Does a Transfer on Death Instrument Actually Work for Farmland? Illinois Landowners' Most Common Questions
What a TODI Is and Is Not
A Transfer on Death Instrument is a deed recorded during the owner's lifetime that designates one or more beneficiaries to receive a specific parcel of real property at the owner's death — automatically, without going through probate. The owner retains full ownership and control during their lifetime. They can sell the property, mortgage it, lease it, revoke the TODI, or record a new one naming different beneficiaries. The designated beneficiaries have zero ownership interest in the property until the moment of the owner's death. This is its essential character: a probate-avoidance tool for real property that is entirely revocable and has no current effect on the owner's rights.
What a TODI is not: a comprehensive estate plan. It covers the real property it specifically describes. It does not cover bank accounts, investment accounts, equipment, grain inventory, business entities, or any other asset that is not real property. It does not address incapacity — what happens when the owner is alive but unable to manage their affairs. It does not provide a framework for what happens among multiple beneficiaries after the property transfers. It does not address debt service, property tax payments, or tenant management during the period between the owner's death and the beneficiaries' ability to act. A TODI is a single tool with a specific, limited function.
The Questions Illinois Farmland Owners Ask Most Often
The first question is whether a TODI works when there are multiple heirs who should receive unequal shares. The answer is yes, with a direct limitation: a TODI can name multiple beneficiaries and specify the percentage each receives — "60 percent to the farming child and 20 percent each to two non-farming children" is a legally valid TODI beneficiary designation. What the TODI does not do is resolve what happens after the transfer when three co-owners with different interests need to manage a working farm together. The TODI moves the property to the intended beneficiaries without probate. What those beneficiaries do with it after that transfer depends on what agreements — operating agreements, buy-sell provisions, buyout rights — have been established separately.
The second question is what happens to the farm tenant when the owner dies and the TODI transfers the property to the beneficiaries. The answer is that the existing farm lease survives the transfer of ownership and remains binding on the new owners through its term. The beneficiaries who receive the property under a TODI step into the landlord's position — entitled to the cash rent, responsible for the landlord's obligations under the lease, bound by the lease term. The tenant's operation does not stop. The cash rent keeps coming. The farming continues. What changes is who receives the rent checks and who the tenant communicates with on lease matters.
The third question is whether the TODI protects the farming heir from the non-farming siblings selling the property after the owner dies. This is where the TODI's limitation is most significant. A TODI that transfers property to three children — one farming, two not — does not give the farming child any special protection against the non-farming siblings selling their shares or filing for a court-ordered partition. The farming child owns a percentage of the property. The other children own the rest. If the other children want to sell and the farming child cannot buy them out, the options are partition action or negotiated sale — neither of which the TODI addresses.
Where a TODI Works Well
A TODI is the right tool when the estate consists of a single property or a small number of properties, the beneficiary designation is uncomplicated — one child receiving the farm outright, or two adult children who have already agreed on what happens after — and the primary goal is simply bypassing the probate process on the real property. For a landowner with one farming child who will inherit and operate the farm and no other heirs who have competing claims, a TODI accomplishes the transfer cleanly, quickly, and at lower cost than establishing and maintaining a trust.
A TODI is also the right tool as a component of a broader estate plan — where a trust or other structure handles the overall estate coordination and the TODI handles specific parcels as a supplemental probate-avoidance mechanism. This is actually a common arrangement for larger estates: the trust governs the overall distribution and management, and individual parcels are titled in the trust name or covered by TODIs depending on which mechanism fits the specific parcel and beneficiary situation.
Where a Trust Does What a TODI Cannot
A revocable living trust can hold the farmland, the bank accounts, the equipment, and any other assets titled into it, and distribute them according to the trust terms when the owner dies — all without probate. It can also address incapacity: if the owner becomes unable to manage their affairs before death, a successor trustee can step in immediately to manage the trust assets, pay bills, make decisions about the farm operation, and maintain the lease relationship with the tenant without a court proceeding.
A trust can also hold the farm for the benefit of the farming child while providing income or a buyout mechanism for non-farming siblings — structuring the distribution in a way that keeps the farm operating as a unit rather than fragmenting it into equal undivided shares that each heir can dispose of independently. This is the core function that a TODI cannot replicate: maintaining unified operational control of a working farm while distributing economic benefits among multiple heirs with different connections to the land.
The cost of a trust — typically $3,000 to $6,000 or more for a well-drafted trust covering a farming operation — is higher than the cost of a TODI. For a landowner whose situation is simple, that cost is unnecessary. For a landowner with a complex estate, multiple heirs, incapacity concerns, or a desire to keep the farm operating under unified control after their death, the trust cost is the cost of solving problems that a TODI leaves unaddressed.
Jared Williams is the Managing Broker and owner of Archer Realty & Auction LLC. He serves on the Menard County Board of Review and specializes in estate real estate transitions, farmland succession, and land sale transactions across central Illinois. Start the conversation at archerrealty.net.
