At least twice a month, I have a client ask me a question about Ladybird deeds. Specifically, they tell me that they heard about Ladybird deeds in passing conversation, but nobody really knows what exactly a Ladybird deed does.
In short, a Ladybird deed is a type of deed that, when executed properly, allows the owners of a piece of real estate to make beneficiary designations on their property where, upon the owner’s death, the real estate is transferred to the beneficiaries outside of any probate proceedings.
Here is how I explain it to my clients: a Ladybird deed is a deed where the owners of the property deed the property from themselves… to themselves. While the owners are still alive, they can do whatever they want with their real estate, including selling the property at a later date. The execution of a Ladybird deed does not result in the owners gaining any additional property rights in the real estate nor does it cause the owners to lose any interest or rights in their property.
The Ladybird deed reads like a normal deed with a circular transaction from the grantors deeding the property to themselves. That is until you get to the last sentence of the deed. This last sentence states: “if, at the last of our deaths this property is still in our names, then we want the property to go to the following person/persons:” After this sentence comes a list of names to whom the grantors want the property to be transferred to upon their deaths. Under current Michigan law, this creates a beneficiary designation on the real estate. The persons who are named as beneficiaries do not have any ownership rights in the property until the moment of the last Grantor’s death.
If the grantor/owners still owned the property at the time of the last owner to pass away, then the beneficiary needs to travel to the register of deed’s office in the county where the real estate is located, record the death certificate of each of the original owners at a cost of $30 per death certificate, and then the register of deeds puts the name of the beneficiary on as the new owner of the property.