The Illinois Residential Real Property Transfer Act (755 ILCS 27/1, et seq.) (the “Act”) allows an owner, or co-owners, to transfer Illinois residential real estate to one or more designated beneficiaries at the death of the owner, or, if there are more than one owner, at the death of the surviving owner. This post-death transfer is done by preparing and recording a Transfer on Death Instrument (“TOD Instrument”) during the owner’s life. A TOD Instrument is recorded with the county where the residential real estate is located during the owner’s life, but does not become effective until the owner’s death (or, if there are more than one owner, upon the death of the last owner to die). The operation and effectiveness of the TOD Instrument is similar to a payable or transfer on death designation available for bank accounts.
In order for a TOD Instrument to be valid under the Act, it must (i) comply with the requirements for preparation of a deed; (ii) state that the transfer takes effect on the death of the owner (or co-owners); (iii) be recorded in the county where the residential real estate is located; and (iv) be executed with the same formalities and requirements as a Will (owner must sign TOD Instrument before two credible witnesses plus a notary public to attest to the owner’s capacity and voluntary actions).
The Act further provides (i) that the owner may revoke the TOD Instrument at any time during the owner’s life; (ii) that neither the designated beneficiary nor the designated beneficiary’s creditors have any legal rights or interests in the real estate during the owner’s life (in fact, no notice is required to the designated beneficiary(ies) that they have been designated on the TOD Instrument); (iii) that the owner may sell, mortgage, lease, or otherwise transfer the real estate during the owner’s life without notice, consent, knowledge, or involvement of the designated beneficiary(ies); and (iv) that the owner may designate any legal entity capable of owning residential real estate as the beneficiary(ies), including trusts, corporations, limited liability companies, and other similar entities.
Upon the death of the owner (or, if there are more than one owner, upon the death of the last owner to die), the designated beneficiary(ies) must record a Notice of Death Affidavit and Acceptance in the county where the residential real estate is located. Upon the recording of this Notice, the transfer is effective as of the date of death of the owner (or, if there are more than one owner, the date of death of the last owner to die). Notably, there is a statute of limitation period that requires this Notice to be recorded within two (2) years of the owner’s death. If the Notice is not recorded in time, the TOD Instrument is void and ineffective.
If you would like more information on how a Transfer on Death Instrument can avoid probate by providing designated beneficiaries the ownership of residential real estate immediately upon your death, please contact Christian G. Spesia of Spesia & Taylor.
