Illinois life estate deed

What a life estate deed does in Illinois

A traditional life estate deed splits ownership across time. You, the life tenant, keep the right to live in and use the property for the rest of your life. The remaindermen you name own everything after that, and their interest vests the moment the deed is delivered; recording protects it against later buyers and creditors. Because their interest is real and present, you can't sell, refinance, or undo the deed without their signatures. That permanence is the whole difference between this and a lady bird deed.

The Illinois law behind this deed

Illinois has no section written specifically for life estate deeds. The instrument runs on the general conveyancing and recording statutes below, which is why the requirements here look like those for any other deed in the state.

When Illinois homeowners use a life estate deed

• Pass a home to children while reserving the right to live there for life
• Start the Medicaid look-back clock on a transfer (state rules vary)
• Avoid probate on the property with a simple, long-established instrument
• Provide for a surviving spouse or partner with the remainder going to your own children

What Illinois requires on the deed

These are the execution and formatting rules county recorders enforce. Getting any of them wrong is the usual reason a deed comes back in the mail.

How to complete and record it in Illinois

1. 1Find your current deedYou need the legal description from it, word for word. If you can't find your copy, the County Recorder (or County Clerk) can provide one, usually for a few dollars.
2. 2Identify everyone by full legal nameNames must match the current deed and government ID exactly, middle names included. A mismatch creates a gap in the chain of title that shows up years later at closing.
3. 3Complete the deedDeedly builds it with the wording, notary certificate, and 3-inch first-page margin used for Illinois deeds.
4. 4Sign in front of a notaryBring photo ID. Wait to sign until you are in front of the notary: you have to appear before the notary anyway, and signing there leaves no question about who signed.
5. 5Complete Form PTAX-203, or sign the exemption statementIllinois requires Form PTAX-203 (Illinois Real Estate Transfer Declaration) with a taxable deed. An exempt transfer, such as a gift, carries a signed exemption statement on the face of the deed instead, and Deedly prints it there. Your filing packet says which applies to you.
6. 6Record it with the County Recorder (or County Clerk)File in the county where the property is located and pay the recording fee. Many offices in this state also accept e-recording, but usually only from approved submitters such as title companies. Keep the stamped receipt. It fixes your priority date.
7. 7Tell the people you named where it isAt your death they record a certified death certificate, and in some states an affidavit, to show that your life estate has ended. Ask your insurer whether they should be added to the policy now.

What it costs in Illinois

Illinois charges a real estate transfer tax of State $0.50 per $500 of value, plus a county tax of up to $0.25 per $500 where the county imposes it (Cook does), plus municipal taxes in many home-rule cities (Chicago adds $5.25 per $500, of which the buyer pays $3.75). Cities and counties may add their own on top, so check the municipality rather than just the county.

Exemptions that commonly apply to a transfer like this: deeds where the actual consideration is less than $100 (section 31-45(e): most gifts, no-payment transfers between spouses and transfers into your own trust) and deeds that correct or confirm a prior deed without additional consideration (section 31-45(d)). You have to claim the exemption. The recorder won't apply it for you.

Where to record it in Illinois

Illinois deeds are recorded with the County Recorder (or County Clerk) in the county where the property sits, not where you live. There are 102 counties in Illinois.

Many Illinois recording offices accept e-recording through vendors such as Simplifile, CSC, or ePN. E-recording is generally open only to approved submitters such as title companies, attorneys, and lenders, so if you prepared the deed yourself, plan to record in person or by mail. Some offices accept filings from the public through those vendors; your county's website will say.

Recording offices we cover in Illinois: Cook, DuPage, Lake, Will, Kane, McHenry, Winnebago, Madison, St. Clair, Champaign, Sangamon, Peoria. See all Illinois recording offices.

What a life estate deed does NOT do

Being honest about the limits is more useful than a sales pitch. Every one of these catches somebody out.

• It is not revocable. Once recorded, you can't sell or mortgage the property without every remainderman signing.
• A remainderman's divorce, bankruptcy, or judgment creditor can attach their interest in your home while you're still living in it.
• Because you keep the right to live there for life, the full value is still counted in your estate for federal tax purposes (26 U.S.C. § 2036). That generally gives the remaindermen a stepped-up basis at your death, but it also means the deed does not shrink a taxable estate.
• It is usually treated as a divestment for Medicaid purposes. Get advice before using it for that purpose.

Quirks of Illinois law that catch people out

• Illinois calls a transfer-on-death deed a transfer on death instrument (TODI), and it requires TWO witnesses plus a notary. Ordinary Illinois deeds need only the notary.
• Municipal transfer stamps, especially in Chicago, must be purchased before recording. The recorder will not record the deed without them (55 ILCS 5/3-5021). In Chicago even an exempt transfer needs a city transfer declaration that states the facts supporting the exemption, and Cook County expects municipal stamps and any water certification to be obtained before the deed is submitted.
• Illinois requires either Form PTAX-203, Illinois Real Estate Transfer Declaration, or, for most exempt transfers (for example a gift or a transfer for less than $100), a signed exemption statement on the face of the deed instead. Exemptions (b), (k) and (m) of 35 ILCS 200/31-45 still require the PTAX-203.
• In Cook County an exempt deed must be accompanied by a Statement by Grantor and Grantee, sworn by each of them (55 ILCS 5/3-5020(b)).
• If your legal description is metes and bounds (not a lot in a recorded subdivision), Illinois recorders commonly require a Plat Act Affidavit (765 ILCS 205/1) with the deed. Get the county's form from the recorder or clerk.
• Illinois tenancy by the entirety is available only for a homestead owned by spouses or civil-union partners.
• Leave a 3-inch by 5-inch blank block in the upper right of page one.