Quick, Simple, but Not Always the Best Choice

A Transfer on Death Instrument (TODI) is often promoted as an easy way to pass your
Illinois home to your loved ones without the hassle of probate. And in the right
circumstances, it is. But because a TODI passes ownership immediately upon death, it can
cause unintended problems if any of your beneficiaries have judgments, lawsuits, divorces,
or debt troubles. In those cases, a trust may protect your property — and your family — far
better.

What a TODI Does Well

When you sign and record a TODI, you name one or more beneficiaries who will take
ownership of your real estate the instant you die. There’s no court proceeding, no waiting
period — your chosen people become the legal owners as soon as your death certificate is
recorded.

That means:

• No probate delays — your beneficiaries can sell, rent, or live in the property almost
• right away.
• Lower costs — compared to probate, preparing and recording a TODI is
• inexpensive.
• Flexibility — you can revoke or change it any time before death.

When Immediate Transfer Can Cause Trouble

Because the transfer happens instantly, the property also becomes instantly subject to the
beneficiary’s creditors, lawsuits, or divorcing spouse. Here are a few real-life inspired
examples:

Scenario 1: The Surprise Judgment
Mary left her home to her three adult children via a TODI. When she passed, her eldest son
immediately became a one-third owner. But he had an unpaid business debt, and a creditor
had already obtained a judgment. Within weeks of Mary’s death, the creditor recorded a lien
against his share of the property. The other siblings couldn’t refinance or sell without
satisfying the lien — and they ended up paying it just to move forward.

Scenario 2: The Pending Divorce
Tom used a TODI to leave his condo equally to his two daughters. One was in the middle of a
divorce when he passed. The moment the TODI transfer took effect, her share became part
of the marital estate subject to division. Her soon-to-be ex claimed a portion of the condo’s
value — dragging the surviving sister into an emotional and costly dispute.

Scenario 3: The Lawsuit in Progress
Carlos named his three nephews as TODI beneficiaries. At the time of his death, one nephew
was being sued after a car accident. The plaintiff’s attorney quickly moved to attach the
nephew’s share of the inherited property as potential recovery. The lawsuit tied up the
entire property for over a year, frustrating the other heirs.

How a Trust Can Prevent These Problems

If any beneficiary is in financial or legal jeopardy — or you simply want to delay the
moment they take legal ownership — a revocable living trust can be a much better tool.

With a trust:

• You can direct when and how a beneficiary gets the property (for example, after
• their divorce is final or their debts are resolved).
• The property stays in the trust’s name until the trustee distributes it.
• Creditors generally can’t attach trust assets before the beneficiary receives them.

This control can make the difference between your gift being a blessing and it becoming a
financial mess.

Choosing Wisely
A TODI is best suited for situations where:

• All beneficiaries are financially stable and free of major legal issues.
• You want a fast, simple, low-cost transfer.
• You’re comfortable with the beneficiaries owning the property outright
• immediately.

If there’s any risk of creditor problems, lawsuits, or divorce, a trust gives you flexibility and
protection that a TODI cannot.

Bottom Line:
A TODI can be a fantastic estate planning shortcut — but like any shortcut, it’s only safe
when the road is clear. If your beneficiaries’ legal or financial lives are complicated, take the
time to build a trust. It could save your property and your heirs from serious trouble.

TODI vs. Trust: Side-by-Side Comparison

Feature	Transfer on Death Instrument (TODI)	Revocable Living Trust
Probate Avoidance	Yes — property transfers immediately upon death, bypassing probate for that asset.	Yes — property transfers immediately upon death, bypassing probate for that asset.
Control After Death	None — beneficiaries receive full ownership instantly.	Full control — trustee can manage timing and conditions of transfer.
Cost to Set Up	Low — relatively inexpensive to prepare and record. Generally, a TODI in Illinois will cost about $1250 to create, including the fee to the County Recorder’s Office.	Higher — involves drafting a trust agreement, a deed, and recording the deed. Generally, establishing a Trust will run about $1750 and, depending on your circumstances, usually requires drafting a new Will which will work with the Trust, costing another $250. Drafting and recording the deed will cost about $1250, for a total around $3250.
Risk if Beneficiary Has Creditors/Lawsuits	High — creditors can attach property as soon as it transfers.	Low — property stays in trust until distributed; trustee can delay distribution.
Flexibility to Change During Life	High — TODI can be revoked or replaced anytime before death.	High — trust terms can be amended or revoked anytime before death.
Multi-State Property	Needs separate TODIs for each state, rules vary, and some states have no provisions for TODIs.	One trust can hold multiple properties in different states.
Privacy	Public — recorded TODI is part of public record.	Private — trust terms are not part of public record.
Ideal Use Case	Simple estates with stable beneficiaries, single-state property.	Complex estates, multi-state property, or beneficiaries with financial/legal issues.