By Matthew A. Quick
A very effective and efficient estate planning tool has been made available in Illinois as of January 1, 2012, especially suited for people who want to make an outright distribution of their property without the protections of a trust. A new Illinois law, called the Illinois Residential Real Property Transfer on Death Instrument Act, at 755 ILCS 27/1, et seq., allows owners to transfer their Illinois residential real estate outside of probate using a prerecorded instrument, which is akin to a deed, but referred to in the new law as a “Transfer on Death Instrument.” Practically speaking, this law allows an owner to indicate who should be the beneficiary of certain real estate before the owner’s passing. Upon the death of the owner, the property will simply pass to the beneficiary with minimal administration (basically all that is required is the filing of an executed form, there is no requirement of probate and no requirement of a trust arrangement).
Highlights of the new act:
The real estate must be residential (a building with less than 4 units, a condo, etc.);
The instrument will always be revocable, even if contrary language is contained in the instrument;
The beneficiaries, but not creators of the instruments, can be business entities; and
The owner may deal with his or her residential real estate during his or her life without restriction.
It must meet the requirements of a properly recordable deed and be witnessed (witnessed in the same way as a last will and testament, which is different from the execution of a deed);
It must state that the transfer is to occur at the owner’s death; and
It must be recorded with the recorder before the owner’s death.
Since the statute did not dictate any forms for use, please consult an attorney to draft an instrument if you are interested. When utilized correctly, a Transfer on Death Instrument can be an extremely efficient means of transferring property without the use of a trust arrangement or the probate process and would make a great addition to a basic estate plan.