As Michigan attorneys serving clients across Oakland County and Macomb County, we understand the importance of planning for the future and protecting family assets. Many individuals want to transfer property to loved ones without the delay and expense of probate. One of the most effective tools available in Michigan for this purpose is the “Lady Bird deed,” also called an enhanced life estate deed. Lady Bird deeds enable a property owner to retain full control over the property during their lifetime while ensuring that ownership passes automatically to the chosen beneficiaries upon death.

Lady Bird deeds are popular because they combine flexibility, efficiency, and the avoidance of probate. Unlike other estate planning tools, they do not require the creation of a trust or ongoing court supervision. Instead, they are authorized by Michigan common law and recognized as a valid method of transferring real estate outside probate. For families seeking a simple and cost-effective way to manage property succession, this tool can be invaluable.

What Is A Lady Bird Deed?

A Lady Bird deed is a type of deed that reserves an enhanced life estate for the current property owner. Under this arrangement, the owner retains the right to live in, use, sell, lease, or mortgage the property for life without needing permission from the future beneficiaries. At the owner’s death, the property passes automatically to the named beneficiaries, much like a transfer-on-death designation.

Michigan courts have recognized the validity of Lady Bird deeds under the state’s property and estate laws, even though there is no specific statute creating them. They are supported through case law and operate consistently with Michigan’s statutes on property transfers and probate avoidance.

Key Benefits Of A Lady Bird Deed In Michigan

The Lady Bird deed provides several benefits for Michigan residents:

• Avoidance of Probate – Because the property transfers automatically to the named beneficiaries, it does not become part of the probate estate under the Michigan Estates and Protected Individuals Code (EPIC), MCL 700.1101 et seq.
• Retention of Control – The owner retains the ability to sell or transfer the property during their lifetime without requiring beneficiary consent.
• Medicaid Planning Advantages – In many cases, a Lady Bird deed can help with Medicaid eligibility because the property does not count as a completed gift during life. At the same time, upon the owner’s death, the property passes outside probate, which may reduce Medicaid estate recovery efforts.
• Tax Benefits – Beneficiaries may receive a “step-up” in basis under federal tax law, which can reduce capital gains taxes if they later sell the property.

How Lady Bird Deeds Compare To Other Options

Some property owners consider using joint tenancy, a living trust, or a standard quitclaim deed as alternatives. However, each of these approaches has drawbacks:

• Joint Tenancy – This creates immediate ownership rights for the co-owner, which can complicate matters if the co-owner has outstanding debts or financial issues.
• Standard Quitclaim Deed – Transfers ownership immediately and eliminates the grantor’s control over the property.
• Living Trust – Although trusts are more paperwork, trusts are a better option than just having a Lady Bird deed. Our firm recommends creating a ladybird deed and a trust as an ideal approach for real estate matters.

For many Michigan residents, the Lady Bird deed strikes the right balance between flexibility during life and efficiency after death.

Legal Considerations And Limitations

While Lady Bird deeds are widely accepted in Michigan, they must be drafted with care. Improperly prepared deeds may create title problems or fail to achieve the intended transfer. In addition, while Lady Bird deeds may offer Medicaid planning advantages, the specifics of each case should be reviewed carefully, as Medicaid rules and estate recovery laws can be complex.

It is also important to note that Lady Bird deeds only transfer real estate. They do not apply to bank accounts, vehicles, or other types of property. For a comprehensive estate plan, Lady Bird deeds should be considered in conjunction with wills, trusts, and other estate planning tools.

Frequently Asked Questions About Lady Bird Deeds In Michigan

What Makes A Lady Bird Deed Different From A Standard Life Estate Deed?

A Lady Bird deed is an enhanced life estate deed, meaning the property owner keeps the right to sell, transfer, or mortgage the property without needing beneficiary consent. A standard life estate deed restricts these rights, requiring the consent of the remaindermen for major transactions.

Can A Lady Bird Deed Help Avoid Probate In Michigan?

Yes. Under the Michigan Estates and Protected Individuals Code, property that transfers automatically outside of the estate does not require probate. Because a Lady Bird deed transfers ownership directly to named beneficiaries upon death, the property bypasses probate completely.

Does A Lady Bird Deed Affect Medicaid Eligibility Or Estate Recovery?

Often, Lady Bird deeds can be beneficial in Medicaid planning because the property is not considered a completed gift during the grantor’s lifetime. Additionally, since the property passes outside probate, it may reduce the scope of Medicaid estate recovery after death. However, the effectiveness depends on individual circumstances and state regulations at the time of death.

Can Beneficiaries Be Changed After The Deed Is Signed?

Yes. One of the main advantages of a Lady Bird deed is flexibility. Because the owner retains control during life, the deed can be revoked or revised to name new beneficiaries without their consent.

What Are The Tax Implications For Beneficiaries Receiving Property Through A Lady Bird Deed?

Beneficiaries generally receive a stepped-up basis in the property under federal tax law. This means the property’s value is adjusted to its fair market value at the time of the owner’s death, reducing potential capital gains tax if the property is sold later.

Is A Lady Bird Deed Valid Without Court Approval In Michigan?

Yes. Michigan recognizes Lady Bird deeds as valid under state property law and common law precedent. Court approval is not required if the deed is drafted correctly and complies with recording requirements.

Can A Lady Bird Deed Be Used With Other Estate Planning Tools?

Yes. Lady Bird deeds can be used in conjunction with wills, trusts, and beneficiary designations on financial accounts. They are most effective when part of a broader estate plan designed to protect assets and provide for heirs.

Are There Any Downsides To Using A Lady Bird Deed?

Potential downsides include limited applicability to real estate only and the possibility of errors in drafting. Additionally, while Lady Bird deeds can help with Medicaid planning, they do not replace the need for comprehensive legal advice when long-term care is a concern.

Call Boroja, Bernier & Associates To Draft Your Lady Bird Deed 

At Boroja, Bernier & Associates, we help clients across Troy, Shelby Township, Oakland County, and Macomb County protect family assets and plan for the future. Lady Bird deeds are a powerful estate planning tool in Michigan, but they must be carefully prepared to ensure they meet individual goals.

Call 586-991-7611 today to schedule a consultation with the Michigan estate plan lawyers at Boroja, Bernier & Associates. Our offices in Troy and Shelby Township are ready to assist clients throughout Oakland County and Macomb County in Michigan with estate planning solutions that protect families and simplify the transfer of assets.