In 2012, Illinois became one of sixteen states which allow the owner of residential real estate with no more than four residential units to avoid probate at death by use of a pre-recorded instrument known as a Transfer on Death Instrument (TODI). By use of TODI, a person with the same mental capacity as required to make a will, can execute an instrument with the same notarization requirements as those needed to execute a recordable deed.
However, in the case of a TODI, the execution must also be witnessed by at least two disinterested individuals in the owner’s presence, just as required for an Illinois will. The TODI must provide that the transfer to the beneficiary will occur on the owner’s death and must be recorded before the owner’s death with the county recorder where the real estate is located.
Because a TODI is not a deed, the normal requirements of notice and delivery for an effective deed are not required for a TODI transfer. All that is required is that the beneficiary accepts the transfer when the owner dies.
A TODI is completely revocable by the owner at any time before the owner’s death. Revocation occurs when a document is executed, acknowledged, witnessed and recorded revoking the TODI expressly or when a new TODI is properly executed, witnessed and recorded which is inconsistent with the earlier TODI.
Only a natural person can create a TODI. However, the beneficiary of a TODI can be a natural person, a corporation, a limited liability company, a trust or any other entity capable of owning residential real estate.
The transfer of title by a TODI is effective upon the owner’s death by the execution by the beneficiary and recording with the local recorder of deeds of a Notice of Death Affidavit and Acceptance of Transfer Upon Death. The TODI becomes void and ineffective if not accepted within two years of the owner’s death. In addition a TODI may be disclaimed by the beneficiary. A beneficiary who disclaims a TODI is treated as having pre-deceased the owner and will be treated as never having had an interest in the property.
The TODI Act created yet another tool for Illinois estate planners. It gives an estate planning lawyer essentially the same tool for transferring qualified residential real estate at the owner’s death as have long been available to estate planners for bank accounts and securities.
Feel free to contact an Illinois estate planning attorney experienced in the use of a TODI at Logan Law if you have questions about the use of a TODI in your estate plan or any other area of the laws governing wills, trusts and other Illinois estate planning tools or Illinois probate or estate administration.
Illinois has long had a law which permitted the transfer of up to $100,000 in personal property at a person’s death without the need for probate. The law permitted the transfer by the completion and execution of what is called a small estate affidavit. Since a probate estate can take seven months to a year or more to complete and can involve attorney fees and costs of $2,000 or more, this alternative to probate can be very useful in the right circumstances.
Until the beginning of 2015, the small estate affidavit had a characteristic which severely limited the usefulness of the procedure, in that the affidavit could only be used where the estate had no debts other than funeral expenses. This changed through a law passed in 2014. Now a small estate affidavit may be used in estates which have non-funeral debts, provided all debts of the decedent are listed in the affidavit.
The person who signs the small estate affidavit becomes responsible for paying the debts. In addition, the signer becomes responsible for distributing the estate to its rightful recipients, who are also to be listed in the affidavit.
The small estate affidavit allows banks and other third parties who have possession of the decedent’s assets to transfer them in accordance with the affidavit. Further, the small estate affidavit may used to gain access to a safety deposit box of the decedent.
Feel free to contact an Illinois estate administration attorney experienced in the use of small estate affidavits at Logan Law if you have questions about the use of a small estate affidavit to avoid probate or any other area of the laws governing Illinois estate planning or Illinois probate or estate administration.