When planning your estate for the future, your real estate is one of the most vital aspects to consider. Frequently, this involves deciding who will get your home.
However, the process of transferring ownership of a property after death may not be as simple as you would expect. In Illinois, there are several methods and catches to consider.
Read on to learn from our McHenry, Illinois attorneys at Diamond Estate Planning just what happens to your property after your death.
Can My Property Stay Under My Name After I Die?
In the United States, a dead person cannot own property – this includes your family home, vacation house, or any place of business you may own.
After you die, you must transfer your property to an inheritor via one of many methods.
Let’s take a look at what some of these methods entail for real estate in Illinois so that you can decide what is best for you and your loved ones.
What Happens To Your Property Without An Estate Plan?
Without an estate plan, such as a trust or a will, your property may go to probate court. The probate court will decide where your properties go. In Illinois, if you don’t have a will this will frequently be a half interest to your surviving spouse, and a half interest to your children in equal shares.
When you die without a will or a trust, your properties may not go where you intended. This issue exemplifies why it is vital to plan your estate ahead of time.
At Diamond Estate Planning, we can help you plan your estate to ensure that your property passes ownership to whoever you want.
Transferring Your Property After Death
Thankfully, transferring your property after death does not need to be difficult for you or your beneficiaries.
This transfer is one of the most common and vital parts of estate planning, so our experienced lawyers can help you set up an estate plan that transfers your property to the people you choose.
There are three main transferrals your beneficiaries may encounter after death transferring via:
- transfer on death instrument, or
Let’s take a closer look at what each of these transferrals entails.
1. Transferring Via Will
Transferring your properties via will is a common method of transferring your property after death.
A will tells your executor, the person in charge of your estate, what to do with your property. If the property did not pass automatically upon your passing, to transfer or sell your property, the executor will either need to go to probate court or purchase a bond in lieu of probate from a title company.
If the executor needs to go to probate court and it is not a contested case, the process will usually take between 9 months and a year. If the case is contested, it can take years to settle or close the case. Once the probate case is started, the executor can ask the court for permission to sell the property.
If the executor decides to purchase a bond in lieu of probate from a title company, the estate will usually need to:
- Pay a bond from 1% to 3% of the sale price or value of the property;
- Have all of the heirs of the owner:
- Sign a deed either to the executor or to the person receiving the property;
- Sign an indemnity agreement with the title company providing the bond;
- Sign an affidavit of heirship verifying all of the heirs of the estate; and
- Provide any other documentation required by the title company.
If all the heirs do not agree to provide all this paperwork, the executor will usually need to open a probate case to sell or transfer the property.
2. Transferring Via Trust
Transferring a property via a trust is much easier than transferring via a will.
Unlike a will, a trust usually does not have to go through probate court – it is a private document. As such, transferring property via a trust is similar to a sale and usually does not require court approval.
A trust is like a suitcase. You put your property into the suitcase when you are alive and hold the suitcase yourself. Most trusts will allow you to sell or transfer the property while you are alive.
When you pass, the person you designate to pick up the suitcase, called the Trustee, will take over for you and can sell or transfer the property in the trust based on the rules you set up in the trust.
If a trust allows a trustee to sell or transfer your property, the trustee simply signs a deed to the recipient of the property.
3. Transferring Via a Transfer on Death Instrument (TODI)
In Illinois, an owner of real estate can create and record a transfer on death instrument, commonly referred to as a TODI, that designates who receives the property upon the owner’s passing. If a TODI is properly drafted, signed and recorded, it can automatically transfer the property to the people you want upon your passing.
You can revoke or change a TODI any time before your passing. While you are alive, you control your interest in the property and can do anything you want with it. A TODI can be a useful tool to transfer property upon your passing without giving any interest to the recipient when you are alive.
4. Transferring Via Co-Ownership
Transferring property via co-ownership can be tricky. It depends on how you own the property.
If you own property with someone else, upon your death, it may or may not transfer to them. The automatic transfer of property to a co-owner of a property is called the right of survivorship.
Typically, if you co-own a home with someone else you usually have ownership as Tenants in Common. This means upon your death, your portion of the ownership will automatically transfer to your heirs or as designated by your will.
However, if you own the property as Joint Tenants or as Tenants by the Entirety, the property will automatically pass to the other owner, or owners, upon your passing.
The deed giving you ownership of the property will usually specify how you own your property. By looking at the deed, your estate planning attorney should be able to tell you how your property will pass after your death.
No matter what your plans are for your property after death, Diamond Estate Planning is ready to help you enact them.
Contact Diamond Estate Planning Today
Diamond Estate Planning in McHenry has been helping Illinois families plan their legacies for decades, and we’re ready to get to work for yours next. Contact us today to get started.
Disclaimer: Any information contained herein is solely for informational purposes and is only applicable in the state of Illinois. While it is important that you educate yourself, nothing herein should be construed as legal advice or create an attorney-client relationship. For specific questions, we urge you to contact a local attorney for advice pertaining to your specific legal needs.
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