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What is a ladybird deed?

If you are worried about how debt, Medicaid, probate and other factors will affect your estate after you die, you may want to consider a ladybird deed. According to the Michigan Bar Journal, this document transfers real estate to your beneficiary upon your death, but it allows you to retain the use of the property for as long as you live. Not only that, you can continue to make all the decisions regarding the property without the input of the grantee, including selling it or choosing a new beneficiary.

One of the benefits of this level of control is that you may be able to protect your estate from your beneficiary’s creditors. As long as you are alive, there is no interest transferred to the person you name as the grantee, so his or her creditors cannot require the property to be sold to pay the debt. However, the property is not protected from your creditors because you have access and control of the estate, including the right to sell the property.

When your real property is your homestead and qualifies for that exemption, it does not affect eligibility for Medicaid. However, without the ladybird deed, the property would enter probate after your death. During the probate process, the Michigan Department of Health and Human Services may require the property to be sold to repay the benefits Medicaid provided to you. With the ladybird deed, the property passes to the beneficiary without going to probate, so it is not subject to Medicaid recovery by the state.

There are many other issues that may affect whether a ladybird deed is right for your circumstances. Therefore, this general information should not take the place of an attorney’s advice.

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