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Probate is a legal case filed in a State of Illinois probate Court in order to transfer your assets upon your death to the people who will inherit them.
A probate case is expensive since it requires hiring and paying a lawyer and perhaps posting a bond. It also takes time to make the transfer of assets since it does not happen automatically but only after a probate Judge makes rulings in the case to make the transfers of assets. So, for most people in Illinois, probate is something to avoid.
If you jointly own real estate with another person with a "right of survivorship," then the surviving co‑owner automatically owns 100% of the real estate when the other owner dies. The Right Survivorship is created by the deed that conveys title to the two of you. The right of survivorship in Illinois is commonly found in two cases.
JOINT TENANCY. The first is Joint tenancy. Real estate owned in joint tenancy automatically passes to the surviving owner when one owner dies. No probate is necessary. Joint tenancy of not only real estate, but other assets is permitted as well including, motor vehicles, joint bank accounts or other accounts may have this right of survivorship. In Illinois, each joint owner must own an equal share of the asset.
TENANCY BY THE ENTIRETY. This form of joint ownership is allowed only for real estate and then only if the couple is married or has entered into a civil union but also has a right of survivorship. Tenancy by the Entirety has the additional benefit of disallowing a creditor who obtains a judgment against just one spouse only, from enforcing that judgment by attaching that spouses one half interest in a jointly held the marital home. The downside of owning a real estate or other assets jointly with your spouse is that there is no provision for what happens to the asset once the two of you passed away.
These accounts allow you to choose a beneficiary of certain Assets. Certain types of assets you may own permit you to choose a beneficiary on death. By choosing a beneficiary you avoid the probate of these types of assets. Retirement benefits: such as IRA, 401(k), 403(b) accounts, pension, and profit sharing plans, life insurance, and some annuities. You should be sure to have one or more people designated as beneficiary(s) to avoid probate. If you do not name a specific beneficiary or you name your state is beneficiary then this type of asset may need to be probated.
A “Pay-on-Death” (POD) account such as a bank account or stock brokerage accounts also bypassing your probate estate by having a named beneficiary(s) to receive the proceeds of your account on your death. Some stock brokerages also allow a similar “transfer on death” (TOD) for securities to avoid probate.
A LIVING TRUST
In Illinois there are commonly two types of trusts: a trust created by your Will that takes effect upon your death is called a “testamentary trust”. A trust created by you that takes effect while you are alive is called a "living trust" and provides for your assets to go to designated beneficiaries.
You can create a "living trust" to avoid probate of your assets including your marital home, or other real estate, bank accounts, stock accounts, motor vehicles and most other types of assets you own. A living trust is created by a document usually drafted by your lawyer in which you name a "trustee" which can be you, and a successor trustee to take over after you have passed away. Then you must transfer the ownership of your assets into the trust in order for the trust your to own them. So I deeded must be prepared transferring your real estate into the trust, your bank or stock accounts must now be transferred into the trust.
What is the advantage to creating a living trust to holding assets in Illinois?
1. At your death, your trustee and transfer the trust assets to whoever your name as beneficiaries. You can change your beneficiaries from time to time prior to your death without having to re‑create a trust or make additional real estate transfers or changes in the ownership of your other assets.
2. You can make provision within your trust for beneficiaries other than your spouse to receive some of your assets to take place upon your death or upon the death of your spouse just like you can with a Will but you will not need probate.
2. No expensive probate or attorneys' fees to transfer the assets upon your death.
Now for the first time in Illinois, you can now transfer your marital home into a living trust and have all the benefits of a tenancy by the entirety with your spouse, including the additional benefit of disallowing a creditor who obtains a judgment against just one spouse only, from enforcing that judgment by attaching that spouses one half interest in a jointly held the marital home.
Illinois Spouses or those in a civil union no longer must choose between the protection against creditors provided by tenancy by the entirety and the estate‑planning advantages of a revocable inter vivos trust. A living trust now serves these purposes. The new law also amends section 12‑112 of the Code of Civil Procedure (735 ILCS 5/12‑112). As amended, the second sentence of that section now reads as follows:
Any real property, or any beneficial interest in a land trust, or any interest in real property held in a revocable inter vivos trust or revocable inter vivos trusts created for estate planning purposes, held in tenancy by the entirety shall not be liable to be sold upon judgment entered on or after October 1, 1990 against only one of the tenants, except if the property was transferred into tenancy by the entirety with the sole intent to avoid the payment of debts existing at the time of the transfer beyond the transferor's ability to pay those debts as they become due.
In Illinois you can now leave real estate to designated beneficiaries by creating a transfer on death deed or beneficiary deed. The new law is known as the: Illinois Residential Real Property Transfer on Death Instrument Act. You must sign and record the deed now, but it doesn't take effect until your death. In addition you can take back a revoke the deeded any time, so the real estate at any time and your beneficiary has no present interest in the property.
There are pros and cons to using this means of avoiding probate for real estate in Illinois but it certainly is a method worth considering.
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