On January 1, 2011, a new law went into effect that enables spouses to maintain the protection against creditors that is offered by a tenancy by the entirety while still taking advantage of estate planning benefits provided by a revocable inter vivos trust. The law amends the Illinois Joint Tenancy Act as well as the Code of Civil Procedure.
The new law adds language to the Joint Tenancy Act, stating that if a homestead is held in the name of a trustee of a revocable inter vivos trust(s) made by settlors who are husband and wife, and the husband and wife are primary beneficiaries of the trust(s), and the deed(s) conveying title to the homestead specifically states that the interests are held as tenants by the entirety, the estate created is a tenancy by the entirety.
The Code of Civil Procedure is also amended by the new law, adding a provision that any property held in tenancy by the entirety shall not be liable to be sold upon a judgment entered against only one of the tenants. This is a major attraction to a tenancy by the entirety over a tenancy in common, as it protects property when a judgment is entered against only one spouse.
Property can only be held as a tenancy by the entirety if it is held by a married couple, and the property is a homestead property (used as the couple’s primary residence). Holding property as tenants by the entirety also allows spouses to have survivorship rights, meaning that if one spouse passes away, the other spouse succeeds to full ownership of the property. Tenants by the entirety cannot dispose of their share of the property without the consent of the other spouse. Creditors of only one spouse can still obtain judgments against that spouse, but they cannot foreclose upon the property to pay that judgment.
If you would like to learn other ways that an estate plan can help you better plan for your future, please contact Waltz, Palmer & Dawson, LLC at (847) 253-8800.