Estate Planning with Joint Property Ownership in Michigan: Life Estate, Joint Tenants, and Tenants by the Entireties
Estate planning in Michigan often involves the strategic use of joint property ownership arrangements to transfer of assets to beneficiaries. Understanding the options for joint property ownership available to property owners is important for crafting a comprehensive estate plan. In this article, the estate planning lawyers of Thompson Legal explore three common forms of joint property ownership used in Michigan for estate planning purposes: Life Estate Deeds, Joint Tenants with Full Rights of Survivorship, and Tenants by the Entireties.
Note that this post is not exhaustive, and every situation is unique. The transfer of real estate may have unintended tax consequences, so it is always advisable to speak with an attorney before execution. Contact Thompson Legal to schedule a discovery call with an estate planning attorney.
1. Life Estate Deed
A Life Estate Deed or a Ladybird Deed is a legal arrangement in which a property owner retains the right to live in or use the property for their lifetime while designating a "remainderman" who will inherit the property upon the owner's death. In Michigan, this arrangement allows for the seamless transfer of real estate, avoiding probate with the recording of the previous owner’s death certificate with the relevant register of deeds.
Advantages of Life Estate:
Avoidance of Probate: The property automatically passes to the remainderman upon the owner's death, bypassing the probate process.
Tax Benefits: Life Estate may offer potential tax advantages, particularly if the property's value appreciates over time.
Considerations:
Loss of Control: The original owner may lose some control over the property, as they cannot sell or mortgage it without the remainderman's consent.
Medicaid Eligibility: The property may be subject to Medicaid recovery if the owner requires long-term care.
2. Joint Tenants with Full Rights of Survivorship
Joint Tenants with Full Rights of Survivorship is a form of co-ownership where each owner has an equal share in the property, and if one owner passes away, their share automatically transfers to the surviving joint tenant(s). This arrangement is common among married couples and family members.
Advantages of Joint Tenants with Full Rights of Survivorship:
Automatic Transfer: The property smoothly transfers to the surviving joint tenant(s) without going through probate.
Unity of Ownership: Each joint tenant has equal rights to the property, simplifying management.
Considerations:
Medicaid Implications: Property jointly owned with others may have Medicaid eligibility implications for one or more owners.
Immediate Ownership: Note that if you choose this method of transfer, your beneficiary will have access to their ownership interest right away.
3. Tenants by the Entireties
Tenants by the Entireties is a special form of joint property ownership exclusively available to married couples in Michigan. It combines aspects of a joint tenancy with the added benefits of creditor protection and survivorship benefits.
Advantages of Tenants by the Entireties:
Creditor Protection: The property is typically shielded from the individual debts of one spouse.
Survivorship Rights: If one spouse passes away, the surviving spouse automatically inherits the property without probate.
Considerations:
Marriage Requirement: This form of ownership is only available to married couples.
Termination upon Divorce: If the marriage ends in divorce, the tenancy by the entireties may convert to a different form of ownership.
Conclusion:
Michigan offers several options for joint property ownership that can be used for seamless estate planning for real property. The choice includes the most common options, like Life Estate, Joint Tenants with Full Rights of Survivorship, or Tenants by the Entireties depends on individual circumstances and goals. Contact Thompson Legal to consult with an experienced estate planning attorney who can provide tailored guidance based on your specific needs.
This blog is for informational purposes only. It is not intended as legal advice. In the event you would like to speak with an estate planning attorney about your case Contact Us at (734) 743-1646 to schedule a consultation.
