TODI and Probate Avoidance for Illinois Farmland: How a Transfer on Death Instrument Works
What a TODI Is and What Problem It Solves
A Transfer on Death Instrument — TODI — is a legal document available under Illinois statute (755 ILCS 27) that allows a landowner to designate a beneficiary who will receive title to real property at the owner's death without the property passing through probate. The beneficiary is named in the TODI, the document is recorded with the county recorder during the owner's lifetime, and at death, the property transfers to the designated beneficiary by operation of law rather than by court order.
The problem a TODI solves is probate — the court-supervised process of establishing a deceased person's estate, validating the will, paying creditors, and distributing assets. Probate in Illinois can take six months to two years, involves court costs and legal fees, and requires that the estate be public record. For farmland held in a deceased person's name, probate means that the ground cannot be sold, leased on new terms, or transferred to the intended heirs until the court process is complete. That delay creates real costs — potential missed sale windows, continued management obligations, and family tension during a period when decisions need to be made.
A TODI eliminates probate for the real property it covers. The beneficiary records a copy of the death certificate with the county recorder, files an affidavit of survivorship, and takes title without going to court. For a family farm that the next generation is already managing, that efficiency matters.
What a TODI Does Not Do
Understanding what a TODI avoids is only half the picture. What it does not do is as important for any Illinois farm family evaluating it as an estate planning tool.
A TODI does not avoid Illinois estate tax. The property that transfers by TODI is still included in the decedent's taxable estate for Illinois and federal estate tax purposes. If the estate is above the Illinois $4 million threshold, the estate tax is still owed by the estate — and the estate may have limited liquid assets to pay it with if the primary asset is the farmland itself, which has now transferred to the beneficiary outside of probate. That creates a situation where the beneficiary owns the land but the estate owes a tax bill, and the estate's only way to pay it may be to ask the beneficiary to contribute funds or to sell the land.
A TODI also does not avoid creditor claims. Under Illinois law, a beneficiary who receives property by TODI takes it subject to the claims of the decedent's creditors for a period of time following the death. A farm owner who dies with medical debts, a deficiency on a farm loan, or other significant obligations may have those claims follow the property to the beneficiary despite the TODI transfer. The statute provides a creditor claim period, and a beneficiary who sells the property before that period expires without addressing known creditor claims may face personal liability.
A TODI does not solve heir equalization. This is perhaps the most significant limitation for farm families with multiple children where one child farms and others do not. A TODI names a specific beneficiary — typically the farming child — who receives the land. The non-farming children receive nothing from that property transfer unless the will or trust provides for it from other assets. If the farmland represents the majority of the estate's value, a TODI that sends it entirely to one child may create the kind of family dispute that persists for years. A well-designed estate plan that uses a TODI for the real property transfer should also address how the non-farming heirs are equalized — through life insurance, other assets, or a specific trust provision.
How a TODI Is Created and Recorded
A TODI must be signed by the property owner, witnessed by two witnesses, and acknowledged before a notary. It must be recorded with the county recorder in the county where the property is located during the owner's lifetime to be effective. A TODI that is prepared and signed but not recorded does not transfer the property at death — it is simply a piece of paper. The recording is the operative step, and it should happen promptly after signing.
A TODI can be revoked by the owner at any time while they are alive and competent. Revocation requires a recorded revocation document or a new TODI that supersedes the prior one. A landowner who creates a TODI, later decides to sell the property or change the beneficiary, and fails to record a revocation may create title complications at death if the TODI is recorded but the subsequent transaction is not properly structured.
Multiple properties can be covered by a single TODI or by separate instruments. An owner who holds multiple parcels in the same county can address all of them in a single recorded TODI, or can create separate TODIs with different beneficiaries for different parcels. The choice depends on the specific succession plan.
Questions to Bring to an Estate Attorney
I am a real estate broker and licensed auctioneer, not an attorney, and nothing in this article is legal advice. What I can tell you from working with farm families in Menard, Sangamon, Mason, and neighboring counties is that a TODI is a useful tool in the right situation and an incomplete solution in many others. The questions to bring to an Illinois estate attorney when evaluating a TODI include: Is my estate above the Illinois $4 million threshold, and if so, how does the TODI interact with the estate tax? Do I have significant debts that could follow the property to the beneficiary? Do I have multiple heirs, and if so, how is the non-farming heir's interest addressed? Is the property held jointly with a spouse, and if so, how does joint tenancy interact with a TODI?
Year-end is when those conversations happen. An attorney who works in Illinois agricultural estate planning can evaluate whether a TODI, a revocable living trust, a family limited partnership, or some combination of tools fits your specific situation. The right answer depends on details that are specific to your estate, your family, and your goals for the land.
Jared Williams is the Managing Broker and owner of Archer Realty & Auction LLC. He serves on the Menard County Board of Review and works with farm families on land valuation and estate succession questions across central and western Illinois. Start the conversation at archerrealty.net.
