Lady Bird Deeds Transfer Homes at Death, Bypassing Probate, Some Taxes & Medicaid Payback
Updated: Jun 22, 2020
A properly drafted Lady Bird Deed automatically transfers your home to your named beneficiary upon your death and saves heirs the time consuming and costly probate court process and fees. Homeowners still retain rights to their property until their death and are able to sell, lease or mortgage their property without the heir’s permission.
Simply adding your child’s name to your deed gives them ownership interest and puts you at great risk of being exposed to their creditors, ex-spouses, and more. A Lady Bird Deed to transfer your home to your heirs is that they will receive a full “step-up in cost basis,” minimizing potential capital gains tax by readjusting the home’s value.
Also, because the property is directly passed to your beneficiary, property taxes will not increase. Michigan property tax is capped under Proposal A for anyone who owned a piece of property prior to 1995. If you have owned your property since this time, your heirs will receive the benefit of the lower property tax when a Lady Bird Deed is used. The LBD also helps your heirs to avoid gift taxes since the property does not become theirs until your death.
And, finally, the LBD bypasses the Michigan Estate Recovery Laws which allow the Michigan Department of Health and Human Services to seek repayment for Medicaid benefits after someone passes. ALBD can play a crucial role in ensuring an estate is not opened. Once the LBD is drafted, the deed is signed and recorded with the local register of deeds.
Adrienne C. Watts is a licensed attorney with over 30 years of experience and specializes in elder law including Medicaid planning, probate, estate planning, asset protection, guardianships and conservatorships.
Visit www.adriennecwatts. com/, call 248.399.6985 or email email@example.com for more information or a complimentary consultation.