For many Illinois families, the home is the most valuable thing they own. When an owner dies and that property is titled in the owner's name alone, the family usually has to open a probate estate before the property can be transferred or sold. Illinois law offers a simpler path for real estate: the Transfer on Death Instrument, commonly called a TODI.
A TODI is a death-planning tool. It does one job: it names the person or people who will receive your Illinois real estate when you die. Here is how it works, what it takes to make one valid, and what it does not do.
What a TODI Is
The TODI is authorized by the Illinois Real Property Transfer on Death Instrument Act, 755 ILCS 27/. The Act applies to an interest in real property located in Illinois that is capable of being transferred at the owner's death (755 ILCS 27/5). In practical terms, a TODI is a recorded document, much like a deed, that says the property passes to your named beneficiary when you die.
Your beneficiary does not need to be told about the TODI, accept it, or pay anything for it (755 ILCS 27/50).
What a TODI Does Not Do While You Are Alive
Until your death, a TODI has no effect on your ownership. Under 755 ILCS 27/60, a TODI does not:
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limit your right to sell, transfer, or mortgage the property;
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give your beneficiary any legal or equitable interest in the property; or
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expose the property to claims by your beneficiary's creditors.
This is the key difference between a TODI and deeding property to a child now. A present deed gives the child an ownership interest immediately. A TODI gives the beneficiary nothing until your death, and you remain the sole owner in every respect.
Requirements for a Valid TODI
The Act is strict about formalities, and a TODI that misses any of them is void (755 ILCS 27/40(b)). A valid TODI must:
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contain the essential elements and formalities of a recordable deed (755 ILCS 27/40(a)(1));
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state that the transfer to the beneficiary is to occur at the owner's death (755 ILCS 27/40(a)(2));
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be signed by the owner and attested in writing by at least two credible witnesses, with the signatures acknowledged before a notary public (755 ILCS 27/45(a)); and
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be recorded before the owner's death with the recorder of deeds in each county where the property is located (755 ILCS 27/40(a)(3)).
Two practical cautions follow from the statute. First, a beneficiary or a beneficiary's spouse should not serve as a witness; doing so can void that beneficiary's interest unless enough other witnesses signed (755 ILCS 27/45(c)). Second, a TODI that is signed but never recorded before death does nothing.
The owner must also have the same mental capacity required to make a will. The owner must sign the TODI personally, because an agent acting for the owner, even one with broad authority, cannot create or revoke a TODI on the owner's behalf (755 ILCS 27/35). That makes timing important: a TODI is something you put in place while you are able to sign it yourself.
Changing or Revoking a TODI
You can change your mind, but only the way the statute allows. A TODI can be revoked, in whole or in part, by a later TODI or by a written instrument of revocation. Either document must be signed, witnessed, and notarized with the same formalities as the original, and recorded before your death in the county where the original TODI is recorded (755 ILCS 27/55(a)).
A recorded TODI cannot be revoked by tearing it up, by an unrecorded document, or by a provision in your will (755 ILCS 27/55(b)). If you update your will, your TODI needs separate attention.
What Happens at the Owner's Death
At death, the owner's interest in the property transfers to the beneficiary named in the TODI (755 ILCS 27/65(a)(1)). Several default rules apply unless the TODI says otherwise:
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Two or more beneficiaries take equal, undivided shares, with no right of survivorship (755 ILCS 27/65(a)(2)).
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If a beneficiary who is the owner's descendant dies first, that beneficiary's descendants take the share (755 ILCS 27/65(a)(5)).
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If the only named beneficiary dies first, the property passes to the owner's estate, which may mean probate after all (755 ILCS 27/65(a)(3)).
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The beneficiary takes the property subject to any mortgage, lien, or other interest that exists at the owner's death (755 ILCS 27/65(b)).
After the owner's death, a beneficiary may record a notice of death affidavit to confirm title. Filing it is optional and is not a condition of the transfer (755 ILCS 27/75), but it helps establish a clean record when the property is later sold or refinanced.
Limits Every Owner Should Know
A TODI is useful, but it is not a complete estate plan:
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The property can still answer for the owner's debts. A TODI beneficiary is subject to creditor, administrative, funeral and burial, and statutory claims in the same way as a beneficiary of a revocable trust (755 ILCS 27/85).
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A surviving spouse may have rights. Unless the spouse waives the right in the TODI itself, a surviving spouse can renounce the TODI and take one-third of the property if the owner leaves descendants, or one-half if not, by recording a renunciation within 7 months after the owner's death (755 ILCS 27/66).
Each of these issues can be addressed with careful drafting and coordination with the rest of your plan.
Is a TODI Right for You?
For an owner who wants a particular person to receive Illinois real estate at death without a probate case for that property, a TODI can be a simple, inexpensive option. It works best when it is drafted precisely, executed with every required formality, recorded promptly, and reviewed alongside your will and other estate planning documents.
If you own Illinois real estate and want to discuss whether a Transfer on Death Instrument fits your plan, contact Katherine L. Maloney & Associates, LLC at 815-556-2057.
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