In Illinois, both a will and a deed can transfer real estate when a person dies. If both attempt to transfer the same property to different beneficiaries, the beneficiary named by the deed will typically get the property. 

Nevertheless, the beneficiary under the will isn’t absolutely dead in the water (estate-planning humor) and may be able to challenge the transfer of the property by deed if certain circumstances exist. 

Avoiding the potential for conflict is what most clients express when they sit down to put an estate plan together with the estate planning attorney at Chicago’s Plan Forward Legal. The following discussion illustrates what can happen when estate planning is done piecemeal rather than as part of an organized strategy. 

A Will Only has Authority over Probate Property

A will does not have any authority during the creator’s (testator’s) life and only becomes effective after being recognized by a probate court after death. A will appoints an executor, who is in charge of inventorying all of the decedent’s assets that are subject to the probate process.

When property passes directly to a beneficiary as the result of a contractual right, it is not included in the owner’s probate estate and therefore not governed by the terms of a will. Thus, the beneficiary named in a will has no claim to the property. 

Property that may pass outside the probate estate includes bank accounts, investment accounts, retirement accounts, insurance proceeds, and even real estate, provided proper procedures are followed. 

Real Property Does Not Have to Go Through Probate in Illinois

A will is just one way to transfer property when someone dies. Property interests can be owned so that an owner’s interest transfers to a designated recipient automatically upon death. There are three ways to transfer real property at death without going through probate.

Transfer on Death Instrument (TODI)

In Illinois, real property can be transferred at death using a Transfer on Death Instrument (TODI). There are specific procedures for executing a TODI that must be followed to ensure the transfer is valid. 

A valid TODI must: 

• Identify the property owner and beneficiary
• Include a legal description of the property
• Express the intent that the property transfer to the beneficiary when the last owner dies
• Be signed by the owner in the presence of a notary and 2 disinterested witnesses
• Be recorded in the county where the property is located before the owner dies

The beneficiary of a TODI usually must be alive at the time of the owner’s death to inherit the property. There is an exception when only one beneficiary is named and is a descendant of the property owner. In that case, the property will be divided equally among the beneficiary’s descendants. 

Joint Tenancy/Tenancy by the Entirety

Illinois law allows jointly owned property to be held so that surviving joint owners automatically inherit the deceased owner’s share. To create a joint tenancy with right of survivorship, the ownership documents must clearly express the intention to do so. 

Married couples or civil union partners can use a special form of joint tenancy called tenancy by the entirety for taking ownership of their primary residence. In addition to the property immediately vesting in the survivor, owning property as tenants by the entirety prevents creditors from accessing the property in satisfaction of the deceased spouse’s debts. 

Trust Ownership

Any property owned by a trust can be distributed during life or after death according to the terms of the trust agreement. Real estate transferred to a trust is not subject to probate and, if not deemed an ‘illusory’ transfer, is generally beyond the reach of a surviving spouse looking to renounce it. 

How a Will Beneficiary Can Challenge a TODI Transfer

If an owner of real estate is of sound mind and properly executes a TODI, the will beneficiary is out of luck, and the TODI governs who gets the property. 

If, however, the will beneficiary can show that the TODI was not properly executed or that the property owner lacked the mental capacity or was coerced into giving the property to someone else, the TODI may be voided, making the property part of the probate estate. 

Any legal action to contest the validity of a TODI transfer must be brought within the earlier of 2 years after the owner’s death or 6 months from the date the probate is opened. 

When a Surviving Spouse Can Override Transfers Made by Will or Deed

Surviving spouses and civil union partners cannot be easily disinherited by attempts to give property to someone else. Illinois law guarantees the survivor a share of a deceased spouse’s probate estate and, usually, a share of any real estate transferred by a TODI. 

Renouncing a Will

A surviving spouse has 7 months from the start of probate to file an intention to renounce the will. Renouncing the will entitles the survivor to 50% of the probate estate if the decedent had no descendants and 33% if there are descendants. 

Renouncing a TODI

Renouncing a TODI requires the survivor to file the intention to renounce within 7 months of the decedent’s death in the county where the TODI is recorded. Renunciation entitles the survivor to 50% of the property if the decedent leaves no descendants and 33% if the decedent has descendants. 

The only time a survivor cannot renounce a TODI is if the decedent spouse transferred the property to a trust and made the survivor the sole beneficiary for life. 

The right to renounce a will can be forfeited under a valid pre- or post-nuptial agreement. Similarly, the non-owner spouse may waive the right to renounce a TODI transfer. 

The right of a surviving spouse to renounce property transfers only applies to property governed by a will or TODI.  To challenge other types of property transfers, such as transfers to a trust, the survivor must show that the transfer was not in good faith and was intended to prevent the survivor from inheriting the property. 

How a Comprehensive Approach to Estate Planning Can Avoid Unwanted Outcomes

Having a loved one die is hard on a family, no matter how prepared they think they are. The stress of the situation can fuel tension and old resentments. If an estate plan is not coordinated and then periodically reviewed and updated, the result may be a family conflict that escalates into a full-blown legal battle.  

At Plan Forward Legal, we are all about promoting family harmony while accomplishing our clients’ goals. We help clients identify potential issues and create tailored estate plans to meet their individual needs. Plan your estate with Plan Forward Legal and give peace a fighting chance.