Lady Bird Deed vs. Living Trust: Which Is Right for Your Michigan Home?

If you have started researching how to keep your home out of probate in Michigan, you have probably run into two recommendations over and over: put the house in a living trust, or sign a Lady Bird Deed. Both work. Both keep your home out of probate court. But they differ enormously in cost, complexity, and what else they can do for you, and choosing the wrong one means either overpaying for protection you do not need or leaving gaps in your plan.

Here is an honest comparison from the perspective of a typical Michigan homeowner.

Cost and Complexity

This is where the difference is most dramatic. A revocable living trust package prepared by a Michigan attorney commonly runs from around $1,500 to $4,000 or more, and the trust only works if you retitle your assets into it, a step many families forget, which quietly defeats the entire plan. A Lady Bird Deed, by contrast, is a single recorded document that typically costs a few hundred dollars to prepare, with no ongoing maintenance and nothing to fund or manage.

For a household whose main asset is the family home, that price gap is often decisive. A helpful overview of how the Lady Bird Deed Michigan works, including what it costs and how it is recorded, shows just how streamlined the process can be compared to trust administration.

What Each One Actually Covers

A living trust is a container. It can hold your home, bank accounts, investments, and business interests, and it can include instructions such as staggered inheritances for young children, protections for a spendthrift beneficiary, or provisions for a family member with a disability. It also provides for management of your affairs if you become incapacitated.

A Lady Bird Deed does exactly one thing: it transfers a specific piece of Michigan real estate at your death. It contains no instructions, holds no other assets, and offers no incapacity planning. That narrow scope is a weakness if your estate is complicated, and a feature if it is not.

Medicaid and Tax Considerations

For Michigan seniors, the Lady Bird Deed holds a surprising advantage. Because you retain full control, signing the deed is generally not treated as a divestment that would trigger a Medicaid penalty period, and because the home passes outside probate, it is generally protected from Michigan’s Medicaid estate recovery program. Assets in a standard revocable trust do not receive automatic estate recovery protection, and transferring a home into certain irrevocable trusts can create divestment problems of its own. Both options preserve the stepped-up basis for your heirs.

The Bottom Line

Choose a living trust when your estate involves multiple asset types, minor or vulnerable beneficiaries, blended family dynamics, or property in more than one state. Choose a Lady Bird Deed when the goal is simpler: keep the Michigan home out of probate, keep control during your lifetime, and keep costs down. Many families actually use both, with the deed handling the house and a simple will or trust handling the rest.

This comparison is general information, not legal advice. A Michigan estate planning attorney can tell you which structure fits your family.