A Lady Bird deed is an estate planning tool available to Michigan residents. Another name for this deed is an enhanced life estate deed. In addition to Michigan, the deed is available in Florida, Texas, Vermont and West Virginia. You should know a few things about a Lady Bird deed before deciding to use one.
A Lady Bird deed is used when planning an estate to transfer property from one individual to another. The deed allows the owner to retain control and ownership of the property during their lifetime. After the property owner dies, the property goes to a beneficiary chosen by the now-deceased owner prior to their death.
A Lady Bird deed keeps your property out of probate court, which is a long and costly process. Your property goes straight to the beneficiary that you designated during estate planning. A valid Lady Bird deed eliminates the need for court intervention. There are also other benefits provided by this type of deed.
You retain control of your property and can use it as you wish. You can ultimately decide to sell the property instead of leaving it to a beneficiary. You could even lease the property, get a mortgage on it or do renovations. The beneficiary has no say so in the property until after they receive the inheritance.
Medicaid is a government program that provides health insurance for low-income individuals. To qualify for Medicaid, you must meet the income and asset requirements set by the program. If Medicaid counts your property as an asset, it might cause you to lose your eligibility for the program.
The property you transfer through a Lady Bird deed doesn’t count as an asset for Medicaid. As a result, you can still possibly qualify for Medicaid while also keeping ownership of your property.
As a Michigan resident, a Lady Bird deed can reduce your taxes. Transferring property through a Lady Bird deed doesn’t require reassessing your property tax.
A Lady Bird deed is potentially a good tool for estate planning. Depending on your assets and personal situation, you might want to consider this type of deed.