How to Sale Real Estate After Death Without Probate Illinois?

 Posted on November 14, 2022 in Estate Planning

Transferring Real Estate After Death: Naperville and Kendall County Real Estate Transfer Attorneys

Transferring real estate after death is a complicated mixture of real estate, estate planning, and probate law. Covid-19 has changed the nature of business and emphasized the importance of estate planning and real estate. Baby boomers are the generation, which were born after World War II. Birth rates skyrocketed, which was referred to as “the baby boom.”

Baby boomers and their adult children are preparing and passing their real estate and wealth to their children and grandchildren. This period is resulting in substantial amounts of wealth transferred from one generation to the next. 

Baby boomers and their families are ill-prepared to transfer their assets after death. There are eight types of property ownership in Illinois:

• Sole Property Ownership

• Tenancy by the Entirety

• Joint Tenants

• Tenants in Common

• Private Land Trust

• Business Entity Transfer

• Revocable Living Trust

• Unprobated Estates 

Sole Property Ownership

Sole property ownership is when one person is the legal holder of real estate. Title ownership is the person that holds legal title to property or otherwise known as individual ownership of property. Sole property ownership consists of the following:

• Married person that owns with property without their spouse being on legal title

• Widow or widower where a spouse has deceased that was the joint ownership of real estate

• Unmarried or Single Persons residing by themselves (or with a significant other)

An unexpected death of a spouse is a major life changing event. The death of a spouse has significant legal consequences especially for a parent (or parents) with an unmarried partner residing with them or a spouse that has stepchildren by another ex-spouse or person. A widow attempts to refinance the property in their name (or sale the property) and find out that they have legal title issues (resulting in difficulty refinancing the property or selling the property). 

Tenancy by the Entirety

Tenants by the entirety involves legal ownership of primary (or homestead) real estate where two spouses hold legal title jointly with a right of survivorship (upon the first’s spouse’s death). The major benefit of tenants by the entirety is the smooth transfer of real estate upon the first spouse’s death. The parties must be married and only one property can be classified as “tenants by the entirety” or “tenancy by the entirety.” Each spouse is presumed to own 50 percent of the property. Unlike joint tenants, spouses that own real estate as tenants by the entirety are seen as a unit (or as one). Tenants by the Entirety also provides additional asset protection benefits in case of a judgment (protecting the real estate from unwanted judgments and lawsuits). This protection provides peace of mind and asset protection to married couples. Tenants by the Entirety is inapplicable to unmarried couples and non-homestead real estate. Non-home real estate is non-owner-occupied real estate.

Joint Tenants

Joint tenants are properties owned by two or more persons (where each person is assumed to own the same title interest) in the property. Joint tenants have a right of survivorship and inherit real estate upon the other co-owners of real estate. For example, three co-owners of real estate will result in two co-owners of real estate (upon the first spouse’s death). Right of survivorship means that jointly held assets are passed upon death to the existing owners (without the need for probate court). 

Tenants in Common

Tenants in common or otherwise known as “tenancy in common” is where the owners of property have a right to distribute their property ownership (or share of property) with no right of survivorship. Examples of tenants in common are two unmarried persons that own real estate with one another (or two engaged people that have yet to be married). There is no automatic right of survivorship with tenants in common. Unlike joint tenants and tenancy by the entirety, the property does not automatically pass to the co-owner(s) of the property. Tenants in common title ownership are the most ordinary form of probate cases. Often, the parties are unaware of the disadvantages of tenants in common.

Private Land Trust

A Private Land Trust is a type of trust that holds legal title to real estate. Unlike a revocable living trust, the only asset classification of ownership of a land trust is real estate. In Illinois, a Private Land Trust has two forms of ownership, legal title holder and equitable beneficiary interest holder. The legal title holder is the technical owner of the land trust (as described in the trust agreement). The beneficiary interest holder (or beneficiary interest holder) is the individual or entity that can give direction to the legal title owner. A letter of direction permits the beneficial interest owner(s) to maintain the right to control, amend, and direct the legal title holder on their specific instructions.

The land trust company is governed by a trust agreement. A trust agreement is a written document which describes the succession in ownership and who shall be the trustee of the land trust. The trustee is a person or entity that has a fiduciary interest to administer in the property consistent with Illinois law. The most common land trust company in Illinois is Chicago Title Land Trust.

Unlike joint tenants and tenants by the entirety, the trust agreement describes who shall inherit the property. The trust agreement may distribute the real estate to a non-property owner upon the death of a beneficial co-owner of real estate legal title (or the private land trust). The land trust provides privacy and shields the ownership of the real estate. The real estate tax bill may be sent to the private land trust company to protect the true identify of the owner (or owners of property).

Business Entity Transfer

A Business entity transfer is generally a transfer of real estate from an LLC, Corporation, and/or another type of business entity. A business entity is distinct and separate from the individual person or family. A business entity is a fictional organization created by an individual or another business entity to engage in a trade or a business. A business entity may also be a sole proprietorship, a partnership, an LLC, and/or a corporation.

A business entity owner is a transfer upon a death, sale of a business, and/or a transfer pursuant to an outlined strategy (or pursuant to operation of Illinois law). A business entity has strategic legal protections, tax implications, and limited liability protection. Gateville Law Firm is the owner of Peace of Mind Asset Protection, LLC. Peace of Mind Asset Protection, LLC provides stability and peace of mind to families seeking peace and tranquility.

Unprobated Estates

Unprobated estates are an estate that did not go through probate to sell property (or refinance property). When someone dies, the title to real estate must vest “somewhere.” A person that dies without a will dies testate. Intestate is when someone dies without a will. See “The Title Examiner’s Guide to Estates and Probate” by Richard F. Bales, Property Title, LLC” (Naperville, Illinois).

Unprobated estates are a complex blend of real estate, estate planning, and probate law. Unprobated estates are important for real property ownership because depending on the facts and circumstances of an unprobated estate, the property may or may not be sold or refinanced with minimum costs and headache. Unprobate estates and real estate transfers are successful under the following circumstances:

• A spouse and their biological (or adopted) adult children agree to refinance the property in one person’s name (or in some other manner) and agree with one another

• All the adult children and deceased children’s heirs agree to sale real estate or refinance the property into an heir or legatee’s name

• There are no minor children or adult disabled adults (and all the heirs and/or legatees agree)

Illinois Probate Act, 755 ILCS 5

The Illinois Probate Act governs the rules of descent and distribution of real estate and unprobated estates. Depending on the facts and circumstances of a particular real estate transfer (and their heirs and legatees) will depend on whether probate must occur. There are significant legal and cost reasons to avoid probate court. 

The avoidance of probate court can save substantial time, lawyer’s fees, and costs. There are also benefits of going through probate court such as the ability to cut off estate claims.

Selling Real Estate Without the Need for Probate Court

Most probate and estate planning attorneys falsely assume that Illinois real estate must go through probate court. Probate court is a court proceeding where a court supervises the distribution of real estate and assets upon a loved one’s death. Selling real estate without the need for probate court involves creating a declaration of facts of heirship summarizing the family relationships of the deceased person.

An affidavit of heirship is a statement of facts under oath describing the rights of inheritance as defined by the Illinois Probate Act of 1975, 755 ILCS 5. The affiant must understand the basic family relationship of the deceased or otherwise known as the “decedent.” The affidavit of heirship is a written statement explaining the legal rights and beneficiaries upon a death or incapacity. The affidavit of heirship has a role in minimizing attorney’s fees and court costs and providing peace of mind to the families that are grieving due to their family law. The affidavit of heirship is a sworn statement, which is notarized. The affidavit of heirship is an important legal document, which explains the family relationship of the deceased and explains who has the rights of inheritance and survivorship estate planning.

Effective legal counsel is critical when dealing with unprobated estates and real estates. Most real estate and probate attorneys lack the expertise required to understand the legal and technical underwriting guidelines required to sell real estate without probating the estate matter.

Naperville and Yorkville Unprobated Real Estate Transfer Attorneys

At Peace of Mind Asset Protection, LLC, we gained title insurance underwriting and experience with real estate closings and unprobated estates by providing counsel to a mid-sized title company. The title company educated us on title insurance guidelines and Illinois probate law. Inexperienced real estate and probate attorneys can have substantial negative consequences by failing to satisfy title insurance guidelines. Title insurance companies have a major concern about fraud and will evaluate each unprobated estate and real estate closing with much scrutiny for fraud. One innocent mistake may result in a refusal to insure the legal title transfer and cause substantial set-back and legal costs (and headaches) to a family looking to sale unprobated real estate.

In conclusion, Peace of Mind Asset Protection, LLC can assist you and your family with the following legal matters:

• Selling Real Estate Without the need for Probate Court

• Transferring Real Estate through a Quit Claim Deed (or other legal instrument) upon a death

• Preparing Deceased Joint Tenancy Affidavits passing property to loved ones and individuals upon a death

A deceased joint tenancy affidavit is a written document under oath passing property from one co-owner to the remaining co-owner(s). A deceased joint tenancy affidavit is a declaration of facts, which cleans up the cloud on legal title on the jointly owned property. A deceased joint tenancy affidavit is a written account of key family relationships and an analysis of the Illinois probate court. The Illinois probate court identifies the relevant heirs and legatees, which have the right to receive an inheritance. Contact us today at 630-780-1034 or contact us via email.