John Lennon famously once said that “life is what happens when you’re busy making other plans.” It’s a beautiful and important quote, and an exceptional reminder that leading a fulfilling life is about being in the moment, and seizing the opportunity to spend time with friends and loved ones whenever you can.
At the same time? It’s key to remember that one of the best ways to ensure that you can “live in the moment” is to have your plans for the future already squared away.
For many of us, this is going to mean looking into estate planning, well in advance. For young families, retirees, and everyone in between, it’s often going to prove crucial to have a comprehensive and well-documented estate plan ready to go. This way, you can help ensure that your family is protected and cared for in a time of difficulty and transition, particularly when it arrives unexpectedly.
For most of us, real estate is the biggest asset in our lives – and, as a result, it’s one of the most important items to take into account when it comes to estate planning. Leaving a home to your loved ones can be a way to ensure that your family is able to stay secure in the long-term. It can provide a roof overhead, a financial asset for them to leverage, or act as a way to make sure that your life’s work and most cherished investment will remain secure, perhaps for generations more to come.
With that being said, it’s key to remember that ensuring that your assets are managed and disbursed properly will take some planning on your part – often, with the assistance of an experienced real estate attorney by your side.
Without preparing ahead of time, you could well forfeit your ability to direct how your real estate assets are used, or who they are left to.
What Happens to Real Estate If You Do Not Leave a Will & Testament?
In Illinois, passing away without a will is known as “dying intestate.” If this happens, your assets are subject to the probate process, and the disbursement of your assets is governed by local intestacy laws. In this case, hard-and-fast succession rules and statutes will dictate who takes control of your property. Generally speaking, if you pass away without any will or testament, or other estate guidance, your property will be divided and distributed to your surviving spouses and descendants, in order of priority. Some common examples:
- If an individual is survived by a spouse and immediate descendants, then half of the probate estate goes to the spouse and half to the children. If there is no surviving spouse, then the entire estate goes to the children; if there is a surviving spouse and no descendants (including grandchildren), then the spouse collects the entire estate
- If the decedent is not survived by a spouse or any descendants, then the probate estate is divided equally among any surviving parents and siblings. If the deceased isn’t survived by any parents or siblings, then the estate passes to their extended family members, with half going to the maternal side, and half to the paternal side (with some additional caveats in place)
- If none of these family members survive the deceased person, then the estate goes to the nearest known living relatives. If no known heirs can be determined or located, then the entire estate, finally, goes to the state
Now, those points above are simplified and streamlined for the sake of space. In practice, this situation can easily become even more complicated and difficult to administer. Without leaving guidance and protocols to follow, it may be impossible to ensure that your assets pass to the individuals you actually want to receive them. In other cases, intestacy can make it easier for disputes and conflicts to arise among family members and third parties. Finally, even if your assets are going to end up being evenly divided among your preferred beneficiaries, there is still the matter of probate. This process can be extremely long, drawn-out, complex, and costly – and having to wait for probate to finish could leave your survivors in the lurch, right when they need personal and financial support the most.
What Can I Do to Protect My Real Estate Assets?
Fortunately, there are numerous steps you can take in advance to help protect your real estate assets, and ensure that you can control what happens to them down the line. In addition to creating a legally binding will and testament, there numerous options worth exploring, including:
- Establishing joint ownership. In Illinois, certain types of joint ownership can help ensure that your share of a piece of property immediately transfers to the remaining owner, without having to pass through probate. Options include establishing joint tenancy with rights of survivorship, or holding tenancy by the entirety (which is available to married couples).
- Creating a transfer-on-death (TOD) instrument. In Illinois, you may be able to use a transfer-on-death, or TOD, instrument to name a beneficiary for your real estate holdings. Functioning a lot like a beneficiary designation on a financial account, this form can help to transfer property automatically when the owner passes away.
- Establishing a trust. A living trust can be a powerful mechanism for estate planning and estate protection. When created strategically, a trust can offer you significant flexibility and control while living, all while helping to ensure that the distribution of your designated property can go off seamlessly (and outside of probate) after you’re gone.
The bottom line? Really enjoying your real estate investments in the here and now is a lot easier to do when you have safeguards in place for the future.
In many cases, an experienced real estate attorney can be an invaluable resource, helping you to complete your paperwork and go through every detail in the present, in order to help set up your long-term financial future – including managing estate transitions for the sake of yourself and your loved ones.
Have any more questions about real estate law in Chicago, or the state of Illinois more broadly? Curious about the steps you can take when it comes to asset protection planning for real estate? Don’t hesitate to drop us a line to keep the conversation going.
For developers, investors, or families looking to buy their forever home, the Gunderson Law Firm possesses the expertise and insight necessary to help you make the most of your time and budget – all reinforced by years of experience and long-term connections throughout Chicago’s real estate, finance, and insurance industries. Get in touch whenever you’re ready to learn more or schedule your free initial consultation.