Does a Ladybird Deed Let You Skip Estate Planning?


If you are looking for an easy form of estate planning, you may think a Ladybird deed is all you need. While these deeds are beneficial in some estate planning situations, they aren’t suitable for every family. They won’t cover everything in your estate plan.

What is a Ladybird Deed?

A ladybird deed transfers the right to live on or use a piece of real property to the owner of the property, their spouse, or some other person while they are alive, along with the right to convey the property during their lifetime. Then, after that person passes away, the same deed conveys the property to specific beneficiaries. It is also called an “Enhanced Life Estate Deed.” Ladybird deeds work well in certain circumstances and like a trust, they let you – the grantor – and your spouse keep control of the property while you are alive. If something happens and you need to sell or refinance the property, you can do that even after signing a Ladybird deed. After your death, the deeds give your beneficiaries total control of the property. They can be helpful because they don’t count as gifts for tax purposes or as divestments for Medicaid eligibility.

Using an Enhanced Life Estate Deed to Streamline Your Family’s Probate Experience

The main reason you might use an Enhanced Life Estate Deed is to remove the home, cabin, or other real estate from your probate estate. The way the Ladybird Deed is written, the property passes automatically to the named beneficiaries at the time of your death. A Michigan probate court judge doesn’t need to authorize or oversee the transfer because, technically, that happened during your lifetime.

A Ladybird Deed Doesn’t Replace Your Need for an Estate Plan

Unfortunately, some families assume that all they need to plan for their family’s future is a Ladybird deed – that it replaces the entire estate plan. That’s not true.

First, the deed only conveys real property: a house or piece of land. It doesn’t apply to anything in the house like furniture or any other property such as a person’s car or personal items. It also does nothing to transfer the money needed to maintain the property or pay off any loans still owed when the grantor dies. If you want to pass down a family cabin along with all its contents and funds to cover the upkeep, a trust may be a better option.

Second, your beneficiaries will receive the property as “joint tenants.” If you name more than one beneficiary, they will need to work together to sell or borrow money against the property. If your children or cousins don’t get along, this could send them to court to ask a judge to partition the property.

Third, a Ladybird deed alone won’t do anything to protect you during your lifetime or in your final illness. If a disease or degenerative condition leaves you unable to manage your care, a guardian may choose to sell the deeded property to cover your medical costs. There are other estate planning documents, including guardianship designations and durable powers of attorney for medical purposes, that can limit those people’s authority or give specific instructions on how you want the property treated while you are still alive.

At Thacker Sleight, our experienced and empathetic estate planning attorneys will make sure you have everything you need to be sure your property is handed down to your family after you pass away. We know when and how to use Ladybird deeds effectively and what you need in your estate plan to supplement them. If you want to be sure your home stays in the family for the next generation, contact us at (616) 300-2367 to schedule a consultation.

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