Estate Planning for Property Owners: Trusts, LLCs, and Probate Avoidance in Michigan

David Manley
Nov 5, 2025
3 min read

Why Every Property Owner Needs an Estate Plan

Owning real estate without an estate plan is like building a house without a deed — someone else decides what happens when you’re gone.

In Michigan, if you die without a will or trust, your property goes through probate court, where the state determines who inherits it. That process can:

Take 6–18 months
Cost thousands in legal fees
Freeze property sales or transfers
Create family disputes

Goal: Use the right tools to transfer property smoothly and protect your legacy.

The Big Three Tools for Real Estate Owners

1. Revocable Living Trust

A revocable living trust lets you retain control of your property while alive and transfer it automatically to beneficiaries upon death — no probate required.

Key benefits:

Avoid probate
Maintain privacy (trusts aren’t public record)
Allow for easy management if you become incapacitated
Simplify multi-property or multi-state ownership

Example: A couple in Muskegon holds their home and two rental properties in the Manley Family Trust. When they pass, assets transfer directly to their children — no court process, no delay.

2. Limited Liability Company (LLC)

LLCs are critical for anyone with investment or rental properties. They separate personal and business liability and simplify ownership transfers.

Advantages:

Shields personal assets from lawsuits or tenant claims
Enables shared ownership with clear percentage interests
Allows flexible profit distributions
Can be owned by a trust for double protection

Michigan Tip: File your LLC with LARA (Licensing and Regulatory Affairs) and keep it in good standing by filing your annual statement.

3. Lady Bird Deed (Enhanced Life Estate Deed)

A uniquely Michigan tool, the Lady Bird Deed lets you keep full control during life but automatically transfer property to heirs at death — avoiding probate.

Benefits:

No need for a trust for single properties
Retain full rights to sell, mortgage, or change beneficiaries anytime
Medicaid-friendly (property not counted as an asset for eligibility)

Example: A homeowner in Norton Shores names her son on a Lady Bird Deed. She keeps full control while alive, but title transfers instantly to him at death without probate.

How to Combine Trusts and LLCs

For investors and business owners, the ideal structure often looks like this:

Property Title: Owned by LLCLLC Ownership: Held by your revocable living trust

This “two-layer” approach ensures:

Asset protection during life (via LLC)
Seamless transfer after death (via trust)
Centralized management for multiple properties

Pro Strategy: Use one LLC per property or per asset class to limit exposure.

Tax and Reporting Advantages

LLCs are “pass-through” entities — income flows to personal returns (Form 1065 & K-1s).
Trusts can minimize estate taxes if structured properly (especially for estates over federal thresholds).
Homestead exemptions can be retained within Michigan trusts and some single-member LLCs.

Tip: Coordinate between your CPA, attorney, and Realtor — Michigan tax law changes occasionally on trust-owned homesteads.

Avoiding Common Mistakes

Not funding your trust (title must actually transfer into it).

Mixing personal and LLC finances.

Naming minors as direct beneficiaries without a trustee.

Using out-of-state boilerplate trust forms that ignore Michigan statutes.

Forgetting to update documents after buying new properties.

Pro Tip: Record a “Certificate of Trust Existence” with your county register to prove ownership while keeping details private.

When to Call a Professional

Even simple plans can go sideways without proper execution. Work with:

A Michigan estate planning attorney familiar with real estate holdings.
A tax professional to structure entity ownership and deductions.
A Realtor experienced in investment properties to align asset value with legacy goals.

Final Thoughts

Estate planning isn’t just for the wealthy — it’s for anyone who wants to protect what they’ve built. In Michigan, tools like trusts, LLCs, and Lady Bird Deeds give homeowners and investors control, privacy, and peace of mind.

If you’re ready to organize your properties for long-term protection, I can help connect you with the right professionals and ensure every deed and entity aligns with your legacy plan.

Because true wealth isn’t just what you earn — it’s what you preserve.