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How to Transfer Property Left to the Beneficiaries in an Estate Plan

How to Transfer Property Left to the Beneficiaries in an Estate Plan

After a loved one passes away, you must first determine whether you need to open a probate estate in order to transfer property to the heirs. A typical estate plan includes a Last Will and Testament of the person, a Trust document, and Power of Attorney Documents for healthcare and property. However, in the absence of some of these documents or in addition to, the estate plan might include a small estate affidavit, a transfer on death instrument, and/or a personal property memorandum.

Determining Whether you Need to go Through Probate to Obtain Property

In Illinois, if the decedent has left behind assets greater in value than $100,000.00 total and/or owned a piece of real estate such as a house or parcel of land, then it is required to open a probate estate. To learn more about the specifics for opening a probate estate, please visit our article “What Does “Probate” Mean In Illinois?”. In these circumstances, it is necessary to hire legal representation to open an estate, distribute the assets, and pay off any claims.

In order for property left in a will to be legally transferable in Illinois, it must satisfy three conditions:

  1. The decedent must be the sole owner of the property and no one else has property rights;
  2. The value of the assets of the estate must be able to satisfy all of the claims made against the estate; and
  3. The Court must make a determination as to the validity of the will.

Alongside a will, there may be a personal property memorandum. A PPM is a document explicitly mentioned in the will that lists out specific items such as clothing, jewelry, artwork, etc. that are to be given away to specific beneficiaries. This document may have been changed multiple times throughout one’s life as it requires no legal permission, or no observation to do so.

On the other hand, if a person left behind assets totaling less than $100,000.00 in value and did not own any real estate, then going to Court or hiring representation may not be necessary, although encouraged. In some cases, the person may have chosen to forego a will altogether and instead used one of the following documents.

#1 Small Estate Affidavit
A Small Estate Affidavit is a legal document that distributes assets without having to go to court. Simply, a SEA is appropriate where the total value of the decedent’s assets are equal to or less than $100,000.00, and they did not own any real estate. For instance, a person who rented apartments their entire life and has a bank account and collectable objects (such as clothes, shoes, furniture) equaling $70,000.00 in value qualifies for a SEA.

In order for a SEA to be legally valid in Illinois, the decedent must have been a resident of Illinois, the document must have been signed in front of a notary public, and no other probate processes can be ongoing. A Small Estate Affidavit does not need to be filed with the Court. One attempting to collect assets presents the document to a person, bank, or other holder of the estate asset. To read the legislation on Small Estate Affidavits, click HERE.

#2 Transfer on Death Instrument Form
A Transfer on Death Instrument Form (TODI) is a legal document where the decedent has predetermined how their property is going to be distributed after their death. While they are living, the owner has full rights to sell, transfer, or mortgage the property. Only after a person dies, is the named beneficiary or beneficiaries able to receive property rights. A TODI allows you to avoid probate proceedings through a simple form process through the County’s Recorder’s Office. To read more about TODIs, check out our previous blog post called “Transfer On Death Instruments”.

Why Hays Firm?

Determining whether an heir is able to inherit a property is a complex process that varies depending on the size of each estate. Our expertise in this area allows us to provide exceptional service to our clients to help simplify that process.