What is a transfer on death instrument?

If you are building your Estate Plan you might have heard of an important legal document called the Transfer on Death Instrument, also known as a “TODI”, but what does this document actually do and what are the benefits of using it? A TODI is a legally binding document commonly used by property owners to facilitate the transfer of real estate property to designated beneficiaries upon their death. While TODIs are usually associated with real estate, certain jurisdictions also allow their application to other assets like vehicles or securities. 

What are the benefits of having a todi?

Avoiding Probate: Perhaps the best benefit, and also one of the primary purposes of using a TODI, is being able to avoid the legal process of reviewing and administrating a decedent’s assets to determine an inheritor, known as probate. With a TODI, the owner can make sure their property goes to the individuals or entities of their choosing instead of letting a probate court decide for them, which also reduces the likelihood of legal disputes. 

Efficiency and Inexpensiveness: Being able to avoid the probate process makes TODIs a less costly option compared to other estate planning tools, as well as a quicker and more straightforward process. Probate often involves higher attorney fees and can take long periods of time to be completed. 

Immediate Distribution: With the use of a TODI, the owner maintains full ownership of the property during their lifetime, this prevents beneficiaries from selling, changing, or otherwise dealing with the property as they see fit until the owner’s death. It also means the owner has the ability to revoke or make changes to the TODI whenever they want, allowing them to keep their Estate Plan updated as circumstances change.

Initial Beneficiaries: The property will pass through to the named beneficiary upon the death of the owner. The beneficiaries listed can be individuals or an organization, such as a charity.

Contingent Beneficiaries: In case the death of the chosen beneficiary precedes that of the owner, or they are unable to inherit the property, TODIs offer the option of designating contingent beneficiaries. This allows owners to take further steps to ensure their property will be left on the hands of only people they trust. 

Filling a Todi in illinois

To draft and file a Transfer on Death Instrument, it is recommended for property owners to have the assistance of an Attorney who can help them make sure the document meets all legal stipulations, this will make the process easier and faster. A TODI has to include all information on the property that is being transferred, this includes the legal description and address, as well as the permanent index number. The document must also need to be witnessed and notarized. Once the TODI is completed and includes all these details, the document will have to be reviewed and recorded by the county recorder’s office to make it legally effective.  

Co- Authors: Meli Trujillo & Melissa Tannehill