Protecting your assets and ensuring your loved ones are provided for after your passing is a cornerstone of responsible estate planning. While a Will is an essential component of this process, it’s not the only tool at your disposal. Incorporating additional legal documents, such as a Transfer-On-Death Deed can offer significant advantages in achieving your estate planning objectives. Please continue reading as we explore the benefits of a Transfer-On-Death Deed and the importance of consulting with an experienced Washtenaw County Estate Planning Attorney to safeguard your legacy.
What is a Transfer-On-Death Deed?
A Transfer-On-Death (TOD) Deed is a legal document that allows for the immediate transfer of property from one part to another upon their passing. Essentially, you can designate beneficiaries who will automatically receive ownership of your real estate upon your death. This process is intended to facilitate the transfer of property to a designated beneficiary without the need for Probate court proceedings. Bypassing the Probate process can potentially save beneficiaries considerable time, money, and stress.
It’s important to understand that Michigan doesn’t recognize TOD deeds. Instead, the state uses “Enhanced Life Estate Deeds” or “Lady Bird Deeds” to achieve the same outcome of transferring real property after death without Probate. While both deeds facilitate property transfer upon death, Lady Bird deeds allow the grantor to retain control and revoke the transfer during their lifetime. TOD deeds, on the other hand, require recording before death and are typically less flexible.
What Are the Potential Benefits of a Lady Bird Deed?
Creating a Lady Bird Deed offers several advantages, most notably bypassing the costly and time-consuming Probate process. Through this deed, you retain lifetime control over your property, enabling you to sell, mortgage, or manage it as you wish, and can change or revoke the deed at any time, providing flexibility in your estate planning.
In addition, a Lady Bird Deed may help avoid certain taxes that would typically be imposed through traditional property transfers. For instance, you may receive a “step-up in basis” on death, potentially minimizing capital gains taxes for your beneficiaries. It may also protect you from Medicaid estate recovery, ensuring that your property passes to loved ones rather than being used to reimburse the state for long-term care costs.
Although a Transfer-On-Death Deed offers numerous benefits, it’s advisable to consult with a qualified estate planning attorney who can determine the suitability of this legal document given the unique circumstances of your situation. At Collis, Griffor, & Hendra, we are prepared to help ensure the deed is properly prepared and executed. Connect with our dedicated firm today for guidance and skilled representation.
