An estate planning tool that has been available in other states for decades has finally come to Illinois. Since the beginning of this year, you can use a transfer on death instrument (TODI) to pass on any piece of real estate you own to your loved ones upon your death.
Up until now, state law only allowed people to use a TODI to pass on residential real estate. For most people, this was enough. But for those who own a farm, commercial property, beach house or other real estate. It meant they would have to find another option to keep the property from passing through probate before it could be inherited.
But the law changed on Jan. 1, 2022, to include non-residential real estate. This should make it easier for high-income individuals and business owners to transfer their real property to their intended heirs.
Making sure your TODI is valid
Like all estate planning documents, a TODI must follow certain technical procedures to be legally valid and enforceable when the time comes. The text must be prepared within legal specifications and signed in the presence of two witnesses. Once you sign the TODI, you (or your estate planning lawyer) must record it with the court.
Also, just like your will, trust, advance directive and other estate planning tools, you can adjust your TODI at any time. For example, if you named your spouse as the beneficiary but you later get divorced, you can remove them as beneficiary and name somebody new.
Do I need a TODI?
Whether or not a TODI is the best way for you to distribute your real estate after you are gone depends on your personal wealth and goals for your legacy. You can discuss this with your estate planning attorney.