Changing the name on a home or other real estate may seem simple, but a deed can affect your ownership rights, mortgage, taxes, and estate plan. In Illinois, a quitclaim deed is one way to transfer an interest in real estate from one person to another.
A Chicago estate planning attorney from Plan Forward Legal can help you decide whether a quitclaim deed makes sense. We help individuals and families transfer property, fund trusts, and make sure their real estate fits with the rest of their estate plan.
What’s a Quitclaim Deed?
A quitclaim deed transfers whatever ownership interest one person has in a property to someone else. The person transferring the interest is called the grantor, and the person receiving it is called the grantee.
A quitclaim deed doesn’t promise that the grantor has clear title or owns the entire property. It generally transfers the legal or equitable rights the grantor has at the time of the deed.
For example, if someone owns one-half of a house and transfers their interest to a sibling, the sibling receives that one-half interest. The deed doesn’t give them the other half owned by someone else.
How a Quitclaim Deed Differs From Other Deeds
A quitclaim deed offers fewer protections than some other types of deeds. With a warranty deed, the person transferring the property makes certain promises about ownership and title.
A quitclaim deed doesn’t include those same promises. If an old lien, ownership dispute, or other title problem exists, the person receiving the property may still have to deal with it. This is why quitclaim deeds are more common when the people involved already know each other and understand the property’s history.
When Quitclaim Deeds Are Commonly Used
People may use quitclaim deeds when they want to change ownership without a traditional real estate sale. Common examples include:
- Adding a spouse to the title after marriage
- Removing a former spouse after divorce
- Transferring property to a family member
- Moving property into a living trust
- Changing how property is titled
- Correcting certain information in an earlier deed
A quitclaim deed may be simple to prepare, but that doesn’t mean it’s the right deed for every situation.
Using a Quitclaim Deed With a Living Trust
Quitclaim deeds sometimes come up when a homeowner creates a revocable living trust. Creating the trust doesn’t automatically move a house into it. The property’s title usually must also be changed so that the trust becomes the owner. This is often called funding the trust. If real estate that was supposed to be in a trust is never properly transferred, the property may not pass according to the trust as planned.
Can a Quitclaim Deed Help Avoid Probate?
In some cases, changing how property is titled can keep real estate out of probate after an owner dies. However, simply adding another person to a deed isn’t always the best way to do that.
Adding someone as an owner may give them rights to the property immediately. Problems may come up if the new owner has creditors, gets divorced, or disagrees about selling the property.
Illinois also has other estate planning options, including living trusts and transfer on death instruments (TODIs). The best choice depends on your goals and how much control you want to keep.
Does a Quitclaim Deed Remove You From the Mortgage?
No. The deed and the mortgage are separate.
If two spouses own a house and both signed the mortgage, one spouse may sign a quitclaim deed giving the house to the other after a divorce. The deed may change ownership, but it doesn’t automatically remove the first spouse from the loan. Both borrowers may remain responsible for the debt unless the lender agrees to release that person or the loan is refinanced.
What Happens to Liens and Other Title Problems?
A quitclaim deed generally doesn’t wipe away existing problems connected with the property. Property tax liens, judgment liens, mortgages, contractor liens, or ownership disputes may still affect the property after the transfer.
These issues can also cause trouble later when the new owner tries to sell or refinance. Reviewing the title before a transfer can help reveal problems that should be handled first.
What an Illinois Quitclaim Deed Needs
Illinois law provides a basic form for quitclaim deeds. The deed generally includes the grantor’s name and place of residence, the amount or other consideration given for the transfer, the grantee’s name, a legal description of the property, the date, and the grantor’s signature.
A legal description is different from the street address. It describes the land in the form used in official property records. After the deed is properly prepared and signed, it’s generally recorded with the recorder in the county where the property is located.
Are There Taxes on an Illinois Quitclaim Deed?
Possibly. A quitclaim deed doesn’t automatically avoid taxes just because no traditional sale takes place. Illinois charges real estate transfer tax on many transfers, although some transactions are exempt.
Depending on the transfer, you may also need to submit Form PTAX-203 or an exemption notation when recording the deed. Local transfer taxes may also apply. A gift of valuable real estate can also raise federal tax and estate planning questions, so consider the tax side before making the transfer.
Why You Should Talk to a Chicago Estate Planning Attorney
Quitclaim deed forms are easy to find online, but the form itself is only one part of the transfer. Our Chicago estate planning attorney can look at how the property is currently titled, why you want to transfer it, and how the change may affect your mortgage, taxes, probate plan, or living trust.
We can also help make sure the deed uses the correct names, legal description, and type of ownership. That can reduce the risk of problems later when the property is sold, refinanced, or passed to someone after your death.
Make Sure the Deed Fits Your Plan
A quitclaim deed can be useful for transferring real estate between spouses, relatives, trusts, and others already connected to the property. However, signing a deed can affect more than whose name appears on the title.
At Plan Forward Legal, we can help you understand how a proposed transfer may affect your property and estate plan. Choosing the right deed now can help prevent ownership, probate, and title problems later. If you have questions about updating a property title or building a complete estate plan, contact us today.
