The transfer on death instrument (TOD) is one of several estate planning tools that a property owner may wish to employ. The transfer on death is an automatic transfer of one’s interest in residential real estate to a named beneficiary, upon the death of the interest holder (owner), without probating the estate.
It is a mechanism by which a real property title holder can transfer their interest upon their death, to a designated beneficiary or beneficiaries. It is statutory, codified in 755 ILCS 27 (Illinois Residential Real Property Transfer on Death Instrument Act). When the owner dies, their interest transfers to the named beneficiary(ies).
What categories of real estate are eligible under the Act?
The Act is specific, and as the name suggests it only applies to residential real estate. More specifically, it limits the transfer to real property with 1-4 units; condominium units; condominium parking (if individually owned or allocated to a specific residential condominium unit); and agricultural land with a single family residence (but limited to 40 acres or less, and must be a single tract of land).
Who is responsible for taxes and maintenance if I execute a transfer on death instrument?
A transfer on death instrument has no effect on the owner’s rights to sell transfer or encumber the property. Additionally, the TOD should have no effect on the owner’s and the beneficiary’s rights to public assistance.
What if I change my mind after I file a Transfer on Death Instruments?
If you change your mind after recording the Transfer on Death instrument, it can be revoked. However, the revocation cannot be done through a Will, it must be recorded.
Will a transfer on death instrument help avoid creditor’s claims upon my death?
No, the owner is still permitted to encumber the property and the transfer on death instrument does not affect the rights of the owner’s creditors, regardless of whether they are secured or unsecured creditors.
What should be done when the owner dies?
The beneficiary can file what’s called a Notice of Death Affidavit with the recorder’s office. This notice must contain: the name and address or each beneficiary, a legal description of the property, the street address and parcel identification number of the property; the date of the Transfer on Death instrument and its recording document number; the name of the deceased owner; the date and place of death; and the name and address for mailing of future tax bills. However, regardless of whether the Affidavit is filed, the title still transfers at death.
Can the owner executing the Transfer on Death be a corporation, trust, LLC, etc.?
No, the statue defines an “Owner” as an individual who owns an interest in real property. Which makes sense, since corporations, LLCs and trusts can, at least in-theory, survive in perpetuity. However, the beneficiary of the transfer on death may be a legal entity (trust, corporation, LLC, etc.), such as a charitable entity.
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