October 15, 2024 • 28 mins
Did you know? Removing your home from your trust might be necessary for Medicaid eligibility in Michigan. Listen to our latest episode for essential tips! #Medicaid #Michigan
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Episode Transcript
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Speaker 1 (00:30):
Well, good afternoon, michiganers. It is Tuesday, October fifteen, twenty
twenty four, and this is of course Tuesday with Tom,
Michigan's only weekly internet show where we do answer your
questions about estate planning and a state settlement in Michigan.
I'm your host, Tom Doyle, a state planning attorney, lifelong
(00:51):
Michigan resident, and ambassador for all things good in this
great state of Michigan. Welcome, Welcome, Welcome to today's program. Well,
it's been a while since I've been with you. Spent
a lot of time trying to enjoy the nice summer
days here in Michigan. Obviously fall is now here. We
(01:14):
all know that colors are changing, and we are back
to begin another round of Tuesday with Tom episodes. Well,
the last episode if you listen to it. If you didn't,
I encourage you to. Does Michigan's uniform Power of Attorney
law affect your power of attorney? I talked about the
(01:38):
new law that became effective on July first, and that
law might require everybody that's out there that already has
an existing durable power of attorney to update that power
of attorney. So, if you're one of those people, I
encourage you to listen to that episode.
Speaker 2 (01:58):
Today.
Speaker 1 (02:00):
Well, today comes about because of conversations I had recently
with a client about their deeds that we had done
for them and whether or not they needed to change
those deeds. So today topic is Medicaid in Michigan why
you should remove your home from your trust. But please
(02:22):
remember that what I'm about to discuss during the program is,
as always for educational purposes only. It is not intended
to be legal advice. You need to work with your
attorney to determine what is appropriate for you and your
estate plan. Medicaid in Michigan and why you should remove
(02:52):
your home from your trust or talk about important topic
today and that is whether or not you should consider
remove your home from your trust.
Speaker 2 (03:03):
So, as part of.
Speaker 1 (03:03):
Your estate plan, many of you have a revocable living
trust that was created for you. Oftentimes, one of the
goals behind that living trust is to avoid probate. And
in order to avoid probate, you should have had a
deed prepared that would have transferred your home into the trust.
(03:26):
That way, it's not in your name anymore, it's in
the name of the trust. That way, it would not
have to go through probate at the time of your death.
So your goal of avoiding probate relative to the home
is accomplished by having that deed prepared.
Speaker 2 (03:42):
But what happens.
Speaker 1 (03:44):
What happens if, however, before you die, you go into
a nursing home and need to apply for Medicaid to
cover the cost of your long term care.
Speaker 2 (03:56):
Well, let's start.
Speaker 1 (03:58):
Let's kind of set the stage first with a little
bit of understanding about Medicaid. Medicaid is a state and
federally funded program that pays for long term healthcare if
you are poor, including long term care costs like nursing home.
(04:18):
And in Michigan, nursing home can be incredibly expensive, often
exceeding currently eight thousand dollars a month, and because of that,
many people are going to turn to Medicaid to help
cover those expenses. That is, they're going to fill out
a claim or an application for Medicaid basically saying, hey,
(04:41):
Medicaid has some strict income and asset eligibilary requirements, but
I qualify under those requirements to have the government pay
for my long term care. And one of those assets
that you will see, which is a most significant asset
that most people have, or many people have and will
(05:03):
be able to retain if appropriately done, even in medicaid process,
is their home. So what happens if your home is
in a trust and you apply for medicaid, Well, if
your home is in revocable living trust. Revocable living trust
is the most common living trust that gets created for
(05:26):
clients as part of an estate plan. Revocable meaning that
you can change it, that you're still in charge of it,
that you can get rid of it. So that's what
we're talking about, is a revocable living trust. And you
have put your home into that revocable living trust, and
that would have been done by having a deed prepared
for your home. Well, if your home is in a
(05:51):
revocable living trust, Medicaid may treat your home as what
they call an available asset. That means the value of
your home could be counted against you when determining your
medic medicaid eligibility.
Speaker 2 (06:09):
What does that really mean?
Speaker 1 (06:10):
Well, in Michigan, if what they call your countable assets,
those are the things that Medicaid looks at as your
countable assets. If your countable assets at seed two thousand dollars,
you won't qualify for medicaid unless those assets are spent down,
meaning you have too much. You have too much by
(06:32):
way of assets. You have to spend your money. You
have to get rid of it. You know, you have
to spend down those assets, and normally it means spend
them on the nursing home. So you're going to use
your own assets to pay for your care in the
nursing home until you get down to two thousand dollars.
Where the issue here is at medicaid. If your home
(06:56):
is in the trust, Medicaid is is going to look
at that home and say, hey, that home is not
in your name. That home is in the name of
your vocable living trust and it has to be spent
down or basically they're going to look at the home
(07:17):
as something that you have to sell in order to
qualify for medicaid. So that's the starting problem. You put
your home into a trust, you're applying for medicaid, and
now the government is saying, well, wait a minute, that
home has to be sold in order for you to
qualify for medicaid. So question, why should you remove your
(07:44):
home from the trust. Well, let's talk about that. If
you remove the home from the trust and again let's
talk about exempt assets in medicaid. In Michigan, your primary
residence is typically exempt from MEDICAIDS asset calculation as long
as its equity value is under the federal limit, which
(08:06):
is currently about six hundred and eighty eight thousand dollars
in twenty twenty four. But that exemption only applies if
the home is not in a revocable trust and is
in your name. So by moving your home out of
the trust back into your name, you should not have
(08:27):
to sell it to qualify for medicaid. So the reason
for removing the home from your trust and putting it
back into your name is so that your home will
not have to.
Speaker 2 (08:41):
Be sold in order to qualify for medicaid.
Speaker 1 (08:44):
Well, obviously, not having to sell your home is certainly
especially important if you've got a spouse who still needs
to live in the home. If you're married and your
home has to be sold in order for you to
qualify for medicaid, where's your spouse going to live? Also,
it might not being the only asset that would be
(09:06):
available at your death to pass on to your children.
So many clients their estate plan is designed to pass
assets onto their children. They're looking at their home as
perhaps being a primary asset for that Well, if it
has to be sold in order for you to qualify
for medicaid, that home is not now going to be
(09:26):
available to pass on to your children. So the why
you should remove your home from the trust is so
that the home will now be an exempt asset and
not have to be sold. Well, question, so, how do
you remove it from your trust? You already put it
(09:47):
inside your trust. When your trust was created for you
would have had some sort of a deed prepared. Normally,
that deed was prepared in order to put that home
inside your trust. That's what we tell clients, that's what
lawyers tell their clients, so that it's in the trust
so that it doesn't have to go through probate. Well,
how you will go about removing the home from your
(10:10):
trust is going to depend upon a couple of things. One,
what type of deed was prepared for you, and we're
going to talk about that about what kind of deed
was prepared for you. And two, whether or not the
deed that was prepared for you that transfers your home
into your trust has been recorded with the.
Speaker 2 (10:33):
Register of Deeds Office.
Speaker 1 (10:35):
So let's go through that if the deed that was
prepared is what is called a ladybird deed, and don't
look for the lady bird word on it, You're never
going to find it. I know, we prepare a lot
of them, and clients are always asking us, where does
this thing?
Speaker 2 (10:51):
Say?
Speaker 1 (10:51):
Ladybird? That's the general term descriptive terms.
Speaker 2 (10:55):
That lawyers have.
Speaker 1 (10:56):
But if the deed that was prepared is what is
known as a ladybird deed, then even if the deed
has been recorded, you don't have to do anything. So
if your deed is a ladybird deed, and even if
you've recorded that ladybird.
Speaker 2 (11:13):
Deed, you don't have to do anything.
Speaker 1 (11:16):
And that is because of the way that a lady
ladybird deed works.
Speaker 2 (11:22):
The way that a ladybird deed works is.
Speaker 1 (11:24):
The ownership of the home is still yours until your
death because it's yours.
Speaker 2 (11:33):
When you do apply for.
Speaker 1 (11:34):
Medicaid, it is considered still an exempt asset. But because
it's a ladybird deed, then upon your death it will
automatically transfer into the trust without having to go through probate.
So again, if the deed that was prepared is a
ladybird deed, even if you recorded it, you don't have
(11:58):
to do anything. What if the deed is not a
ladybird deed, If the deed is not a ladybird deed,
which quite often was the case with attorneys who are
preparing these deeds, if it hasn't been recorded. So, if
you've got a deed it's not a ladybird deed, you're
(12:20):
just holding on to that deed as part of your
state planning documents, planning on recording that later on, or
planning on having your trustee perhaps recorded after your death,
then you can simply destroy that deed. It's never been recorded,
it's never become a public record. You could simply tear
that deed up and throw it away. So if the
(12:42):
deed is not a ladybird deed and it has not
been recorded, then you can simply destroy the deed that
was prepared for you. If, however, the deed is not
a lady bird deed and you have already recorded the deed,
then you will need to have a new deed prepared
(13:03):
that's going to transfer the home out of the trust
back into your name, and you should be able to
determine if the deed's been recorded simply by looking at
the top of it, because when it does get recorded,
there's going to be some numbers and some tests that's
going to be stamped or printed on the top of
the deed from the registered deed's office indicating that the
(13:25):
deed has been recorded. So if the deed is a
lady Bird deed, doesn't matter whether it's recorded or not,
you don't have to do anything. If the deed is
not a Ladybird deed and has not been recorded, then
you can simply destroy the original deed that was prepared. If, however,
(13:46):
the deed is not a Ladybird deed and you have
already recorded the deed, then you'll need to have a
new prepared, new deed prepared that's going to transfer the
home out of the trust back into your name, and
just a.
Speaker 2 (13:59):
Brief brief mention on deeds.
Speaker 1 (14:02):
Usually at the top of a deed, it's going to
have a line that tells you what kind of a
deed it is.
Speaker 2 (14:08):
It might be what we call.
Speaker 1 (14:09):
A quit quit claim deed, or it might be a
warranty deed. A quit claim deed or a warranty deed
could be a Ladybird deed or might not. So whether
it's a warranty deed or quit claim deed does not
answer the question as to whether or not it is
or is not a ladybird deed. So let's say you
(14:33):
destroy that deed because it hasn't been recorded, or you've
had a deed prepared putting the property back into your
name because that deed had been recorded. Well, here's the
next thing, though, Once the home has been removed from
the trust and placed back in your name, there is
(14:54):
still work that needs to be done.
Speaker 2 (14:58):
And here's why.
Speaker 1 (15:00):
Even though Medicaid won't count your home as an asset
for eligibility, it might now try to recover the cost
of care from your estate after your death. So the
federal government requires the state of Michigan to try to
recover the cost of Medicaid benefits that were paid for
(15:20):
you from your estate after you die. That's what's known
as Medicaid estate recovery. So in Michigan, under Michigan's Medicaid
to State Recovery law, the state, through the Michigan Department
of Health and Human Services, will go after your home
to get repayment of Medicaid payments paid on your behalf.
(15:43):
If it now goes through probate. Why because in Michigan,
the state can only go after assets.
Speaker 2 (15:50):
That go through probate.
Speaker 1 (15:51):
So go back to when your trust was created and
that deed was prepared.
Speaker 2 (15:57):
Why was it done.
Speaker 1 (15:58):
It was done to get the proper out of your
name so it didn't have to go through probate. Well,
now we've put the property back into your name, so
it will be an exempt asset for medicaid. But the
problem now is because of Michigan's A State Recovery law,
the State of Michigan will be able to go after
that home to help pay itself back for any of
(16:20):
the expenses that it paid for you to be in.
Speaker 2 (16:23):
The nursing home. So once you remove the home.
Speaker 1 (16:26):
From the trust placed it back into your name, it's
now subject to going through probate and subject to Michigan's
A State Recovery law. So to avoid your home having
to be sold in order to repay the State of
Michigan after you die, you need a new deed prepared,
another deed prepared that will now transfer the home back
(16:49):
into your trust at the time of death. That deed
is what is going to be a Lady bird deed. Again,
Lady Birdie deed would now get prepared, so you've got
the property back in your name. You have the deed
work that was done to put it back into your name,
so it's no longer in your trust. Well now, in
(17:11):
order so it won't go through probate, you need to
have a new deed prepared, and that is what is
called a lady bird deed, And in our practice, generally
speaking now we simply do ladybird deeds from the beginning.
So if you were to come in today and create
a new living trust with our office, the deed that
(17:32):
we would prepare would be a lady bird deed, and
that's what many attorneys are doing. So if you want
more detailed explanation about Medicaid state recovery law, I had
a podcast on March one, twenty seventeen, titled will the
State of Michigan Take Your Home after you receive Medicaid?
(17:55):
For a more discussion about what different types of deed are.
If you're curious what works TVs are, quit claim deeds,
are lady beer deeds, et cetera, listen to my October second,
twenty eighteen podcasts titled the Anatomy of a Deed. Well,
let's just a little side note here, what if you
(18:18):
have what's called an irrevocable trust, Because we've been talking
about revocable trust, which are ones that.
Speaker 2 (18:24):
You can change.
Speaker 1 (18:25):
If you have an irrevocable trust, those are going to
work differently normally. An irrevocable trust, if properly structured, might
help shield assets from medicaid after certain look back period.
It's designed usually in the medicaid planning world, to try
and shield more assets so you can keep more assets
(18:49):
quite frankly, for your loved ones, so that they don't
have to be sold in order for you to qualify
for medicaid. Well, if you have an irrevocable trust, one
that was for you buy an attorney for medicaid planning,
then you should consult your attorney who prepared the irrevocable trust.
Speaker 2 (19:09):
If you have any questions.
Speaker 1 (19:10):
About is your home in it, is it done properly,
what do you need to do with it? Because the
general discussion that we're having today is really about the
most common trust, which is the revocable living trust. So
the question that raises now though, is well, should you
remove your home from the trust now or should you
(19:33):
wait until you apply for medicaid. Well, some of the
clients that we work with decide to remove the home
from the trust now, even though they're not currently applying
for medicaid. So we've looked at it and have determined
that either the deed was a non Ladybird deed and
(19:54):
had been recorded, or they've thrown.
Speaker 2 (19:58):
Away the deed that they did.
Speaker 1 (20:01):
Then the question is do they do that now, throw
it away now, or do they wait until they apply
for medicaid.
Speaker 2 (20:08):
Well.
Speaker 1 (20:09):
Again, some clients decide to take the helm out of
their trust now, even though they're not currently planning to apply.
Speaker 2 (20:15):
That way, it's done and they don't have to worry
about it.
Speaker 1 (20:19):
It's just one more thing that is off their plate,
and that oftentimes is much of the concern that clients
have when they're putting their state plan together. It's getting
things off of their plate and having the peace of
mind from knowing that it's been done. So have the
deed taken out now, and have your new ladybrewd deed
(20:39):
done now so you don't have to worry about it.
They also don't have to worry though if you don't.
If you say, well, let me just wait until I
apply for Medicaid. Okay, Well, now they have to worry
about what would happen if when the time comes to
apply for Medicaid they're not able to have the deed
work done at that time. They might be incapacitated by then.
(21:02):
And if they're incapacitated by then, they're not going to
be able to execute the necessary deeds to either take
the property out and or the lady bird deed that's
going to be es central to avoid the Medicaid recovery law.
Speaker 2 (21:16):
Other clients are going to wait.
Speaker 1 (21:19):
They're just going to wait until they have to play
plan for Medicaid because they're saying, Hey, if I never
plan for Medicaid, it's never an issue, so I'm not
going to worry about it.
Speaker 2 (21:28):
I will put it off another day.
Speaker 1 (21:30):
And obviously, what they are assuming in that case is
that they will be able to execute the deeds at
the time. What you should do now, however, what you
should do now, what you should do now is review
any deed that was done as part of your estate plan,
whether it was done by our office or another office.
(21:52):
You need to review the deeds. You need to determine
whether or not it is a lady bird deed. Or
whether or not it has been recorded. If you're not sure,
if we prepared the deed for you, contact our office.
We'll be able to look up your file and advise
you on that. If it's another attorney that prepared it
(22:12):
for you, contact that attorney who prepared the deed so
that you can know is it a ladybird deed?
Speaker 2 (22:19):
Is it not a deed.
Speaker 1 (22:20):
You can have a conversation about whether or not the
deed has been recorded, and only one.
Speaker 2 (22:25):
Should do that.
Speaker 1 (22:27):
Can you decide if you should have new deeds prepared now?
Speaker 2 (22:31):
So the important thing.
Speaker 1 (22:34):
To do now is to know what you have. So
the important thing to do now is to review the
deeds that was done now. It used to be pare
fairly common practice for attorneys in Michigan not to use
ladybird deeds. For a long time, we didn't use ladybird
deeds because that wasn't the common practice as in Michigan.
(22:57):
Much of the time, the recommendation was simply, hey, hold
on to the deed with your file. It can always
be recorded after your death. So a deed deed would
be prepared simply held onto with the idea being that
the clients would record it later on. That way, the
deed can simply be destroyed if the clients ever had
(23:18):
to apply for medicaid. But more recently, we, as many
other attorneys, as the use of medicaid I'm sorry, as
a use of ladybird deeds is becoming more common, and
as more and more, quite frankly, title companies out there
seem to now be being comfortable with the way that
(23:39):
ladybird deeds work. When we meet with clients who have
already transferred their interest in their home to their trust,
we will review what type of deed was prepared, will
determine whether or not it was a ladybird deed. We
will discuss with the client deeding the property out of
(24:00):
the trust if it wasn't a ladybird deed and that
deed has been recorded, deeding that property out of the
trust so it will be exempt, and then using a
ladybird deed to prevent it from having to go through probate.
(24:38):
Of course, amand and I, if we've already done work
for you, we'd be happy to get together with you
or talk to you and review your file to determine
what sort of deed had been prepared. Anything that needs
to be done for you, and certainly we would be
honored to have the opportunity to help you protect your
loved ones by putting together in a state plan for you,
(24:59):
perhaps a man ending a plan that you already have
that's been prepared by another law firm, or assisting you
in settling a loved ones state Simply head on over
to our website. That's where you're going to find all
the information that you need or to contact us. That's
(25:21):
at DOYLELAWPC dot com. There you're going to find information
how you can schedule either a in person consultation in
our Grand Rapids location or our East Lansing location, or
virtual consultations via zoom or telephone wherever you happen.
Speaker 2 (25:38):
To be in the state of Michigan.
Speaker 1 (25:41):
And while you're there, if you're looking at simply needing
a one document prepared, check out our Legal Store at
the website. There you can arrange to have individual not
doesn't that be an entire plan Simply individual legal documents
can be prepared through the legal Store and you'll also
find information on preparing those documents at our Facebook page.
(26:06):
So visit DOYLELAWPC dot com for information on all of
that and to.
Speaker 2 (26:12):
Schedule your consultation.
Speaker 1 (26:24):
Well, I think that's going to be it for today though,
as always, if you have a comment about the program,
a topic that you'd like to have me discuss, questions
that you'd like to have answered, head over to the
Tuesday with Tom dot com. That's the website for the podcast,
and leave a voice message by clicking on the microphone
or send me an email Tom at Tuesday with Tom
(26:48):
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(27:10):
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(27:31):
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thanks again for spending some of your time with us today,
and as always, I hope that you have an awesome
day and an awesome week in Michigan.
Speaker 2 (27:54):
Stay safe.
Speaker 1 (27:59):
Tuesday with Tom has been brought to you by the
estate planning attorneys at Doyle Law PC. To learn how
we can help you with your estate plan or with
settling a loved one's estate, please call us today at
five one seven three two three seven three sixty six.
That's five one seven three two three seven three sixty six.
Well, good afternoon, michiganers. It is Tuesday, October fifteen, twenty
twenty four, and this is of course Tuesday with Tom,
Michigan's only weekly internet show where we do answer your
questions about estate planning and a state settlement in Michigan.
I'm your host, Tom Doyle, a state planning attorney, lifelong
(00:51):
Michigan resident, and ambassador for all things good in this
great state of Michigan. Welcome, Welcome, Welcome to today's program. Well,
it's been a while since I've been with you. Spent
a lot of time trying to enjoy the nice summer
days here in Michigan. Obviously fall is now here. We
(01:14):
all know that colors are changing, and we are back
to begin another round of Tuesday with Tom episodes. Well,
the last episode if you listen to it. If you didn't,
I encourage you to. Does Michigan's uniform Power of Attorney
law affect your power of attorney? I talked about the
(01:38):
new law that became effective on July first, and that
law might require everybody that's out there that already has
an existing durable power of attorney to update that power
of attorney. So, if you're one of those people, I
encourage you to listen to that episode.
Speaker 2 (01:58):
Today.
Speaker 1 (02:00):
Well, today comes about because of conversations I had recently
with a client about their deeds that we had done
for them and whether or not they needed to change
those deeds. So today topic is Medicaid in Michigan why
you should remove your home from your trust. But please
(02:22):
remember that what I'm about to discuss during the program is,
as always for educational purposes only. It is not intended
to be legal advice. You need to work with your
attorney to determine what is appropriate for you and your
estate plan. Medicaid in Michigan and why you should remove
(02:52):
your home from your trust or talk about important topic
today and that is whether or not you should consider
remove your home from your trust.
Speaker 2 (03:03):
So, as part of.
Speaker 1 (03:03):
Your estate plan, many of you have a revocable living
trust that was created for you. Oftentimes, one of the
goals behind that living trust is to avoid probate. And
in order to avoid probate, you should have had a
deed prepared that would have transferred your home into the trust.
(03:26):
That way, it's not in your name anymore, it's in
the name of the trust. That way, it would not
have to go through probate at the time of your death.
So your goal of avoiding probate relative to the home
is accomplished by having that deed prepared.
Speaker 2 (03:42):
But what happens.
Speaker 1 (03:44):
What happens if, however, before you die, you go into
a nursing home and need to apply for Medicaid to
cover the cost of your long term care.
Speaker 2 (03:56):
Well, let's start.
Speaker 1 (03:58):
Let's kind of set the stage first with a little
bit of understanding about Medicaid. Medicaid is a state and
federally funded program that pays for long term healthcare if
you are poor, including long term care costs like nursing home.
(04:18):
And in Michigan, nursing home can be incredibly expensive, often
exceeding currently eight thousand dollars a month, and because of that,
many people are going to turn to Medicaid to help
cover those expenses. That is, they're going to fill out
a claim or an application for Medicaid basically saying, hey,
(04:41):
Medicaid has some strict income and asset eligibilary requirements, but
I qualify under those requirements to have the government pay
for my long term care. And one of those assets
that you will see, which is a most significant asset
that most people have, or many people have and will
(05:03):
be able to retain if appropriately done, even in medicaid process,
is their home. So what happens if your home is
in a trust and you apply for medicaid, Well, if
your home is in revocable living trust. Revocable living trust
is the most common living trust that gets created for
(05:26):
clients as part of an estate plan. Revocable meaning that
you can change it, that you're still in charge of it,
that you can get rid of it. So that's what
we're talking about, is a revocable living trust. And you
have put your home into that revocable living trust, and
that would have been done by having a deed prepared
for your home. Well, if your home is in a
(05:51):
revocable living trust, Medicaid may treat your home as what
they call an available asset. That means the value of
your home could be counted against you when determining your
medic medicaid eligibility.
Speaker 2 (06:09):
What does that really mean?
Speaker 1 (06:10):
Well, in Michigan, if what they call your countable assets,
those are the things that Medicaid looks at as your
countable assets. If your countable assets at seed two thousand dollars,
you won't qualify for medicaid unless those assets are spent down,
meaning you have too much. You have too much by
(06:32):
way of assets. You have to spend your money. You
have to get rid of it. You know, you have
to spend down those assets, and normally it means spend
them on the nursing home. So you're going to use
your own assets to pay for your care in the
nursing home until you get down to two thousand dollars.
Where the issue here is at medicaid. If your home
(06:56):
is in the trust, Medicaid is is going to look
at that home and say, hey, that home is not
in your name. That home is in the name of
your vocable living trust and it has to be spent
down or basically they're going to look at the home
(07:17):
as something that you have to sell in order to
qualify for medicaid. So that's the starting problem. You put
your home into a trust, you're applying for medicaid, and
now the government is saying, well, wait a minute, that
home has to be sold in order for you to
qualify for medicaid. So question, why should you remove your
(07:44):
home from the trust. Well, let's talk about that. If
you remove the home from the trust and again let's
talk about exempt assets in medicaid. In Michigan, your primary
residence is typically exempt from MEDICAIDS asset calculation as long
as its equity value is under the federal limit, which
(08:06):
is currently about six hundred and eighty eight thousand dollars
in twenty twenty four. But that exemption only applies if
the home is not in a revocable trust and is
in your name. So by moving your home out of
the trust back into your name, you should not have
(08:27):
to sell it to qualify for medicaid. So the reason
for removing the home from your trust and putting it
back into your name is so that your home will
not have to.
Speaker 2 (08:41):
Be sold in order to qualify for medicaid.
Speaker 1 (08:44):
Well, obviously, not having to sell your home is certainly
especially important if you've got a spouse who still needs
to live in the home. If you're married and your
home has to be sold in order for you to
qualify for medicaid, where's your spouse going to live? Also,
it might not being the only asset that would be
(09:06):
available at your death to pass on to your children.
So many clients their estate plan is designed to pass
assets onto their children. They're looking at their home as
perhaps being a primary asset for that Well, if it
has to be sold in order for you to qualify
for medicaid, that home is not now going to be
(09:26):
available to pass on to your children. So the why
you should remove your home from the trust is so
that the home will now be an exempt asset and
not have to be sold. Well, question, so, how do
you remove it from your trust? You already put it
(09:47):
inside your trust. When your trust was created for you
would have had some sort of a deed prepared. Normally,
that deed was prepared in order to put that home
inside your trust. That's what we tell clients, that's what
lawyers tell their clients, so that it's in the trust
so that it doesn't have to go through probate. Well,
how you will go about removing the home from your
(10:10):
trust is going to depend upon a couple of things. One,
what type of deed was prepared for you, and we're
going to talk about that about what kind of deed
was prepared for you. And two, whether or not the
deed that was prepared for you that transfers your home
into your trust has been recorded with the.
Speaker 2 (10:33):
Register of Deeds Office.
Speaker 1 (10:35):
So let's go through that if the deed that was
prepared is what is called a ladybird deed, and don't
look for the lady bird word on it, You're never
going to find it. I know, we prepare a lot
of them, and clients are always asking us, where does
this thing?
Speaker 2 (10:51):
Say?
Speaker 1 (10:51):
Ladybird? That's the general term descriptive terms.
Speaker 2 (10:55):
That lawyers have.
Speaker 1 (10:56):
But if the deed that was prepared is what is
known as a ladybird deed, then even if the deed
has been recorded, you don't have to do anything. So
if your deed is a ladybird deed, and even if
you've recorded that ladybird.
Speaker 2 (11:13):
Deed, you don't have to do anything.
Speaker 1 (11:16):
And that is because of the way that a lady
ladybird deed works.
Speaker 2 (11:22):
The way that a ladybird deed works is.
Speaker 1 (11:24):
The ownership of the home is still yours until your
death because it's yours.
Speaker 2 (11:33):
When you do apply for.
Speaker 1 (11:34):
Medicaid, it is considered still an exempt asset. But because
it's a ladybird deed, then upon your death it will
automatically transfer into the trust without having to go through probate.
So again, if the deed that was prepared is a
ladybird deed, even if you recorded it, you don't have
(11:58):
to do anything. What if the deed is not a
ladybird deed, If the deed is not a ladybird deed,
which quite often was the case with attorneys who are
preparing these deeds, if it hasn't been recorded. So, if
you've got a deed it's not a ladybird deed, you're
(12:20):
just holding on to that deed as part of your
state planning documents, planning on recording that later on, or
planning on having your trustee perhaps recorded after your death,
then you can simply destroy that deed. It's never been recorded,
it's never become a public record. You could simply tear
that deed up and throw it away. So if the
(12:42):
deed is not a ladybird deed and it has not
been recorded, then you can simply destroy the deed that
was prepared for you. If, however, the deed is not
a lady bird deed and you have already recorded the deed,
then you will need to have a new deed prepared
(13:03):
that's going to transfer the home out of the trust
back into your name, and you should be able to
determine if the deed's been recorded simply by looking at
the top of it, because when it does get recorded,
there's going to be some numbers and some tests that's
going to be stamped or printed on the top of
the deed from the registered deed's office indicating that the
(13:25):
deed has been recorded. So if the deed is a
lady Bird deed, doesn't matter whether it's recorded or not,
you don't have to do anything. If the deed is
not a Ladybird deed and has not been recorded, then
you can simply destroy the original deed that was prepared. If, however,
(13:46):
the deed is not a Ladybird deed and you have
already recorded the deed, then you'll need to have a
new prepared, new deed prepared that's going to transfer the
home out of the trust back into your name, and
just a.
Speaker 2 (13:59):
Brief brief mention on deeds.
Speaker 1 (14:02):
Usually at the top of a deed, it's going to
have a line that tells you what kind of a
deed it is.
Speaker 2 (14:08):
It might be what we call.
Speaker 1 (14:09):
A quit quit claim deed, or it might be a
warranty deed. A quit claim deed or a warranty deed
could be a Ladybird deed or might not. So whether
it's a warranty deed or quit claim deed does not
answer the question as to whether or not it is
or is not a ladybird deed. So let's say you
(14:33):
destroy that deed because it hasn't been recorded, or you've
had a deed prepared putting the property back into your
name because that deed had been recorded. Well, here's the
next thing, though, Once the home has been removed from
the trust and placed back in your name, there is
(14:54):
still work that needs to be done.
Speaker 2 (14:58):
And here's why.
Speaker 1 (15:00):
Even though Medicaid won't count your home as an asset
for eligibility, it might now try to recover the cost
of care from your estate after your death. So the
federal government requires the state of Michigan to try to
recover the cost of Medicaid benefits that were paid for
(15:20):
you from your estate after you die. That's what's known
as Medicaid estate recovery. So in Michigan, under Michigan's Medicaid
to State Recovery law, the state, through the Michigan Department
of Health and Human Services, will go after your home
to get repayment of Medicaid payments paid on your behalf.
(15:43):
If it now goes through probate. Why because in Michigan,
the state can only go after assets.
Speaker 2 (15:50):
That go through probate.
Speaker 1 (15:51):
So go back to when your trust was created and
that deed was prepared.
Speaker 2 (15:57):
Why was it done.
Speaker 1 (15:58):
It was done to get the proper out of your
name so it didn't have to go through probate. Well,
now we've put the property back into your name, so
it will be an exempt asset for medicaid. But the
problem now is because of Michigan's A State Recovery law,
the State of Michigan will be able to go after
that home to help pay itself back for any of
(16:20):
the expenses that it paid for you to be in.
Speaker 2 (16:23):
The nursing home. So once you remove the home.
Speaker 1 (16:26):
From the trust placed it back into your name, it's
now subject to going through probate and subject to Michigan's
A State Recovery law. So to avoid your home having
to be sold in order to repay the State of
Michigan after you die, you need a new deed prepared,
another deed prepared that will now transfer the home back
(16:49):
into your trust at the time of death. That deed
is what is going to be a Lady bird deed. Again,
Lady Birdie deed would now get prepared, so you've got
the property back in your name. You have the deed
work that was done to put it back into your name,
so it's no longer in your trust. Well now, in
(17:11):
order so it won't go through probate, you need to
have a new deed prepared, and that is what is
called a lady bird deed, And in our practice, generally
speaking now we simply do ladybird deeds from the beginning.
So if you were to come in today and create
a new living trust with our office, the deed that
(17:32):
we would prepare would be a lady bird deed, and
that's what many attorneys are doing. So if you want
more detailed explanation about Medicaid state recovery law, I had
a podcast on March one, twenty seventeen, titled will the
State of Michigan Take Your Home after you receive Medicaid?
(17:55):
For a more discussion about what different types of deed are.
If you're curious what works TVs are, quit claim deeds,
are lady beer deeds, et cetera, listen to my October second,
twenty eighteen podcasts titled the Anatomy of a Deed. Well,
let's just a little side note here, what if you
(18:18):
have what's called an irrevocable trust, Because we've been talking
about revocable trust, which are ones that.
Speaker 2 (18:24):
You can change.
Speaker 1 (18:25):
If you have an irrevocable trust, those are going to
work differently normally. An irrevocable trust, if properly structured, might
help shield assets from medicaid after certain look back period.
It's designed usually in the medicaid planning world, to try
and shield more assets so you can keep more assets
(18:49):
quite frankly, for your loved ones, so that they don't
have to be sold in order for you to qualify
for medicaid. Well, if you have an irrevocable trust, one
that was for you buy an attorney for medicaid planning,
then you should consult your attorney who prepared the irrevocable trust.
Speaker 2 (19:09):
If you have any questions.
Speaker 1 (19:10):
About is your home in it, is it done properly,
what do you need to do with it? Because the
general discussion that we're having today is really about the
most common trust, which is the revocable living trust. So
the question that raises now though, is well, should you
remove your home from the trust now or should you
(19:33):
wait until you apply for medicaid. Well, some of the
clients that we work with decide to remove the home
from the trust now, even though they're not currently applying
for medicaid. So we've looked at it and have determined
that either the deed was a non Ladybird deed and
(19:54):
had been recorded, or they've thrown.
Speaker 2 (19:58):
Away the deed that they did.
Speaker 1 (20:01):
Then the question is do they do that now, throw
it away now, or do they wait until they apply
for medicaid.
Speaker 2 (20:08):
Well.
Speaker 1 (20:09):
Again, some clients decide to take the helm out of
their trust now, even though they're not currently planning to apply.
Speaker 2 (20:15):
That way, it's done and they don't have to worry
about it.
Speaker 1 (20:19):
It's just one more thing that is off their plate,
and that oftentimes is much of the concern that clients
have when they're putting their state plan together. It's getting
things off of their plate and having the peace of
mind from knowing that it's been done. So have the
deed taken out now, and have your new ladybrewd deed
(20:39):
done now so you don't have to worry about it.
They also don't have to worry though if you don't.
If you say, well, let me just wait until I
apply for Medicaid. Okay, Well, now they have to worry
about what would happen if when the time comes to
apply for Medicaid they're not able to have the deed
work done at that time. They might be incapacitated by then.
(21:02):
And if they're incapacitated by then, they're not going to
be able to execute the necessary deeds to either take
the property out and or the lady bird deed that's
going to be es central to avoid the Medicaid recovery law.
Speaker 2 (21:16):
Other clients are going to wait.
Speaker 1 (21:19):
They're just going to wait until they have to play
plan for Medicaid because they're saying, Hey, if I never
plan for Medicaid, it's never an issue, so I'm not
going to worry about it.
Speaker 2 (21:28):
I will put it off another day.
Speaker 1 (21:30):
And obviously, what they are assuming in that case is
that they will be able to execute the deeds at
the time. What you should do now, however, what you
should do now, what you should do now is review
any deed that was done as part of your estate plan,
whether it was done by our office or another office.
(21:52):
You need to review the deeds. You need to determine
whether or not it is a lady bird deed. Or
whether or not it has been recorded. If you're not sure,
if we prepared the deed for you, contact our office.
We'll be able to look up your file and advise
you on that. If it's another attorney that prepared it
(22:12):
for you, contact that attorney who prepared the deed so
that you can know is it a ladybird deed?
Speaker 2 (22:19):
Is it not a deed.
Speaker 1 (22:20):
You can have a conversation about whether or not the
deed has been recorded, and only one.
Speaker 2 (22:25):
Should do that.
Speaker 1 (22:27):
Can you decide if you should have new deeds prepared now?
Speaker 2 (22:31):
So the important thing.
Speaker 1 (22:34):
To do now is to know what you have. So
the important thing to do now is to review the
deeds that was done now. It used to be pare
fairly common practice for attorneys in Michigan not to use
ladybird deeds. For a long time, we didn't use ladybird
deeds because that wasn't the common practice as in Michigan.
(22:57):
Much of the time, the recommendation was simply, hey, hold
on to the deed with your file. It can always
be recorded after your death. So a deed deed would
be prepared simply held onto with the idea being that
the clients would record it later on. That way, the
deed can simply be destroyed if the clients ever had
(23:18):
to apply for medicaid. But more recently, we, as many
other attorneys, as the use of medicaid I'm sorry, as
a use of ladybird deeds is becoming more common, and
as more and more, quite frankly, title companies out there
seem to now be being comfortable with the way that
(23:39):
ladybird deeds work. When we meet with clients who have
already transferred their interest in their home to their trust,
we will review what type of deed was prepared, will
determine whether or not it was a ladybird deed. We
will discuss with the client deeding the property out of
(24:00):
the trust if it wasn't a ladybird deed and that
deed has been recorded, deeding that property out of the
trust so it will be exempt, and then using a
ladybird deed to prevent it from having to go through probate.
(24:38):
Of course, amand and I, if we've already done work
for you, we'd be happy to get together with you
or talk to you and review your file to determine
what sort of deed had been prepared. Anything that needs
to be done for you, and certainly we would be
honored to have the opportunity to help you protect your
loved ones by putting together in a state plan for you,
(24:59):
perhaps a man ending a plan that you already have
that's been prepared by another law firm, or assisting you
in settling a loved ones state Simply head on over
to our website. That's where you're going to find all
the information that you need or to contact us. That's
(25:21):
at DOYLELAWPC dot com. There you're going to find information
how you can schedule either a in person consultation in
our Grand Rapids location or our East Lansing location, or
virtual consultations via zoom or telephone wherever you happen.
Speaker 2 (25:38):
To be in the state of Michigan.
Speaker 1 (25:41):
And while you're there, if you're looking at simply needing
a one document prepared, check out our Legal Store at
the website. There you can arrange to have individual not
doesn't that be an entire plan Simply individual legal documents
can be prepared through the legal Store and you'll also
find information on preparing those documents at our Facebook page.
(26:06):
So visit DOYLELAWPC dot com for information on all of
that and to.
Speaker 2 (26:12):
Schedule your consultation.
Speaker 1 (26:24):
Well, I think that's going to be it for today though,
as always, if you have a comment about the program,
a topic that you'd like to have me discuss, questions
that you'd like to have answered, head over to the
Tuesday with Tom dot com. That's the website for the podcast,
and leave a voice message by clicking on the microphone
or send me an email Tom at Tuesday with Tom
(26:48):
dot com. Of course, you can follow us on Facebook
and we invite you to invite your friends and family
to follow us as well. That would be Tuesday with
Tom and the Office's Doyle Law Piece. And don't forget
to join our email list. Simply head on over to
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to our Tuesday with Tom email list. You can also
(27:10):
go to DOYLEPC dot com and sign up for We
have a monthly e newsletter that we sent out keeping
you abreast of various changes out of occurring in the
law or topics that might be of interest to you.
Remember too, the program is available on many of the
places where you're going to listen to a podcast, Apple Podcasts, Spotify,
(27:31):
Amazon Music, Google podcast, iHeartRadio, speaker, and you can always
ask your smart speaker to play Tuesday with Tom. Well,
thanks again for spending some of your time with us today,
and as always, I hope that you have an awesome
day and an awesome week in Michigan.
Speaker 2 (27:54):
Stay safe.
Speaker 1 (27:59):
Tuesday with Tom has been brought to you by the
estate planning attorneys at Doyle Law PC. To learn how
we can help you with your estate plan or with
settling a loved one's estate, please call us today at
five one seven three two three seven three sixty six.
That's five one seven three two three seven three sixty six.
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