Kemp Klein

Seniors Keep Life-Long Homes in the Family

One of the biggest concerns of older adults in Michigan and their family members is the ability to maintain ownership of their life-long home. As an older adult develops the need to enter a nursing home, further concerns and complications can arise if the government puts a lien on the real estate.

With the adoption of an Estate Recovery Law in Michigan, the state will be able to place a lien on the home after the death of a Medicaid recipient in an effort to recoup the Medicaid monies provided the older adult prior to his or her death.

We are often asked, “Can a lien be avoided?” The answer is: sometimes. Having the senior convey the real estate to their children prior to the parent’s admission into a nursing home will work by using a so-called “Ladybird” Deed.

Under the senior’s “life estate” created by the deed, the parent would retain his or her right to return to (and live in) the home any time prior to death. Most importantly, from the parent’s perspective, the deed would

contain an absolute right of the parent to sell, convey or mortgage the property during the parent’s lifetime, or to change who the property would pass to upon the parent’s death.

This conveyance complies with Michigan’s real estate title standards and it allows the parent to retain significant rights, but so far it has not been challenged by the courts as an “incomplete gift.” Therefore, the Ladybird Deed appears to still be an appropriate way of preserving a home for a family in the Medicaid planning process. We are, however, cautioning clients that this may change in the not so distant future.

For further information regarding these matters, please contact Ms. Brazzil at 248 740 5667 or via email.