How to Sell Real Estate After Death Without Probate Illinois?

 Posted on March 24, 2023 in Real Estate Transactions

Transferring Real Estate After Death: Yorkville 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 that was born after World War II. As a result, birth rates skyrocketed, 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. As a result, this period resulted in substantial 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 real estate holder. Title ownership is the person holding legal title to the property, otherwise known as individual ownership. Sole property ownership consists of the following:

• A married person that owns property without their spouse being on the legal title

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

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

The unexpected death of a spouse is a significant life-changing event. The end of a spouse has substantial legal consequences, especially for a parent (or parents) with an unmarried partner residing with them or a spouse with stepchildren by another ex-spouse or person. For example, a widow attempts to refinance the property in their name (or sell it). However, she finds out they have legal title issues (resulting in difficulty refinancing or selling the property). 

Tenancy by the Entirety

Tenants by the entirety involve 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 significant benefit of tenants 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 own real estate as tenants in the entirety. Tenants by the Entirety also provide additional asset protection benefits in case of a judgment (protecting the real estate from unwanted reviews 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 hold the same title interest). Joint tenants have a right of survivorship and inherit the real estate from 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 jointly held assets are transferred on death to the co-owners.

Tenants in Common

Tenants in common, otherwise known as "tenancy in common," is where the property owners have a right to distribute their property ownership (or share of the 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. In contrast to joint tenants and tenants by the entirety, real estate 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 need to be aware of tenants' disadvantages 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, real estate is the only asset classification of land trust ownership. 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.

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

Unlike joint tenant tenancies, 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. Real estate owners may send the real estate tax bill to the private land company. 

Business Entity Transfer

A Business entity transfer is generally a real estate transfer from an LLC, Corporation, and another business entity. A business entity is distinct and separate from a 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 a corporation.

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

Unprobated Estates

Unprobated estates do not go through probate to sell the property (or refinance property). When someone dies, the title to real estate must vest “somewhere.” A person that passes 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 essential 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 headaches. Unprobate estates and real estate transfers are flourishing 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 sell 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 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. 

Avoiding 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 probate court requires creating a declaration of heirship facts summarizing the deceased person's family relationships.

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

Effective legal counsel is critical when dealing with unprobated estates and real estate. Unfortunately, most real estate and probate attorneys need more expertise to understand the legal and technical underwriting guidelines necessary to sell real estate without probating the estate matter.

Yorkville Unprobated Real Estate Transfer Attorneys

At Gateville Law Firm, 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. In addition, title insurance companies are concerned 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 sell unprobated real estate.

In conclusion, Gateville Law Firm 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 instruments) 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 passing property from one co-owner to the remaining co-owner(s) under oath. A deceased joint tenancy affidavit is a declaration of facts that cleans up the cloud on the legal title of 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 with the right to receive an inheritance. Contact us today at 630-780-1034 or by email.