Hi, I’m Alicia Kellogg with Access Title Agency. I promised back in the warm summer months that I would talk to you about Lady Bird Deeds. So here is the basic information you need to know to help you decide if a Lady Bird Deed is right for your situation.
A Lady Bird Deed (or an Enhanced Life Estate Deed) is a conveyance document that would deed a person’s home to him or herself and create a gift-in-default to his or her children…or what we call beneficiaries. The deed reserves full ownership and use of the property with the grantor, while allowing him or her the ability to sell the property at any time.
In layman’s terms, this means that (1) the grantor still owns the property; (2) the grantor can sell the property at any time without notifying his or her beneficiaries; and (3) if the grantor never sells the property, the house will pass directly to his or her beneficiaries after she passes away without going through probate.
A Lady Bird Deed has several other benefits, including:
- As stated, bypassing probate.
- The transfer is exempt from homestead transfer tax.
- It does not result in capital gains for the beneficiaries because they will not receive any value until the Grantor passes away.
- It does not open up the property to the beneficiaries’ creditors during the Grantor’s lifetime because the beneficiaries have no interest until the Grantor has passed away without selling the home.
- It allows the Grantor to sell her home at any time, without needing the consent of his or her beneficiaries.
As always, when determining what kind of conveyance to use, a person’s individual situation must be assessed. It is important to discuss
- The status of the current ownership interest in the property;
- What affect and consequences the client’s proposed change in the property interest would have on the client; and
- Whether or not the client even has the right to change the current ownership interest.
If you have questions about your interest in a property or want to discuss a Lady Bird Deed, please call our office and we would be happy to help.
By Alicia Kellogg
Alicia Kellogg is Access Title Agency’s new on-staff attorney for the Traverse City and Suttons Bay, Michigan offices. She graduated cum laude from Western Michigan University Cooley Law School and is licensed to practice in the State of Michigan. Contact info: firstname.lastname@example.org or (231) 539-1203.