Dealing with probate after a loved one’s passing adds extra stress during an already difficult time. The probate process involves proving the validity of the deceased’s will in court and then distributing their assets under court supervision. This lengthy legal process can tie up the deceased’s property and assets for months or even years in some cases. Many people look for ways to avoid this hassle by using estate planning tools to transfer ownership of real estate outside of probate. If you own a home in Illinois, there are a few options to consider.
How Do You Avoid Probate on a Home in Illinois?
Avoiding probate on your Illinois home gives your loved ones a smoother inheritance process without court delays and costs. Two simple options include creating a revocable living trust and transferring your home’s ownership to it, or adding a transfer-on-death beneficiary designation directly to the deed. With some smart estate planning, you can bypass probate court altogether and ensure your house transfers to your heirs promptly.
What is the Benefit of Avoiding Probate?
Besides avoiding court involvement and lengthy delays, the biggest advantage is cost savings. Probate fees and court costs can eat up a significant portion of even a modest estate’s value. By transferring your Illinois home to a living trust or adding a beneficiary, you ensure it gets passed to your intended heirs without probate expenses.
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How Can You Transfer Your Illinois Home to a Living Trust?
Creating a revocable living trust and transferring your home’s ownership to the trust is one of the most common ways to avoid probate.
Once established, you can name yourself as the trustee and retain control over managing the home during your lifetime. Your chosen successor trustee will then take over upon your passing and transfer ownership of the home and other trust assets to your named beneficiaries without probate court involvement.
What if You Don’t Want a Living Trust?
If you’d rather not go through the hassle and potential expense of setting up a living trust, you have another option in Illinois. The state allows you to record a transfer-on-death instrument (TODI) which designates a beneficiary that will take title to your home’s deed upon your passing.
Much like naming a beneficiary on a life insurance policy or bank account, the TODI beneficiary will automatically inherit the home after you pass away without probate court proceedings.
Does a TODI Avoid Probate Completely?
The TODI offers a simple, inexpensive way to keep your home out of probate, but it does have some downsides compared to a living trust. Any other assets you own that aren’t covered by the TODI may still have to go through probate. A living trust offers more comprehensive estate planning options for avoiding probate on all your assets.
What About Other Probate Avoidance Methods?
A living trust or TODI may keep your home out of probate, but what about other assets like vehicles, bank accounts, and investments? Fortunately, Illinois allows other non-probate transfer methods such as:
- Payable-on-death (POD) and transfer-on-death (TOD) designations for bank accounts
- Naming beneficiaries on life insurance policies and retirement accounts
- Jointly owned property with rights of survivorship
By using a combination of these tools, you can develop a thorough estate plan that transfers the bulk of your assets to heirs without probate delays and costs.
What is a Bond in Lieu of Probate?
Even if you don’t set up a living trust or record a transfer on death instrument (TODI), your heirs may still be able to avoid probate by asking a title company to issue a bond in lieu of probate. This method is most likely to work with a smaller estate and when all of the heirs are in agreement concerning the sale of the property. By collecting affidavits and information from the heirs, a title company can make a determination that the property can be sold to a third party without the necessity of going through the probate process.
The drawbacks of the bond in lieu of probate method are that title companies may not issue this bond where the estate is complex or if there is any disagreement or dispute among the heirs of the estate. Additionally, there is a cost associated with this method, which varies based on the sale price and amount of time that has elapsed since the original owner died (generally between 1-2% of the sale price).
What if Probate is Unavoidable?
Even with careful planning, Illinois’ complex probate laws sometimes make going through the court process unavoidable for certain assets. However, working with a qualified estate planning attorney can help minimize costs and streamline the probate timeline as much as possible when it can’t be avoided completely.
Avoid the Probate Headaches with Proper Planning
While no one likes to dwell on their own mortality, taking the time now to implement an estate plan can save your loved ones considerable money, stress, and delays later on. With options like living trusts and transfer-on-death designations, you can keep your Illinois home and other assets out of probate court so they transfer smoothly to your heirs when the time comes.
