Ladybird Deeds and In and Out Deeds

What Is a Ladybird Deed?

A Ladybird Deed (also known as an enhanced life estate deed) lets you keep full control of your property while you are alive and ensures that it automatically transfers to your chosen beneficiary when you pass away—without going through probate court.

How It Works

• During your lifetime, you keep the right to live in, sell, refinance, or change ownership of the property at any time.
• After your death, ownership automatically transfers to your named beneficiary—no probate required.
• The deed is legally recognized in Michigan as a valid tool to “forgo the probate process” while reserving the grantor’s full property rights.

Key Benefits

• Retain Control: You can sell or mortgage the property whenever you want, without anyone’s consent.
• Avoid Probate: Your heirs receive the property directly, saving time and probate fees.
• Flexibility: Unlike joint ownership, you don’t expose the property to another person’s creditors or require their approval to make changes.
• Medicaid Planning: The property is not counted as a gift or penalized under Medicaid’s look-back rules.
• Tax Advantages:
  • Keeps your principal residence exemption during your lifetime.
  • Avoids “uncapping” of property taxes.
  • Provides a step-up in basis for beneficiaries, reducing future capital gains taxes.

 Important Considerations

• Beneficiaries do not have ownership rights until after your death.
• Add the future owner as an additional insured on your homeowner’s policy.

What are In and Out Deeds?

Some banks and lenders aren’t set up to refinance loans for properties held in a revocable trust. They want the property in your own name during the mortgage process.​

How It Works—Simple Steps

• Step 1: Take Out of Trust
  • You sign a deed that moves the property from your trust back to your own name. This is usually done as part of the paperwork when you start your refinance with the lender.​
• Step 2: Refinance
  • Now in your name, the bank can complete the refinance—giving you your new loan.​
• Step 3: Put Back in Trust
  • Once the refinance closes, you sign another deed that moves the property back into your trust. Your estate plan is now back in place, and you’ll avoid probate down the road.​

Why It’s Important

If you forget to put the property back in your trust after refinancing, you lose out on important protections—like keeping the property out of probate when you die.