Ladybird Deeds: Purposes and Usefulness

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A ladybird deed, sometimes written as Lady Bird deed, is not a deed in and of itself. Rather, it is a term that describes a method of transferring real property by a warranty or quitclaim deed. Simply defined, a ladybird deed is a transfer of real property to a contingent grantee that reserves a life estate and the lifetime power to convey the property and unilaterally defeat the grantee’s interest.

It is a classic example of retaining the power to take back with one hand what the other hand purportedly gave. Before obtaining the nickname of ladybird deed, this type of transfer was commonly referred to as an enhanced life estate; namely, a life estate reserved in the grantor and enhanced by the grantor’s reserved power to convey. It is generally believed that the first ladybird deed was used by President Lyndon Johnson to transfer property to his wife, “Lady Bird” Johnson, upon his death. The name actually came into existence when Jerome Ira Solkoff, a Florida attorney, used a fictitious cast of characters, which included Lady Bird, in his elder law materials to illustrate the usefulness of the enhanced life estate transfer.

In fact, the ladybird type of transfer precedes Solkoff (and, for that matter, President Johnson). This type of transfer by deed was permissible under the common law of estates. It is a vested remainder subject to total divestment. The most common ladybird-type transfer in Michigan is sanctioned by the Michigan Title Standards.3 This standard is founded on the principle of powers of appointment. Consequently, the ladybird-type transfer is not a new phenomenon.

To learn more about the purposes and usefulness of ladybird deeds-including how it relates to Medicaid benefits, probate avoidance, creditor protection, and changes in ownership and property uncapping-read the entire article in the June 2016 Michigan Bar Journal.

By: Kary C. Frank, Michigan Bar Journal 

Source: www.michbar.org/file/barjournal/article/documents/pdf4article2878pdf.

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