right fit.