Annette, a widowed woman with two adult children has a home, which is paid off. She has a checking account, savings account and a life insurance policy, all of which have her children as beneficiaries or transfer-on-death designees. Since she intends for her children to get the house immediately when she passes, she wants to make them joint owners via quit claim deed. Sounds like she is set to avoid probate court and will have no issues moving forward, right? Not so fast. The monkey wrench is that her son has a tremendous amount of debt. Why is this relevant? If he is a joint owner of the home, this could open up the home to creditors! So, what’s the answer?
Meet, Ladybird. Michigan is one of a few states that allow for property transfers via ladybird deed. The ladybird deed, which is officially known as an enhanced life estate deed, gives you the power to retain control of your property during your lifetime, including the right to rent it out, or even to sell it. However- it STILL avoids probate! The grantee’s interest in the property does not mature until after your death! This is an attractive option to Ann. If one of her children filed for bankruptcy, got sued, or even divorced, the property would not be considered one of their assets.
This is just one of many examples that demonstrate the need to talk to an estate planning attorney as soon as possible. Although you may have the very best intentions, there are certain implications that you may not be aware of! You want to make sure your wishes are honored AND that your assets are protected. Contact us today!!
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