A new law will soon make it easier to transfer residential real estate upon death while avoiding the time and cost of going through probate. Governor Quinn recently signed into law the Illinois Residential Real Property Transfer on Death Instrument Act which takes effect January 1, 2012.
Under the Act, an owner of residential real estate may execute a Transfer on Death Instrument (“TODI”), which allows the property to pass to one or more designated beneficiaries upon the death of the owner. The designated beneficiary could be an individual, corporation, trust, partnership, limited liability company, or a corporation.
The requirements of a TODI are similar to those of a will. The TODI must contain all the elements of a regular deed and also requires two witnesses and a notary. After the TODI is executed by all necessary parties, it must be recorded in the county where it is located. The owner is free to mortgage, sell, lease or deed the property during his or her lifetime. The designated beneficiary has no rights to the property until the owner passes away. If the owner changes his or her mind as to who the designated beneficiary should be, the owner may revoke the TODI by recording a revocation with the county’s recorder of deeds office.
Upon the owner’s death, the beneficiary must appropriately claim the property by signing and recording with the county a Notice of Death Affidavit and a Notice of Acceptance. Once recorded, the beneficiary takes title to the property effective on the date of the owner’s death. If the two documents are not recorded within thirty days after the owner’s death by at least one beneficiary, the personal representative of the owner’s estate may take possession of the property and can place a lien on the property for all reasonable costs and expenses of managing and caring for the property. If the Notice of Death Affidavit and the Notice of Acceptance are not recorded within two years of the owner’s death, the TODI becomes void and the property then passes to the deceased owner’s estate.
Encourage your clients to talk to their estate planning attorneys to see if this new Act would benefit them and their heirs. The minimal cost and time of preparing and recording a TODI could be a favorable way to avoid the costs and time delays of going through probate.
Long way around Robin Hood's barn. Missouri did this about 10 years ago and all you need is a beneficiary deed executed by title owner.