REAL ESTATE INTERESTS IN PROBATE AND NON-PROBATE – PART 1
By Cary A. Lind
Succession and transfer of real estate after death is often surprising, with results that are different from other types of property. This article and the ones that follow will address a number of issues relating to death and real estate. For those who want a more in-depth treatment with statutory and case citations, I recommend a publication of Chicago Title Insurance Company entitled Rights of Heirs and Legatees and Their Purchasers in Illinois Real Estate by Paul Peterson, Assistant General Counsel of CTIC.
Prior to death, an individual may hold real estate in a variety of ways. At the moment of death, however, real estate moves away from the decedent and to others. That is easy to see for real estate that passes outside of Probate. Joint tenancy real estate passes by operation of law to the survivor(s). Real estate in which the decedent had a life estate will pass to the remaindermen. Real estate held in a land trust or other trust (which was not in fact owned personally “by the decedent”) will pass by the terms of the trust to the designated beneficiaries.
In intestate estates, real estate in the name of the decedent, whether owned solely, in tenancy in common, or otherwise, vests at the moment of death in the decedent’s heirs at law, and “heirs” must be properly determined. Title in the heirs is subject to the rights of an administrator to possess and to sell, lease, or mortgage the real estate. It is also possible for all of the decedent’s heirs to pass good title without Probate by furnishing appropriate documentation to a title insurance company. Those procedures will be addressed in the next article.
In testate estates, title also initially vests in the heirs at law. However, when the will is admitted to Probate, the heirs are divested of title, and the legatees succeed to title, again subject to similar rights of the executor. It is more difficult to pass good title without Probate where there is a will, even where the will appears valid. A title company may refuse to insure title without admission of the will to Probate, since it cannot be certain without court approval that the will is valid.
Real estate owned in any manner by a disabled ward passes in similar manner. At the moment of death, the real estate is no longer “in” the guardianship estate, and the property passes as if there is no guardianship. While a guardian may retain limited custodial and financial duties after death with regard to real estate, as of the moment of death, the guardian no longer has any ownership interest to administer.
If real estate is not sold during administration, it may be distributed in kind, providing all Probate claims are paid and the administration of the estate is completed. Who receives the real estate may be determined by a will, legal heirship, or agreement of the parties. If the estate is supervised, title is conveyed by an administrator’s or executor’s deed, usually exempt from transfer taxes. If the estate is independent, the transfer should be made not by a deed but by a document with two parts:
- A Notice of Probate, stating that the property owner has died and giving information about the estate.
- A Release of Estate’s Interest in Real Estate, showing to whom the real estate goes.
The Notice of Probate and Release of Estate’s Interest connects the chain of title from the decedent to the new owner. In Cook County, no Statement of Grantor and Grantee is required.
Other assets may hang in limbo awaiting letters of office or a small estate affidavit. Real estate always has at least one owner, although the owner may have to jump through hoops to pass good title.
©2002 by Cary A. Lind, all rights reserved.