Tag Archives | Tenancy by the Entirety

Looking back at 2011: all the rest

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!

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Avoid probate and protect your home, without a land trust

Picture this.  Your spouse hasn’t been sleeping well and runs into another car during his or her morning commute.  The other driver is injured in the accident and has medical bills and lost wages greatly exceeding your insurance coverage.  The lawyer for the injured driver says it was all your spouse’s fault, and they’re coming after everything you have.  Can they really take your home?

Or your spouse runs a business, and the bank required them to personally guarantee a loan.  Now, the business isn’t doing so well, and the bank is asking about other ways your spouse might come up with the money.  Is your home safe?

Or perhaps your spouse gets into trouble with their credit card spending, and bankruptcy seems like the only option for them.  You’re making enough to pay the monthly bills, including your mortgage.  But can the credit card companies really make you sell your home to cover your spouses charges?

In Illinois, the answer to both questions might be no … if you own your home as “tenants by the entirety.”

Don’t let the complicated name scare you off (and let’s just call it “entirety protection” to keep it simple).  Entirety protection is a really important protection for married couples, and one that is overlooked by many estate planning attorneys.

You don’t get entirety protection automatically.  But a new law signed last week by Governor Quinn makes it much easier to use a living trust and keep entirety protection for your home.

Why is entirety protection so important?  Well, it protects your home from claims made against either you or your spouse (but not from claims made against you both).  Without entirety protection, a creditor of your spouse could place a lien on your home and might even force you to sell your home to pay off the debt or claim.

Until now, there have been only two ways to get entirety protection:

  1. Own your home together with your spouse, where the deed includes the words “tenancy by the entirety” or “tenants by the entireties”
  2. Own your home in a land trust, where you and your spouse are the beneficiaries

But the new law allows for a third way to get entirety protection—using a traditional living trust.

The keys to entirety protection under the new law are a properly structured deed and living trust (or trusts, if you and your spouse each have your own trust).

If you already have a land trust, that’s great!  As long as your land trust states that your home is held in “tenancy by the entirety,” you don’t need to do anything.  The new law doesn’t change anything for you.

But if you’re not sure how your home is owned or whether it has entirety protection, I can tell you by taking a look at your deed and living trust or land trust.  There’s no fee for this service.  It’s my gift to you to make sure you don’t miss out on this invaluable protection for your home.

As always, I am here to help you and educate you — bringing you the latest developments in the law that affect your family.

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