Families and business owners want clear answers on what happens to property after a death. At Woods & Bates, P.C., we work to give you tools that protect your wishes and cut down on stress for your loved ones. Our firm focuses on estate and trust administration, estate planning, and real estate matters, and we use that focus to help you plan with confidence. If you own commercial or mixed-use property in Illinois, a Transfer on Death Instrument, or TODI, might fit your plan.
What is a Transfer on Death Instrument (TODI)?
A TODI is a legal document that lets an Illinois property owner name a beneficiary to receive real estate at death without probate. Think of it like a payable-on-death form for a bank account, except it applies to land and buildings. Your beneficiary takes title after you pass, and the court process that usually handles deeds is skipped for that parcel.
Illinois made TODIs available on January 1, 2012, under the Illinois Residential Real Property Transfer on Death Instrument Act, cited as 755 ILCS 27/1 et seq. The statute spells out who can sign, what formalities are required, and how transfers work after death. The goal is to provide a simple path that still respects creditor rights and recording rules.
With the basics in place, we can look at why property owners often pick this route for real estate.
Benefits of Using a TODI
A TODI helps families avoid the time and cost that come with probate on a given parcel. It also keeps you in full control while you are alive since you can sell, refinance, or revoke the document at any point. Many clients also like the privacy factor since the transfer does not appear in a probate file.
- Avoids probate for the covered property, so transfers happen faster and with fewer fees.
- You keep full control while living, including the right to sell or change the plan.
- No immediate income tax hit upon signing, and property tax status usually does not change while you own it.
- Private transfer outside the probate court file, which lowers unwanted attention.
- Pairs well with a will or trust for a broader plan that covers all assets.
Even with these perks, the right fit depends on the parcel, how the title is held, and your long-term goals for the property.
Owners of commercial and mixed-use buildings often ask if TODIs work for them, and the answer has expanded in the past few years.
TODIs and Commercial Real Estate
The Act has been amended to allow TODIs to reach beyond only residential houses or condos, and now, it can cover certain commercial and mixed-use properties. That shift matters for small businesses and investors who hold a building in their own name or through a simple structure. It gives a path to pass property to a child, partner, or successor without a full probate case.
Here are examples of parcels that can fit under the amended Act:
- Mixed-use buildings where the owner also lives in one unit, such as a storefront with a second-floor apartment.
- Industrial property owned by an individual or a single-member LLC, such as a small warehouse or workshop.
- Small office buildings or professional suites held in an individual’s name.
- Retail spaces owned by a sole owner, including strip center units and stand-alone shops.
Corporations cannot use a TODI. Property titled in an LLC can qualify if the LLC has only one member and the statute’s other rules are met.
With eligibility in mind, the next step is getting the formalities right since the Act is picky about how a TODI is signed and recorded.
Key Requirements for a Valid TODI
A TODI has to follow strict rules to work as intended. Small mistakes can void the transfer, so close attention to form helps you avoid headaches later. The checklist below covers the basics.
- Parties and property: Name the grantor, who is the current owner, and the grantee, who is the beneficiary. Include a clear legal description and any parcel numbers.
- Conveyance language: State that the property will transfer upon the owner’s death, subject to liens, taxes, and creditor claims allowed by law.
- Signature and formalities: The owner must sign in front of a notary, plus two witnesses who are not owners or beneficiaries.
- Recording: Record the TODI with the county recorder where the property sits, and do this before the owner’s death.
- Post-death acceptance: After the owner dies, the beneficiary has to file an acceptance of the TODI within the timeline set by the statute, or the transfer fails.
These steps keep title clean for the next owner and help title companies feel comfortable insuring the transfer.
Paperwork that meets the rules is only half the task since the most common problems with TODIs stem from planning choices and follow-up steps.
Common Mistakes to Avoid with Commercial TODIs
Simple drafting choices can set the stage for fights or delays. A quick review now can prevent trouble for your family or your business partner later. Here are pitfalls we see often with commercial or mixed-use parcels:
- Naming multiple recipients without clear shares or backup rules, which can spark disputes.
- Forgetting that the parcel stays subject to the decedent’s debts for up to two years after death.
- Errors with notarization, witnesses, or recording, which can void the document.
- Using a TODI on jointly-owned property or entity-owned land that does not qualify.
- Creating a later will or deed that cancels the TODI by accident.
We suggest syncing your TODI with your will, trust, and any business agreements, so the full plan works in one direction.
If plans change, a TODI does not lock you in, and the law gives a clear path to revoke it cleanly.
Revoking a TODI
TODIs are revocable during the owner’s life. You can keep your options open and move with new business goals or family changes. The statute lays out how to do it.
You can revoke by preparing a separate revocation document that calls out the earlier TODI, or by signing a fresh TODI that states it replaces the prior one. Either path needs two witnesses, a notary, the owner’s signature, and recording in the county where the parcel lies. Skipping recording leaves the old TODI in place, which can cause confusion later.
Many clients also ask how TODIs stack up against a will, and a side-by-side view helps show the role each document plays.
TODI vs. Will: Key Differences
A TODI focuses on real estate and avoids probate for that parcel. A will covers the rest of the estate and usually runs through probate unless all assets pass by beneficiary form or trust. The two can work together, with the TODI handling a building and the will backstopping everything else.
| Feature | TODI | Will |
| Asset covered | Specific real estate listed in the instrument | All assets not otherwise directed |
| Probate | Avoided for the covered parcel | Generally required to transfer title |
| Owner control while living | Full control, can sell or revoke | Full control, can update will |
| Transfer timing | At death, after beneficiary acceptance | After probate steps are complete |
| Creditor claims | Subject for up to two years after death | Handled in the probate case |
| Privacy | Outside probate records | Filed with the court |
| Changing the plan | Record a revocation or a new TODI | Sign a new will that revokes the old one |
| Works with business entities | Allowed for single-member LLCs, not corporations | Directs equity interests through probate |
When a will and a TODI point at the same parcel, the TODI controls. Your will still covers other assets and can name backups for property that does not pass by TODI or a beneficiary form.
If this approach sounds helpful for your family or business, a short meeting can confirm fit and timing.
Contact Woods & Bates, P.C. for Your Real Estate and Estate Planning Needs
At Woods & Bates, P.C., we work hard to give families and businesses steady support, clear options, and calm next steps. Your goals guide the plan, and our job is to draft documents that match your values and protect what you built.We welcome your questions and your what-ifs. Feel free to call us at 217-735-1234 or reach us through our Contact Page to set up a time that works for you. We also offer virtual service. We are committed to results that protect your property and reflect your wishes, plain and simple.