Money & Debt

A Transfer on Death Instrument is a document that allows a person who owns Illinois real estate to give it to another person when they die. The document works outside of the probate process, so the beneficiary does not have to go to probate court to get the house.
 

In Illinois, a Transfer on Death Instrument can only be used for real property. This includes land, houses, commercial properties, and farmland.
 

A Transfer on Death Instrument (TODI) can be used by a person to transfer real estate they own to a beneficiary when they die outside of the probate process. This can save time and money in the future, since the transfer does not need to be part of a probate case. Many people who use a TODI also use a small estate affidavit for the rest of their property.
 

A beneficiary listed on a Transfer on Death Instrument (TODI) can be anyone still alive. The property can also be given to a company, trust, or government entity. There can also be more than one beneficiary. It is also a good idea to name contingent (backup) beneficiaries in case one or more of the beneficiaries dies before the property owner or is unable to inherit the property for any reason.

The property owner can name someone under the age of 18 as a TODI beneficiary. However, minors cannot own real estate in their own name, so the property will not automatically pass to a minor upon the death of the owner. The owner will need to designate an adult custodian to manage the property for the minor until they reach the age of majority. 

TODIs are available to property owners who own real estate as joint tenants with rights of survivorship (JTWROS), as tenants by the entirety (for married couples only), and as tenants in common.

Transfer on Death Instruments (TODI) are available to property owners who own real estate as joint tenants with rights of survivorship (JTWROS), as tenants by the entirety (for married couples only), and as tenants in common.

For joint tenants and tenants by the entirety, the TODI remains revocable by the last surviving owner and does not become effective until the last surviving owner dies. If not all joint owners execute (sign and record) the TODI, and if the last surviving owner did not execute the TODI, then it becomes ineffective. It is important to note that a TODI does not sever a joint tenancy or tenancy by the entirety.

If the property is owned as tenants in common and all of the tenants in common do not execute the TODI, then the TODI beneficiary becomes a tenant in common with the other common tenants upon the death of the owner who executed the TODI. 

Yes, executing a Transfer on Death Instrument (TODI) does not give any rights to the beneficiary until the property owner dies. The owner of the property can still do anything with the property that any other owner would have the right to do. This includes selling the property or using it as collateral on a loan. The owner’s rights in the property are not affected by the TODI.

There are no tax consequences to using a Transfer on Death Instrument (TODI) during the property owner’s lifetime, but there is also no tax avoidance available when executing a TODI. If the value of an owner’s estate exceeds certain threshold amounts, the estate will still have to pay estate tax.

A Transfer on Death Instrument (TODI) automatically transfers the property to the beneficiary after the owner’s death.

While not mandatory, it is strongly recommended that the beneficiary of a TODI file a Notice of Death Affidavit and Acceptance of Transfer on Death Instrument at the County Recorder in the county where the property is located. It is recommended that this Notice be filed within two years of the property owner’s death, as it provides public notice of the transfer.

Yes, a property owner who has signed a Transfer on Death Instrument (TODI) can cancel or revoke the TODI at any time before they die. However, the revocation must be notarized and recorded with the county Recorder of Deeds in the same county where the original TODI was filed. An unrecorded document or will cannot revoke a TODI.

If the property owner’s spouse outlives them, the spouse may be able to cancel the TODI even if they had been separated for a long time. If the spouse is able to cancel the TODI, they will get a share of the property. If the property owner does not want the spouse to cancel the TODI, they must either divorce or get the spouse to waive their right to renounce the TODI.

Learn more about Canceling or revoking a Transfer on Death Instrument.

A property owner can still use a Transfer on Death Instrument (TODI), even if they have a will. A TODI is a separate document from a will and is only used to transfer real estate outside of the probate process. Additionally, a properly recorded TODI will supersede or take priority over any provisions in a will that contradict the TODI.

A property owner can still file a Transfer on Death Instrument (TODI) if they have a mortgage on their property. It will not affect the mortgage during the owner’s lifetime and will not trigger any due-on-sale clauses in the mortgage.

Mortgages follow the property, so if there is still a mortgage in place when the property owner dies, the TODI beneficiary will inherit the property subject to that mortgage or any other liens that may be in place. The TODI beneficiary will need to make arrangements with any lenders to continue paying the mortgage.

A property owner can name backup beneficiaries in their Transfer on Death Instrument (TODI) to cover the possibility that one or all beneficiaries die before the property owner. If the property owner does not name backup beneficiaries in their TODI document, then the following scenarios will apply:

• If there is only one TODI beneficiary and that beneficiary is a descendant of the property owner, the property will be divided equally among the deceased beneficiary’s descendants.
• If there is only one TODI beneficiary and that beneficiary is not a descendant of the property owner, then the property will be included in the property owner’s estate and will have to go through the probate process.

When there is more than one beneficiary and one of the beneficiaries dies before the property owner, the owner can revoke the TODI and execute (sign and record) a new TODI to make sure the property will go to whom they want according to their wishes. If the property owner does not execute a new TODI when one of multiple beneficiaries dies before them, then the remaining living beneficiaries will divide up and take the shares in the property of the deceased beneficiary. 

An Illinois Transfer on Death Instrument (TODI) can only be used to transfer property that is located in Illinois. If a property owner owns real estate in another state, that owner would need to follow the TODI rules in the state where that property is located. Each state that allows for TODIs will have its own forms and rules for these types of property transfers.

The Illinois Real Property Transfer on Death Instrument Act can be found at 755 ILCS 27/. For more information and forms to file for a Transfer on Death Instrument, read Creating a Transfer on Death Instrument.
 

You can complete and file the Transfer on Death Instrument yourself. However, it may be a good idea to get a lawyer to help find the information needed for the form or review it before recording it.

You can use Get Legal Help to find a free legal aid organization or a private lawyer near you.