New Law Will Make Passing House to Descendants Easier
A new bill passed by the Illinois Legislature and awaiting signature by the governor, HB1153, will allow for the transfer of residential property to a beneficiary upon the death of the owner. To be called the Illinois Residential Real Property Transfer on Death Instrument Act (the “Act”), the Act only applies to transfers of real estate by an owner dying on or after the effective date of the Act.
The Act provides that “an owner may transfer residential real estate by a transfer on death instrument to one or more beneficiaries as owners, concurrently or successively, and upon any contingency, effective at the owner’s death.” The document must contain all of the elements and formalities of a normal deed, including being witnessed by two individuals in front of a notary. The document must also state that the transfer to the designated beneficiary is to take place at the owner’s death and must be recorded in the recorder of deeds office for the county in which the property is located before the owner’s death.
Until the owner’s death, the beneficiary has no rights. The transfer on death instrument is revocable, even if the instrument contains a contrary provision. However, a transfer on death instrument that has been executed and recorded cannot be revoked by an unrecorded instrument or by a provision in a will. In order to revoke the instrument, another transfer on death instrument revoking the previous instrument expressly or by inconsistency, executed and witnessed in the same manner as any other deed, must be recorded in the recorder of deeds office.
Even if an owner executes a transfer on death instrument, the owner is not prevented from selling or encumbering the property, nor does it affect the interests of creditors having an interest in the property. The instrument will not create a legal or equitable interest in favor of the designated beneficiary. It should be noted that similar measures have been initiated by the legislature in the past, and until the governor signs the bill, it will not become law.
If you would like to further understand how to pass your home to a designated beneficiary upon death, or have any other estate planning needs, please contact Waltz, Palmer & Dawson, LLC at (847) 253-9258.