How a Transfer on Death Deed Works in Illinois

A transfer on death deed (TODD) is a legal instrument that allows property owners to bypass probate and distribute real estate directly to a beneficiary upon their passing. Whether you’re an elderly homeowner, a single person or someone with a modest estate, a TODD might be a suitable tool for your estate planning needs. Here’s what you need to know about setting up a TODD in Illinois. For help protecting your assets, talk to a financial advisor.

What Is a Transfer on Death Deed?

A transfer on death deed (TODD) is an estate planning tool designed to facilitate the transfer of real estate upon the death of the property owner. When you die, the property automatically transfers to the designated beneficiary without the need for probate proceedings.

Unlike a will, which must go through probate, or a trust that requires ongoing oversight by a trustee, TODDs offer a simpler way to pass real estate. However, the specific rules governing TODDs vary by state.

The Illinois Real Property Transfer on Death Instrument Act ¹ governs the use of TODDs in the state. These deeds become operative upon the property owner’s death, provided they meet requirements for execution, witnessing and recording.

To set up a TODD in Illinois, you must complete a Transfer on Death Instrument form that names your beneficiaries and file it with the county recorder’s officer to ensure compliance with state law.

Benefits of Filing a Transfer on Death Deed

A TODD can significantly reduce delays and expenses associated with probate, the legal process for validating wills and settling estates. Probate can take months, if not years, and reduce the value of an estate. Probate costs can reach up to thousands of dollars, depending on the size and complexity of the estate.

A TODD also lets you retain full control of your property during your lifetime, since it doesn’t transfer ownership or grant any rights to beneficiaries until your death.

When to Use a Transfer on Death Deed

This tool works well for individuals seeking a direct, uncomplicated way to transfer real estate to a beneficiary or small group of heirs. A TODD is optimal in scenarios such as:

• A single individual wishing to leave property to a close relative or friend;
• Elderly homeowners who want a smooth transition of their home to a designated heir;
• Individuals with modest estates seeking to bypass probate.

However, TODDs are not a one-size-fits-all solution. They should be evaluated as part of a broader estate plan, as they may not suit every situation or objective.

Requirements for a TODD to Be Valid in Illinois

In Illinois, a transfer on death deed must meet specific criteria to be considered valid. The following breakdown outlines the key requirements:

• The individual must be at least 18 years old and mentally capable of understanding the deed’s implications.
• The property must be residential real estate, such as a single-family home, condominium, or building with up to four units.
• The deed must include the property’s legal description, the owner’s signature, and two credible witnesses who are not beneficiaries, as well as notarization.
• The deed must be filed with the county recorder’s office where the property is located before the owner’s death.

Understanding and fulfilling these requirements is critical to guaranteeing that your transfer on death deed is legally sound and enforceable, allowing for the intended transfer of your property to be carried out as you wish.

Bottom Line

A transfer on death deed (TODD) can offer a straightforward and probate-avoiding solution for transferring property to a designated beneficiary in Illinois. While it can help you avoid probate and provide control and flexibility to the property owner, it’s not a guarantee for all estate planning needs. A TODD should be established with a full understanding of its legal requirements, including capacity, documentation and recording to ensure it reflects the owner’s intentions.

Tips for Financial Planning

• There are a lot of factors to consider when completing a financial plan. A financial advisor can offer you specific advice for your financial situation. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Protecting property is just the first step to consider in your estate planning. Consider this estate planning checklist to help you get started.

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