An Introduction to Ladybird Deeds:
As a homeowner, you want to make sure that your property is protected and that your loved ones will be taken care of in the event of your passing. This is where a Ladybird Deed can be a valuable tool in your estate planning process.
How Does a Ladybird Deed Pass Your Home to Your Beneficiaries?
A Ladybird Deed, also known as an enhanced life estate deed, is a legal document that allows you to retain ownership of your property during your lifetime while also naming a beneficiary who will automatically inherit the property upon your passing. This means that you have the freedom to live in your home, sell it, or even mortgage it without the permission of your beneficiary.
Another significant advantage of a Ladybird Deed is that it can help you avoid probate, which can be a complicated and time-consuming process. This type of deed offers a helping hand for homeowners who want to leave a lasting legacy for their loved ones.
Why is it Called a Ladybird Deed?
It’s an interesting term that actually came from a legal case involving President Lyndon B. Johnson and his wife, Lady Bird. They used this special type of deed to transfer property. Even though the deed isn’t named after Lady Bird Johnson herself, the name stuck because of the famous nature of the case and the unforgettable name of the former First Lady.
Does a Ladybird Deed Affect My Property Taxes?
One of the benefits of a Ladybird Deed is that it does not affect your property taxes. As the owner, you can file a Property Transfer Affidavit and claim an exemption that prevents your property taxes from the dreaded uncapping. This means that you can transfer your property while still paying the same amount of taxes as before.
Can a Ladybird Deed Protect My House from Medicaid Recovery?
A Ladybird Deed does not affect Medicaid eligibility. This is because the property is still considered an asset of the original owner until they pass away. At that point, the property is transferred to the designated beneficiaries without going through probate, which protects your property against Medicaid recovery.
When a Ladybird Deed May Not Be the Best Choice
While Ladybird Deeds can be an excellent choice for many individuals seeking to avoid probate and transfer property quickly, they may not always be the best option. For example, if you have a complicated estate with multiple beneficiaries or liabilities, a more comprehensive estate planning tool may be necessary for protecting your assets and minimizing tax consequences.
Additionally, Ladybird Deeds may not be recognized in certain states, making them invalid and potentially causing confusion or disputes among beneficiaries. They are legal in Michigan!
If you have any questions or concerns about Ladybird Deeds or estate planning in general, please do not hesitate to contact me. I understand the importance of protecting your assets and ensuring that your loved ones are taken care of. I can assist you in creating a comprehensive estate plan that includes a Ladybird Deed.
Give me a call at (517) 708-2222 or email me at Katrina@CornerstoneLegalPLLC.com..