Why Use a Transfer on Death Instrument for Real Estate in Illinois?
Why Use a Transfer on Death Instrument?
If you have real estate in Illinois then it is important to consider how your real estate may pass to your family upon your death. Transfer will depend on your current ownership, and whether you have a Will set up or if you have deeded your property to a Trust. For homeowners in Illinois who do not have a Trust but are still looking to avoid probate upon their passing, a transfer on death instrument (TODI) may be a good option.
Operation of a Transfer on Death Instrument
A transfer on death instrument is similar to a deed, in that it directs the transfer of your property. But it differs from a deed in that it requires execution in a similar manner to the execution of a Will. A transfer on death instrument further differs from a deed in that it is not a present transfer, but rather a testamentary transfer. That also means that generally no transfer taxes are due upon recording of a transfer on death instrument. Under Illinois law a transfer on death instrument is not valid until recording. Therefore it is imperative to record the transfer on death instrument shortly after execution to make sure it is in place in case the inevitable happens.
Transfer of Property Upon Death
A transfer on death instrument names a beneficiary of your property. This means that upon your passing, your property will be transferred by operation of law to the person (or entity) you named in your transfer on death instrument. The beneficiary can be one person, multiple people, a Trust, or business or non-profit entity. The title taken can be the usual forms, such as sole ownership, tenants in common, joint tenants with right of survivorship, and tenants by the entirety.
Benefits of a Transfer on Death Instrument
A transfer on death instrument has multiple benefits. First, it will send your property to your intended beneficiary upon your passing. Another benefit is that it takes the real estate out of probate and turns it into a non-probate asset (provided your named beneficiary is still living). This means you can use it as a tool to avoid probate without the need to make a Trust. An experienced Wills and Trusts attorney will be able to give you more guidance regarding whether you should have a Trust or whether a Will with a transfer on death instrument will be enough to avoid probate upon your death.
Why Use a Transfer on Death Instrument Instead of Putting My Child on Title?
Some people put their children on the title to their real estate as a method of avoiding probate. In such a scenario ownership is owned jointly with right of survivorship. While this may work to transfer the property to your children upon your passing, it presents the opportunity for other problems to appear. For instance, if you put your child on title and your child defaults on loans, then the creditors can come after your real estate. The creditors could put liens on your property and eventually foreclose on the property.
Another issue is that if you want to sell your property you will need your children to sign off on it. This can be problematic if your children are incapacitated, or otherwise unavailable to execute a deed.
The best alternative to prevent such problems is to draft a transfer on death instrument. A transfer on death instrument will not permit your beneficiary’s creditors to put a lien on the property nor will it require your children to sign off on a deed if you decide to sell your home. If you sell your home with a transfer on death instrument on it then the transfer on death instrument will be considered a nullity.
Contact a Lake County Wills and Trusts Attorney at Johnston Tomei Lenczycki & Goldberg LLC Today to Get Your Transfer on Death Instrument for Real Estate
If you are interested in putting a transfer on death instrument in place to make sure your real estate transfers to your beneficiaries upon your passing, contact the Wills and Trusts attorneys at Johnston Tomei Lenczycki & Goldberg LLC here for a no charge initial consultation. Make sure that your real estate does not trigger a probate upon your death.