Laws

5 Costly Estate Planning Mistakes Michigan Homeowners Make (and How to Avoid Them)

Estate planning mistakes have a cruel quality: the person who made them never sees the consequences. It is the children and grandchildren who spend months in probate court, pay avoidable taxes, or watch the family home slip away. After decades of handling Michigan estates, attorneys tend to see the same handful of errors repeated. Here are five of the most expensive, and the fixes for each.

Mistake 1: Assuming a Will Avoids Probate

This is the most widespread misunderstanding in estate planning. A will does not avoid probate; a will is an instruction manual for the probate court. If your home passes under your will, your family is going to probate, with the filing fees, inventory fees, attorney costs, and public records that come with it. Assets avoid probate only when they transfer by operation of law, through joint ownership, beneficiary designations, trusts, or the right kind of deed.

Mistake 2: Adding Children to the Deed as Joint Owners

It feels intuitive: put the kids on the deed now and the house passes automatically later. In practice this is one of the riskiest moves a homeowner can make. Adding a child as a co-owner is an immediate gift of a share of the property, which can create gift tax filing obligations, expose your home to that child’s creditors, lawsuits, and divorce, and forfeit part of the stepped-up basis that would have saved them capital gains tax. You also cannot sell or refinance without their signature.

Mistake 3: Not Using the Tools Michigan Actually Offers

Michigan homeowners have an option that residents of most states do not. An enhanced life estate deed, commonly called a Lady Bird Deed, lets you name who inherits your home while keeping total lifetime control, including the right to sell or change your mind. At death the home bypasses probate entirely, heirs generally keep the stepped-up tax basis, and the deed can help shield the home from Medicaid estate recovery. This plain-language resource on the Lady Bird Deed Michigan walks through how the deed works and when it makes sense. Because so few states recognize the tool, even lifelong Michiganders often have no idea it exists.

Mistake 4: Forgetting About Property Tax Uncapping

Michigan’s Proposal A caps how fast a home’s taxable value can rise, but the cap resets when the property transfers, which can send the new owner’s tax bill soaring. Certain transfers to close family members can avoid uncapping when statutory requirements are met, and the way you structure the transfer matters. A poorly planned transfer can hand your children a home along with a permanently higher tax bill, an outcome good deed planning can often prevent.

Mistake 5: Setting It and Forgetting It

An estate plan drafted fifteen years ago may name an ex-spouse, a deceased beneficiary, or a guardian for children who are now adults. Deeds, wills, and beneficiary designations should be reviewed after every major life event: marriage, divorce, births, deaths, and any significant change in Michigan law.

The common thread in all five mistakes is doing what seems obvious instead of what the law actually rewards. An hour with a Michigan estate planning attorney is cheap insurance against errors that can cost your family tens of thousands of dollars. This article is general information, not legal advice.

TomEditor

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