By: James Cerami, Associate
The Illinois Residential Real Property Transfer on Death Instrument Act (the “Act”) establishes a new and valuable estate planning tool for Illinois residents. The Act allows owners of residential real estate to transfer property upon their deaths using a document called a transfer on death instrument (a “TODI”). According to the Act, residential real estate includes property improved with one to four dwelling units, a condominium or townhome, or agricultural property of 40 acres or less with a single family home.
The Act is important for individuals and families who want to transfer their homes when they pass to specific beneficiaries without using costly or complex estate planning strategies. Prior to the Act, if one wanted to avoid the time-consuming and often expensive probate court process, the property either needed to be transferred to an Illinois land trust, a revocable living trust, or some other entity. However, the amount of work and cost involved in creating and maintaining these devices makes them unattractive for many people.
Effective January 1, 2012, Illinois residential real estate can be transferred upon death to one or more designated beneficiaries using a TODI. A TODI is similar in form to a deed, but must be executed with all of the formalities of a will. Specifically, a TODI must be executed voluntarily by an individual with sufficient capacity and must be attested in writing by two witnesses. After the document is created, it must be filed with the recorder of the county in which the real estate is located.
During the property owner’s life, the TODI does not affect his or her current interest in the property. The owner or owners can sell, mortgage, lease or otherwise encumber or transfer the property. Additionally, the fact that someone is a future beneficiary under a TODI does not give him or her a present interest in the property. Furthermore, like a will, a TODI can be revoked during the property owner’s lifetime as long as the revocation complies with the Act.
According to the Act, TODIs can only be prepared by Illinois licensed attorneys. TODIs are simpler than some other estate planning tools but still must be prepared with due care and skill. If you have any questions regarding TODIs or other estate planning or property transfer tools, please do not hesitate to contact our office.
