Transfer on Death Instruments
HOW DO YOU TRANSFER PROPERTY AFTER A PERSON DIES?
After a person dies, his or her real property may need to be sold or transferred to a beneficiary of the person’s estate. Real property includes homes, plots of land, or condominiums. Generally, in order to sell real property after a person dies, a probate estate needs to be opened. The property cannot be sold or transferred unless an executor or administrator of an estate has been appointed by a judge.
For many individuals, their largest, most valuable asset is their home. And, unlike other assets, it is not easy to name a beneficiary or a “payee on death” on a real estate deed. Thankfully, the Illinois legislature recognized the reality that families were often forced into opening a probate estate solely to transfer real property. In 2012, Illinois enacted the “Illinois Residential Real Property Transfer on Death Instrument Act” in order to help individuals and families transfer property after a person dies.
Under the Transfer on Death Instrument Act, an owner of residential real estate may name one or more beneficiaries to receive the real estate after the owner dies. The act only applies to residential property, such as a home or a condominium. The act does not apply to commercial or business properties, such as a retail store or commercial building. Also, it is important to note that the transfer on death instrument does not become effective during the owner’s life. The owner can revoke or rescind the transfer on death instrument during his or her lifetime. In fact, even after the transfer on death instrument is executed and recorded, an owner can sell or transfer the property. The owner may also take a mortgage out on the property.
Transfer on Death Instruments must be signed and witnessed just like a will. The owner must sign the instrument and two witnesses much watch him sign the instrument. The transfer on death instrument must then be filed with the county “Recorder of Deeds.” Each county has a Recorder of Deeds. File the transfer of death instrument in the county where the property is located. There will likely be a fee for recording the instrument; be sure to contact the Recorder of Deeds to determine the fee and whether the fee must be paid by cash or money order.
After the owner’s death, the property may be transferred directly to the beneficiary or beneficiaries. The beneficiary must file a “Notice of Death Affidavit” with the county recorder of deeds. The Notice of Death Affidavit must be filed within thirty (30) days of the owner’s death. If for some reason, the notice of death affidavit is not filed within two (2) years of the owner’s death, the original Transfer on Death Instrument will become void. Therefore, it is very important to file the Notice of Death Affidavit as soon as possible after the owner’s death.
If the Transfer on Death Instrument becomes void, the property will pass to the owner’s estate and a probate estate may be necessary to transfer the property. Additionally, the property may not be transferred to the named beneficiary or beneficiaries if the instrument becomes void because the property must then pass through the owner’s estate. The beneficiaries of the owner’s estate may be different that the beneficiaries named in the Transfer on Death Instrument.
Many counties in Illinois have a form for the Transfer on Death Instrument and for the Notice of Death Affidavit. The form for Cook County is located here. These forms are generally easy to complete but they must be executed properly and notarized. The attorneys at Hays Firm can answer any questions you may have about these documents and can help you determine if a Transfer on Death Instrument is an appropriate estate planning tool for you and your family.