In Part 2 of our year-end review, we discussed the new Power of Attorney statute. Next up are some changes affecting couples.
Tenancy by the Entirety
The first major change of 2011 provided new options to married couples in how they own their home. Tenancy by the entirety was a special protection available for the marital residence.
Normally, a person’s house is completely exposed to their creditors apart from a $15,000 homestead exemption. But married couples can own their primary residence (and only their primary residence) in tenancy by the entirety.
Tenancy by the entirety works the same as joint tenancy, meaning that when one spouse dies the other spouse inherits the entire property. But it also adds some major creditor protection. A home held in tenancy by the entirety can’t be lost to creditors of only one spouse.
Of course, creditors try to find a reason (any reason!) to drag the other spouse into the picture. Even so, it’s a very strong protection.
Prior to 2011, tenancy by the entirety was only available to married couples who owned their homes directly or via a land trust. Owning a home directly exposes the home to probate. Land trusts were a common solution to the probate problem, but that usually meant paying annual fees to a bank to maintain the land trust.
Starting January 1, 2011, tenancy by the entirety protection became available to couples who want to own their home in a traditional revocable living trust. It’s not automatic and it does not apply to people who transferred their home into their trust prior to January 1, 2011. The trust and the deed need to be drafted with tenancy by the entirety in mind.
The new statute provides a useful alternative for married couples who want to: (1) hold their home in tenancy by the entirety; (2) keep their estates out of probate; and (3) avoid paying a bank for an expensive land trust.
Civil Union Act
On June 1, 2011, the Illinois Religious Freedom Protection and Civil Union Act went into effect. That law made Illinois just the sixth state in the nation to recognize civil unions for same-sex couples. Civil union partners have the right to be treated as a spouse under the Probate Act. They can also hold their primary residence in tenancy by the entirety (previously granted only to married couples—singles and same-sex couples were out of luck!).
While the Civil Union Act provides certain safeguards, its benefits don’t extend to every aspect of estate planning. And at best, it means that same-sex couples get the same bad “default” Illinois estate plan as traditional married couples. So it is important for same-sex couples to have a comprehensive estate plan that addresses their property and health care.
To 2012…and Beyond!
Those are the major stories from 2011. There’s more to come for 2012, and we’ll be sharing it with you as it happens. We look forward to a great year of serving you!
