Ladybird Deeds have received a lot of press because they allow a homeowner to have the "best of both worlds":
- He can maintain control of all legal rights regarding his home until his death.
- He can sell the property, re-finance it or even change his mind about who gets the property.
- Upon the homeowner's death, the home transfers to the beneficiary without the need to go through probate court. The beneficiary just needs to file a death certificate with the county Register of Deeds' office.
One of the drawbacks to Ladybird Deeds, though, had been that property taxes could "pop up". The law used to provide that when the homeowner died, it was considered a "transfer" of the property and would allow the local assessor to re-value the property, even if nothing else had changed.
The Michigan Legislature corrected this problem with a new law that was enacted on December 22, 2015 (and is retroactive to December 31, 2014). Under the new law, the death of the homeowner is NOT considered a "transfer" of the property (and does not allow the assessor to change the value of the property) IF:
- the person receiving the property is the homeowner's (or the homeowner's spouse's) mother, father, brother, sister, son, daughter, adopted son, adopted daughter, grandson, or granddaughter AND
- the residential property is not used for any commercial purpose after the homeowner's death.
This new law makes a Ladybird Deed an even more valuable estate planning tool.