Avoiding Probate - Deed Transfers

Property is valuable and protecting the ownership of your property is important, even after you die.  Family members are sometimes left needing to figure out how to effectively and legally, in the most cost-effective way, transfer title to the property after the death of the owner. I want to discuss deed transfers because it is a very cost-effective solution, and it avoids probate.

Your Property and Probate

Probate is the legal process that deals with the estate of someone who has died.  The probate court will determine the validity of a will and appoint an executor who will have the legal authority to distribute your assets to your beneficiaries.  If you die without a will, known as “intestate”, the probate court will determine how the estate should be handled based upon state laws and regulations.

Many people don't understand that, even when you have a will, probate can be a time consuming and expensive process.  Depending upon how complex the matter is, whether or not all the siblings, heirs, or other beneficiaries agree with the will, you may need to get a probate attorney. A lot of people simply can't afford an attorney, nor can they afford to take time off from work to show up to court.  Legal fees and court costs can be cost-prohibitive depending upon the length of the matter.

One way to avoid entangling your property in probate is to use a deed transfer: transferring the title of the property to someone else or adding someone else to title to the property. A deed transfer is a written and signed legal document that is used to transfer ownership of the property from the previous owner, the grantor, to the new owner, the grantee. 

Why Use a Deed Transfer

A deed transfer can be used to change the title of the property to an individual or entity and can also be used to add or remove individuals or entities from the title. For example, I may own a property by myself and if I want to add my husband to the title of that property as well, I would do a deed transfer.

Let’s discuss some of the ways in which you may need to use a deed transfer. As I mentioned earlier, one way is you may need to add (or remove) someone to the title. In the event you have gotten married or divorced you may need to add or remove a spouse.

 An aging parent, someone with a chronic health condition like Alzheimer’s or dementia, may want to add an heir to the property title.  Others with ongoing trauma, a long-standing health condition, or a terminal condition might also want to add a spouse, significant other, or sibling for example.  In most of these cases, people want some assurance that when they pass their property is just not up in the air for anybody, or everybody, to claim. There is no arguing because ownership of the property goes to the person on the title.

Sometimes, people just want to add someone to the title as a safety and a security measure in case something does happen. People like first responders or active military personnel going off to war or overseas may want to have someone on the title, just in case. Sometimes, you just want to have a certain person on the title because the property is a gift that you want to give them, and then you can avoid tax fees, probate fees, and other transfer fees.

Transferring your property to a non-profit by deed transfer is another option some people want.  A lot of people want their church or non-profit that they've dedicated their life to or that they really believe in what the mission value of the non-profit is to have ownership of their property after they pass on.  Many non-profit organizations have particular rules and regulations regarding property donations so it's a discussion that you need to have with the organization beforehand. If your building or your property has a mortgage on it that the non-profit is going to have to pay upon your passing that may create a burden on the organization. Have a discussion with a non-profit or a church prior to planning to do a transfer, because they could deny the transfer of the property if it can be more of a burden than a blessing to them.

All of the ways that I've given you so far are situations where the deed transfer is done before someone dies.  After someone dies, if there's no will, then the heirs can transfer the property to themselves, or the heirs may want to sell the property without having to go to probate.

 I mentioned earlier, without a deed transfer your property could end up falling into probate court.  In addition to having to pay a bond, you have to pay legal fees to an attorney if you're unable to navigate probate court by yourself.  You may have to take time away from your job to go to court dates.  Matters can get very complex if siblings or heirs are fighting over the property and proper ownership or fighting over who exactly is an heir. Property and money upon somebody's death, unfortunately, makes some people go kind of crazy.

In the past, when you had to go to probate, a lot of communities of color were losing that legacy that people have fought so hard to purchase. Since they couldn't afford to go to probate court to then dispose of the property appropriately then it was just left there.

Preparing a Deed Transfer

The information on a deed transfer is tracked and recorded by the County Recorder’s Office.  When ownership of the property is transferred from one owner to another, a new deed is filed with the Recorder of Deeds.

A deed transfer is the official record of ownership and properly recording any transfers of property is very important. You need to submit the correct official documents to reflect the transfer.  Without the required documents, the transfer could be invalidated.

In addition to the deed transfer, you may also need a few other documents. For example, you might need an Affidavit of Heirship. This affidavit is a notarized statement from either an heir, or someone who knows the situation with the heirs, that these are the heirs. All possible heirs will be listed including children out of wedlock, adopted children, children of heirs that may have predeceased the property owner. The purpose is to determine the lineage, giving a statement of fact as to who is an heir.

Additionally, you have to fill out a Statement by Grantor and Grantee. This document is also notarized and states that both the grantor and the grantee are real people or entities recognized by the State of Illinois.

Don’t forget about the taxman. In Cook County and the City of Chicago, all property conveyance instruments (deeds) must have a completed MyDec prior to recording. Typically, in the situations we’ve been discussing, it is an exempt transfer, meaning that there won't be any transfer taxes on this type of transfer. There is usually no money exchanged in these types of transfers so then there are no taxes owed but the forms still need to be completed.

That is a brief look into the current process to handle a deed transfer.  As you can see, a deed transfer is a much quicker, more efficient, and a more cost-effective way to transfer property, as opposed to going into probate court.  Using deed transfers has really enabled families, communities of color to keep the legacy going, to hold onto the property that they otherwise may not have been able to hold on to, due to the cost-prohibitive and time-consuming nature of going to probate court.

Getting it Done Right

The type of deed you need to transfer property can vary. The deed may contain conditions or assurances that go along with the transfer.  Your specific situation will determine which type of deed is right for you.  Consult the Law Office of Alexis Hart McDowell aka Enterprise Esquire to handle your deed transfers and ensure that the process is completed correctly.

I understand that estate issues, finances, property, and death are very sensitive topics and can be very emotional. It can be a very trying topic because it can bring out some family issues that not all families are proud of and trust me I have seen the gamut. I have seen families who are fighting. I have seen families that are very peaceful. Whatever your particular situation is it's not lost on me, but allow me to help you navigate that for the best resolution for the family and the property owner.

I've helped with several deed transfers in many different situations.  Let’s have the conversation to determine your family needs.  Whether the property owner is still living or if they have passed away, a deed transfer can be an excellent way to reduce costs and reduce the amount of time that you have to spend on this particular matter.

If you're in need of a deed transfer, please reach out to the Enterprise Esquire to schedule a free 15-minute consultation at your convenience.