If you own property in Illinois, legal changes now allow you to transfer all types of real estate to a beneficiary without going through probate after your passing. Illinois expanded its Transfer on Death Instrument Act on Jan. 1, 2022, to include commercial properties as well the previously allowed residential properties.
How a TODI works
Estate administration and probate issues are some of the most important aspects of estate planning. Proper planning aims to avoid probate whenever possible so that your assets can pass safely to your heirs. Until 2022, Illinois was one of only a handful of states where farms, commercial, industrial, recreational or other real estate properties still had to go through probate upon death. A transfer on death instrument, or TODI, works similarly to TOD bank and brokerage accounts. The property passes immediately to your designated heir upon presentation of a death certificate.
A valid TODI must be drafted and recorded and then witnessed by two people. An affidavit must be issued when the owner dies, noting the original owner’s death and the new owner’s name. You can change a TODI, name a new beneficiary, borrow against the property, etc., up until your death.
Is a TODI right for your property?
If you know who you want to inherit a piece of real estate upon your death, then a TODI may be a good choice. However, if your beneficiary arrangements are complicated, then selecting another method, such as a revocable trust, may be a better consideration during the estate planning process.
A good estate plan aims to ensure that your final wishes are carried out. Periodically review your estate plan to make sure it still meets your needs. If you include a TODI, also check that document regularly to see if updates are needed.