Does Michigan Allow Transfer on Death Deeds?

Why TOD deeds aren't available in Michigan

Michigan has not adopted the Uniform Real Property Transfer on Death Act or any TOD / beneficiary deed statute. No authorizing act exists in MCL ch. 565 (conveyances of real property) or MCL ch. 700 (Estates and Protected Individuals Code). Michigan instead relies on the enhanced life estate ("Lady Bird") deed, a conveyance resting on common law and the Powers of Appointment Act (1967 PA 224) whose mechanism is validated by Michigan Land Title Standard 9.3 (6th ed.).

Michigan recognizes enhanced life estate ("Lady Bird") deeds: the grantor conveys a remainder while retaining a life estate coupled with an absolute power to dispose of the fee by inter vivos conveyance. Michigan Land Title Standard 9.3 (6th ed.) validates that mechanism — a life-estate holder "coupled with an absolute power to dispose of the fee estate by inter vivos conveyance" may "convey a fee simple estate during the lifetime of the holder", and "if the power is not exercised, the gift over becomes effective" — though the Standards volume itself never uses the terms "Lady Bird" or "enhanced life estate"; the Standard's stated authorities are the Powers of Appointment Act, MCL 556.122, 556.123, and 556.129. The arrangement avoids probate while the grantor keeps lifetime control, including the right to sell, mortgage, or revoke without the remainder beneficiary's consent. The grantor's retention of a life estate is itself not a transfer of ownership for property-tax purposes (MCL 211.27a(7)(c)); on the grantor's death, the termination of that life estate is exempt from uncapping when the transferee is the transferor's or the transferor's spouse's mother, father, brother, sister, son, daughter, adopted son, adopted daughter, grandson, or granddaughter and the residential real property is not used for any commercial purpose following the transfer (MCL 211.27a(7)(d), added by 2015 PA 243); a direct transfer of residential real property to such a relative is likewise exempt under MCL 211.27a(7)(u) (added by 2014 PA 310). Under both subdivisions, the transferee must furnish proof of eligibility within 30 days of a request by the Department of Treasury or the assessor, and a transferee who fails to comply is subject to a $200.00 fine. Administrative guidance is in Michigan State Tax Commission Bulletin 20 of 2017 (Transfers of Ownership). A Lady Bird deed, like any Michigan real-property conveyance, must be a deed signed by the person from whom the interest passes (MCL 565.1) and acknowledged before a judge, clerk of a court of record, or notary public (MCL 565.8); it must be recorded with the county register of deeds to be valid against a subsequent good-faith purchaser whose deed is first recorded (MCL 565.29, the recording act). Michigan does not require subscribing witnesses on deeds executed after March 4, 2002 — only notarial acknowledgment (2002 PA 23, amending MCL 565.8).

Alternatives for Michigan

These mechanisms transfer real property at death without probate in Michigan:

• •
  Revocable living trust
• •
  Enhanced life estate deed (Lady Bird deed) — mechanism validated by Mich. Land Title Std. 9.3 (6th ed.); uncapping exemption under MCL 211.27a(7)(d) and (7)(u)
• •
  Joint tenancy with right of survivorship (MCL 554.43–554.45)

Consult a licensed attorney for help choosing the right mechanism for your situation.