Dealing with probate court proceedings, where the assets of a deceased individual are transferred to their beneficiaries, can be a daunting and costly process. It’s no wonder that many people proactively seek ways to alleviate this additional burden during estate administration. Fortunately, different states provide alternatives to avoiding the probate process. Here are the available options specifically applicable to Illinois:
Living Trusts
If you’re in Illinois, you can choose to establish a living trust. This allows you to bypass probate for various assets such as real estate, bank accounts, and vehicles, among others. Creating a living trust involves preparing a trust document, similar to a will, and appointing a successor trustee who will handle the assets after you pass away.
The key step in this process is transferring ownership of your property to yourself as the trustee of the trust. Once this transfer is completed, the terms outlined in the trust document will govern the property. When you eventually pass away, the successor trustee will have the authority to transfer the assets to the beneficiaries specified in the trust. All this is possible without the need for probate court proceedings.
Joint Ownership
In the event that you co-own property with another person and have the “right of survivorship,” the surviving owner will seamlessly inherit complete ownership upon the passing of the other owner. In these situations, the transfer of the property does not require probate. However, certain documentation will be necessary to establish that the title of the property solely rests with the surviving owner.
In Illinois, the following forms of joint ownership are recognized:
- Joint tenancy: Property owned in joint tenancy automatically passes to the surviving owners upon the death of one owner. Probate is not required. Joint tenancy is often suitable for couples (married or unmarried) acquiring real estate, vehicles, bank accounts, or other valuable property together. In Illinois, each owner, known as a joint tenant, must hold an equal share.
- Tenancy by the entirety: Similar to joint tenancy, tenancy by the entirety is exclusively available to married couples or couples in a civil union. In Illinois, this form of joint ownership is limited to real estate.
Payable-on-Death Designations for Bank Accounts
In Illinois, it is possible to add a “payable-on-death” (POD) designation to bank accounts, such as savings accounts or certificates of deposit. This designation allows you to maintain full control over the funds in the account. And the POD beneficiary does not have any immediate rights to the money.
As the account holder, you have the freedom to spend the funds as you see fit. Upon your passing, the designated beneficiary can directly claim the funds from the bank, avoiding the probate process.
Transfer-on-Death Registration for Securities
In Illinois, it is possible to register stocks and bonds in a transfer-on-death (TOD) form, a widely utilized option for brokerage accounts. By opting for TOD or beneficiary registration, the designated beneficiary becomes the automatic inheritor of the account upon your demise. This approach eliminates the requirement for probate court intervention since the beneficiary can directly work with the brokerage company to facilitate the transfer of the account.
Transfer-on-Death Registration for Vehicles
Illinois permits transfer-on-death registration for vehicles, subject to certain limitations. Only vehicles owned by a single individual can be designated with a TOD beneficiary. Additionally, you can name only one beneficiary. Additionally, if there is a lienholder (such as a car financier), a TOD beneficiary cannot be appointed. To add, remove, or modify a TOD beneficiary, you can utilize the form provided by the Illinois Secretary of State.
Transfer-on-Death Deeds for Real Estate
If you own real estate in Illinois, you have the option to leave it with an Illinois transfer on death deed form, referred to as a “transfer on death instrument” within the state. The deed is signed and recorded in advance but does not become effective until your death. You retain the ability to revoke the deed or sell the property at any time. The named beneficiary on the deed also has no rights until your passing (as outlined in 755 Ill. Comp. Stat. §§ 27/40 and subsequent sections).
Simplified Procedures and Avoiding the Probate Process
Probate can be a complex journey. However, having a grasp of the choices at your disposal can empower you to make informed decisions and simplify the process. Even if you haven’t implemented any strategies to evade probate, your estate could still be eligible for Illinois’s streamlined “small estate” probate procedures.
Consult with a qualified probate lawyer in Illinois for personalized guidance on probate avoidance strategies. Ideally, this should be part of an overall estate planning strategy..
