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, LLC 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.

One of the more useful tools used by Illinois Estate Planning attorneys is the inter vivos trust, also commonly known as a living trust.  This is a trust created by someone during their lifetime and then “funded” by transferring assets from the name of the person who created the trust (the “grantor”) into the name of the trustee.   The estate planner generally combines the living trust with what is called a “pour over” will, which is intended to take care of any assets which remain in the testator’s name at the time of his or her death.  The pour over will provides that any assets in the testator’s name at the time of his or her death “pour over” into the trust, which contains the complete dispositive estate plan.

Living trusts typically can be amended or revoked by the grantor at any time or times.  To the extent assets are transferred into the trust during lifetime, the trust creator can avoid probate at death or in addition, the often much costlier and longer lasting need for a probate court guardianship of the estate of a grantor who suffers a stroke or other debilitating condition rendering him unable to handle his affairs during his lifetime.

The grantor of the living trust can name himself the initial trustee during his lifetime, thus retaining complete flexibility and control over the assets in the trust.  Under Internal Revenue Service rules, the trust can be simply ignored during the grantor’s lifetime, with all income and expense reported by the grantor under his or her social security number on his or her 1040 annual tax return.  Further, the trust is ignored for such important issues as qualification of a residence transferred to the trust for purposes of the real estate tax homestead, senior and senior freeze exemptions.

Feel free to contact an Illinois estate planning attorney experienced in the use of living trusts at Logan Law, LLC, if you have questions about the use of trusts in your estate plan or any other area of the laws governing Illinois estate planning or Illinois probate or estate administration.