April 2022 Newsletter
To my Family and Friends,
Around the Office this month.
Deeds
When is a “Quit Claim” deed also a “Ladybird Deed”? A Ladybird Deed is one of the best tools in my toolbox. It is used in the vast majority of my estate plans whether they include a trust or not. Many new clients will call to make an appointment just to “get a Ladybird Deed”.
However, I have had a least four clients call this month to ask why I gave them a Quit Claim deed when they wanted a Ladybird Deed. I tell them they received a Ladybird deed, but they wonder why their deed says “Quit Claim deed” at the top. I hope this explains it more clearly, so everyone understands :
Michigan has basically two kinds of deeds. 1. “Warranty deed” and 2. “Quit Claim deed.”
In a Warranty deed, the Grantor will “…convey and warrant to” the Grantee. This means a guarantee to a good title. If the title is not good and the property has claims or liens against it that were not disclosed, then the Grantee can sue the Grantor for damages.
In a Quit Claim deed, the Grantor will “quit claim to” the Grantee. This means the Grantor is giving whatever his/her legal interest in the property is to the Grantee. The Grantor may own clear title, own a percentage interest in the property, or not own any interest but claims to have one and will give up his claim for money. They are commonly used between family members, whether adding a family member to a deed or conveying between a divorced husband and wife.
In both these deeds, the transfer of title usually occurs when the deed is signed. However, sometimes we want the transfer to happen later. That’s where a Ladybird deed comes into the picture. A Ladybird deed is just a nickname. It is still legally called a Warranty or Quit Claim deed, but I add special language to make it serve a specific purpose.
A Ladybird deed makes the transfer effective when the Grantor dies, or, if there are two Grantors like a husband and wife, then the transfer takes place when the second of the Grantors dies.
Therefore, it is possible to have a Warranty deed that is a Ladybird deed or a Quit Claim deed that is a ladybird deed. The deed, at the top of the page, will not say “Ladybird Deed” however. That is just a nickname. It will say Warranty Deed or Quit Claim Deed.
Just remember, if your deed says “title passes when someone dies”, then it is a Ladybird deed even if it says Warranty deed or Quit Claim deed at the top.
Random Stock Certificates From Insurance Companies
Three different families have come in this month to open estates for a loved one and reported that the decedent had a small number of shares with a life insurance company. For example, one had 10 shares of Met Life. Another had a few shares of Sun Life and the other Prudential. Sometimes the shares go back to the 1960s and 1970s when the life insurance companies issued shares to their policy holders. The bigger the life policy, the more shares you would receive. Many people put the shares away only to be discovered after they died.
As part of an estate going through probate court, the Personal Representative will use their Letters of Authority to transfer or sell the shares. However, when there are no other probate assets, there is no appointment of a Personal Representative, so transferring the shares becomes very difficult. For a small number of shares, the cost of selling the shares may be more than their value.
It is much easier to transfer or sell the shares while the owner is alive than after their death.
Trust Administration
A longtime client came to see me following the death of his mother. She lived in Fort Wayne, IN and had a trust that had been drafted in Indiana. The trust said it would be administered under Indiana law.
The client asked me to help him with the administration of the Trust. I told him that I couldn’t because the administration would take place in Indiana and under Indiana law. I am not licensed to practice there, and I do not know Indiana Law.
However, in reviewing the trust, I found a provision that said the Successor Trustee could change the state of Administration. I then reviewed the Indiana statute and found that a Successor Trustee can change the state of administration to the state where he lived or had a business. All that I needed to do was to give all the heirs a written notice of the intent to change and give them 60 days to object.
Now the client can administer his mother’s trust with my assistance.
No Successor Trustee
I met this week with a client who had lost both her parents and her only sibling in the last two years. Her parents had individual trusts in which they named each other as the first Successor Trustee and the daughter that had recently died as the second Successor Trustee. The client was not named as the third Successor Trustee. The trust was the work of a CPA and very poorly written. It consisted of only 8 pages and did not have a provision for the beneficiaries to name a successor trustee if the position was vacant.
Michigan statutes provide that a probate judge can appoint a successor trustee when there is no one named in the trust. I will be filing a petition with the court to name my client as the Successor Trustee. I will let you know how it goes.
The lesson here is to always try to name at least three people for a successor trustee or personal representative position as well as agents on your powers of attorney.
Seminars
All three seminars in May are the same topic: “Wills, Trusts, and Ladybird Deeds”. It is generally considered to be the best of all the seminars I do. I think clients love it because it dispels many myths and has so many interesting stories. If you want to attend again, or if you want to recommend it to a friend who needs to think about an estate plan, please register for the free seminar. The registration lets us know how to set up the room and how many handouts to bring.
Here are the details for my May seminars:
May 12: Plymouth, 1:30pm
May 17: Northville, 10:30am
May 19: Westland, 2pm
Please see our website, www.gfalawfirm.com, to view our updated list of future seminar dates and times.
Reviews/Feedback
We are so pleased to help you with your estate planning needs. The best way to receive new clients is through referrals from you. In addition, there are people out there searching for someone to help them. They feel comfortable calling an attorney that has a 5-star rating and details of client experiences. If I may, I will continue to ask all of my clients who have not done so yet, to provide a Google Review for me. Not only will it give me more positive reviews, but it may also help someone, that doesn’t have a referral available, find an excellent resource...me! It is easy to do and takes very little time. Thank you!! (Please note: It may have you sign into your Google account if you haven’t already)
Simply type “Gary Allen attorney” and hopefully my information should pop up (if it doesn’t, call me).
On the right of your screen are gold stars and the number of Google reviews I have. Click on the google reviews and it will take you to my reviews.
Then in the top right corner it says in blue “Write a review”. Click on that to provide a review.
Please feel free to share this newsletter with your friends and family.
Very truly yours,
Gary