A Lady Bird deed is a special type of deed that conveys an enhanced life estate to the donee. Michigan recognizes the use of Lady Bird deeds, and they can be great estate planning tools. Lady Bird deeds avoid probate, have certain tax advantages, and are not considered divestments for medicaid planning purposes.
Basically what happens is a person conveys property to him/herself while reserving the power (a general power of appointment) to sell, gift, mortgage, or do basically anything else with the property during his or her lifetime. However, that person can designate certain people who will automatically take the property if the power has not been exercised when the person dies. These people are called default takers or beneficiaries. Because a person can do anything with the property during life, there has been no actual transfer which has both tax and medicaid advantages. And because the property will transfer to the default beneficiaries immediately upon the person’s death, probate proceedings are avoided.
The use of Lady Bird deeds is gaining popularity in Michigan as well as some other states because of their flexibility and many advantages. If you would like more information to see if a Lady Bird deed should be part of your Michigan estate plan, contact me today.
Interesting Note: The name is derived from Lady Bird Johnson because it is reported that President Johnson once used this type of deed to convey land to his wife
No related posts.