Clients are always interested in how to transfer their property to their heirs without the need to go through probate court at the time of their death. Another goal is to assure that the property taxes on long held real property do not uncap upon the transfer to the next generation.
For a period of time, we have been unable to accomplish both of these goals using a Lady Bird or enhanced life estate deed. This is due to the fact that while the amendments to the property tax laws had provided for transfers by jointly held property and transfers by a revocable trust to pass to the next generation without uncapping the taxes, it did not provide for the same result specifically for enhanced life estate deeds. Because of this, the state of Michigan and all local assessors would uncap property if held under a Lady Bird or enhanced life estate deed when the original owners died.
The law has now been amended to include Lady Bird or enhanced life estate deeds. The application of the law is retroactive to December 31, 2014. Therefore, these deeds are now effective for a transfer to the next generation upon the death of the original owners who die on or after January 1, 2015. The property will transfer without the need for probate and the property taxes will not uncap.
This is great news for clients who are not interested in a trust and have worked out most of their post-death transfers using beneficiary designations and transfers on death. They now can take advantage of a Lady Bird Deed to transfer their property to their children leaving little or nothing to run through the probate process.