Written by Brandon Thomson

The Ladybird Deed is a specific type of deed that has become popular in recent years. The reason for its popularity is simple – it has many benefits. Some of the benefits include the ability to transfer property outside of probate without using a trust and the avoidance of Michigan Medicaid Estate Recovery.

What is a Ladybird Deed?

A Ladybird Deed is a nickname for an “enhanced life estate.” Unlike a regular life estate, a Ladybird Deed gives you the power to retain control of the property during your life, including the right to use the property for profit or to sell the property. Legend has it that President Lyndon B. Johnson conveyed real estate to his wife, Lady Bird Johnson, by means of this type of deed –  hence the deed taking on her namesake.  The real story is Jerome Ira Solkoff, a Florida-based attorney, used a fictitious cast of characters –  which included Lady Bird –  in his elder law materials to illustrate the usefulness of the enhanced life estate transfer.

Do I Need a Ladybird Deed in Michigan?

There are many situations that may warrant the use of a Ladybird Deed; nevertheless, there are a couple common situations when our Probate Pro attorneys often recommend the use of a Ladybird Deed. An example a widow or widower who has adult children as the beneficiary of all assets is typically a great candidate for a Ladybird Deed. For example, if the adult children are transfer on death beneficiaries on the widow’s bank accounts, and the beneficiaries of her life insurance, the real estate could be conveyed via a Ladybird Deed and avoid the need for probate.

A Common Mistake

A mistake that we often see at The Probate ProSM is a parent adding an adult child to their property via a quit claim deed for the purpose of avoiding probate (not using the Deed). The intention of avoiding probate is good; however, this mechanism to do so is a mistake.

What the parent fails to realize in this situation is that when you add a child – or any person –  onto a deed, the child is now claiming half ownership of the property, without any restrictions. If the child were to file for bankruptcy, get a divorce, or get sued, the property would be considered an asset of the person involved. After all, that child is half-owner of the property.

How the Ladybird Deed can Help

A better way to accomplish the client’s goal of avoiding probate includes a Ladybird Deed to transfer the property. It’s akin to adding a beneficiary designation to the property. The beneficiary’s interest in the property does not ripen until the death of the client. Therefore, the client’s goal of avoiding probate is met, without the potential risks of adding a new owner during the client’s lifetime.

At The Probate ProSM, we want to make sure you avoid any messy probate court drama. We’ll work with you to create a Ladybird Deed so that the assets can be transferred without any trips to the probate court. If you or someone you know needs a Ladybird Deed, or any probate court related services, call us today at 1-(877)-YOUR-FIRM.