Planning your estate takes time and meticulous planning to ensure that your assets will be distributed to the proper intended beneficiaries. Drafting a will, establishing the family trust, and aligning asset ownership are all crucial steps in creating your estate plan. However, even the most meticulously prepared estate plan can be compromised by the small, overlooked detail of a deed that remains unrecorded or is not properly recorded in the county. For many East Lansing homeowners, recording a deed may appear as a trivial task. After all, simply filing a document with the county’s Register of Deeds office should be the simplest part of finalizing an estate plan, especially after deliberating on the uncomfortable nature of the topic. Nevertheless, when a deed is improperly recorded or not recorded at all, the legal and financial repercussions can be substantial enough to disrupt the pre-planned estate plan.
What Recording a Deed Involves
Recording a deed means officially filing it with the county Register of Deeds’ office where the property is located. Once recorded, the deed becomes part of the public record. It establishes legal notice that ownership has transferred or will be transferred upon the homeowner’s death. Recording formalizes the title change, which allows third parties such as the courts, creditors, or potential buyers to recognize the new owner. This is particularly important when transferring property into a trust or when executing a lady bird deed to avoid probate.
Why it Matters, and how this Small Step can have a Big Impact on the Success of Your Estate Plan
An unrecorded or improperly recorded deed can cause significant issues for beneficiaries, heirs, and trustees. It may undermine the estate plan you diligently crafted, preventing your loved ones or intended beneficiaries from receiving the assets you intended to leave them. Moreover, it can place these beneficiaries in a challenging position during an already emotionally taxing time.
1. Probate Risks
First, if a property transfer, such as to a trust or via lady bird deed, is not recorded or improperly recorded, the home may still be treated as part of the deceased’s probate estate. This means the asset could still go through probate court, defeating the entire purpose of planning for a non-probate transfer.
2. Title Confusion
Unrecorded deeds are not visible in a title search. Consequently, if an heir or beneficiary attempts to sell or refinance the property in the future, they may encounter delays or be compelled to take legal action, such as filing a quiet title suit.
3. Medicaid Complications
Medicaid planning hinges on the timing and visibility of asset transfers. An unrecorded deed could lead to a home being deemed a countable resource, potentially subject to a Medicaid lien, or raising doubts about the validity of the transfer.
4. Disputes Among Heirs
Lastly, a missing or unrecorded deed can cause confusion and disagreements among family members, especially if the original document cannot be found or if one party disputes the transfer. Additionally, if the deed was intended to disinherit certain heirs and prevent them from receiving the home for any reason, this could lead to them receiving the property against your initial wishes.
When Recording is Especially Critical
Recording the new is always recommended, but there are specific scenarios where it becomes crucial. For instance, a lady bird deed must be recorded before the grantor’s death to be effective. If not, the property may revert to the probate estate. Similarly, a trust cannot manage property unless the deed formally transfers ownership to the trust and is recorded. Furthermore, adding or removing family members from the title without recording the change leaves ownership status unclear. Lastly, an unrecorded gift of real estate can create tax issues or legal uncertainty, especially if challenged later.
How to Properly Record a Deed
Recording a deed involves several key steps:
1. Prepare a valid, notarized deed that complies with Michigan law, including a legal description, date of transfer, and correct party names.
2. Submit the deed to the appropriate county Register of Deeds (e.g., Ingham County for East Lansing properties).
3. In addition to recording the deed, Michigan law requires a Property Transfer Affidavit (PTA) to be filed whenever real property changes ownership. This applies whether the transfer is part of a sale, a gift, or an estate plan, such as deeding a home into a trust or through a lady bird deed. The PTA must be filed with the local assessor within 45 days of the transfer. Failing to do so can result in uncapped property taxes, meaning the taxable value of the home could significantly increase, leading to unexpected costs for the new owner. For East Lansing properties, the affidavit should be filed with the City of East Lansing Assessor’s Office, even if the deed itself is recorded at the county level. Further, if the transfer qualifies for a tax exemption, such as a transfer to a trust or a family member, the PTA is still required. Filing this form correctly and on time is a critical step in protecting your beneficiaries from unnecessary tax burdens.
4. Pay the applicable recording fee, which is typically around $30.
5. Retain a certified copy for your estate planning records.
Importantly, don’t assume the recording is perfect just because it was filed. Like any office handling high volumes of documents, the Register of Deeds can occasionally make clerical errors such as misspelled names, missing pages, or incorrect indexing. Even small mistakes can interfere with a trust’s ability to manage the property or cause title issues after death.
Deeds with missing signatures, incorrect legal descriptions, or improper notarization may be rejected. To avoid costly mistakes, it’s best to have an attorney prepare and handle the recording process as part of your overall estate plan.
In estate planning, success often depends on attention to detail. Recording a deed may seem like a small administrative task, but it plays a major role in ensuring that your property passes smoothly to the individuals or trust you’ve designated. If you’re unsure whether your deed has been recorded, or if you recently created or updated an estate plan involving real estate, it’s worth confirming with your attorney or title professional.
At Leydorf Law Firm, we help Greater Lansing families ensure every part of their plan is complete, including the crucial step of deed recording. If you’d like us to review your estate documents or assist with transferring and recording property, contact us to schedule a consultation.