Quit Claim Deed vs. Transfer on Death Instrument in Illinois: Which Is Right for Your Estate Plan?

Feb 1

5 min read

When it comes to real estate in Illinois, two commonly used tools to avoid probate for a primary residence are the Quit Claim Deed (QCD) and the Transfer on Death Instrument (TODI).

Although they are sometimes discussed interchangeably, they function very differently. Choosing the wrong tool can create unintended tax, creditor, or eligibility consequences. In this article, we will explore the differences between a Quit Claim Deed and a Transfer on Death Instrument, explain their advantages and disadvantages, identify when each might be appropriate (and when not), and help you determine which option might best fit into your estate plan.

What Is a Quit Claim Deed?

A Quit Claim Deed transfers whatever ownership interest the grantor has in a property to the grantee. It does not guarantee clear title or make any warranties about ownership. A QCD is often used in estate planning to fund a revocable living trust.

Transfers ownership upon proper execution, delivery, and recording
No warranties of title
Commonly used to transfer property into a revocable trust
Frequently used between spouses or family members

Advantages of a Quit Claim Deed

Simplicity and Speed: Generally quick and easy to execute and record.
Flexibility: Useful for transferring property into a living trust, adding or removing names from title, or resolving title issues.
Immediate Transfer: Ownership changes immediately upon execution and recording.

Disadvantages of a Quit Claim Deed

No Title Guarantee: If title problems exist, the grantee inherits them.
Loss of Control: Legal title transfers to the Trust or other recipient. If transferring to your own revocable trust, you typically retain practical control as trustee. If transferring to children or others outright, you no longer control the property.
Additional Steps: (1) Although federal law generally protects transfers to a revocable living trust from triggering a due-on-sale clause (if you remain a beneficiary and occupant), it is prudent to notify your lender and confirm file documentation, (2) requires updating insurance policy to reflect the new ownership title (3) depending on the county or municipality, recording may require transfer tax exemptions to be claimed, municipal stamps, or water certifications, (4) may require confirming or re-applying for certain property tax exemptions or deductions.
Medicaid Penalties: If you are putting child(ren) on the title, gifting property within the look-back period can affect eligibility for Medicaid long-term care.
Potential Loss of Creditor Protection for Married Couples: In Illinois, married couples who own their primary residence as tenants by the entirety benefit from important creditor protection. If only one spouse has a judgment creditor, that creditor generally cannot force the sale of the home. If you use a Quit Claim Deed to transfer your home into a revocable trust, you typically terminate tenancy by the entirety. That means you may lose that creditor protection.

What Is a Transfer on Death Instrument (TODI)?

Under the Illinois Residential Real Property Transfer on Death Instrument Act, a TODI allows an owner to name one or more beneficiaries who will receive the property at death—without probate. During the owner’s lifetime:

The owner(s) retains full ownership and control, no ownership transfers until death
The property can be sold, mortgaged, or refinanced
The TODI can be revoked or changed

Advantages of a Transfer on Death Instrument

Avoids Probate: Smooth transition of ownership without court involvement.
Retains Control: Owner can revoke or change the TODI anytime.
No Immediate Transfer: Property remains part of the owner’s estate during their life.
No Additional Steps: No changes required during lifetime to mortgage, insurance, or tax exemptions.
No Loss of Creditor Protection for Married Couples: A TODI does not change current ownership during lifetime, so tenancy by the entirety protection remains intact while both spouses are living.

Disadvantages of a Transfer on Death Instrument

Potential Beneficiary Disputes: If beneficiaries predecease the owner or disclaim inheritance, it can complicate matters. Blended families, minor beneficiaries, or special needs beneficiaries often require more sophisticated planning.

FinCEN Reporting Confusion (Corporate Transparency Act)

As of March 2026, there has been recent confusion about whether transferring a house into a trust requires reporting to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) under the Corporate Transparency Act (CTA). Here is the clarification:

Most revocable living trusts are not “reporting companies” under the CTA.
Transferring your personal residence into your revocable trust generally does not trigger a FinCEN beneficial ownership filing.
LLCs that hold real estate have separate reporting obligations.

Because federal guidance has evolved and litigation has impacted enforcement timelines, it is important to confirm current requirements before assuming a filing is unnecessary.

When Caution Is Required

Avoid using a Quit Claim Deed simply to “avoid probate” by adding child(ren) to title. This frequently creates loss of step-up in basis, gift tax reporting obligations, exposure to a child’s creditors or divorce, family conflict.

Similarly, a TODI with a Will based estate plan may not be sufficient for blended families, minor beneficiaries, special needs planning, significant creditor concerns, multi-property estates. In more complex situations, naming a revocable trust as TODI beneficiary—or using a fully trust-based plan—may provide better coordination.

Conclusion

A Quit Claim Deed and a Transfer on Death Instrument serve very different purposes.

A Quit Claim Deed is typically used to transfer property during lifetime—often into a trust—but may eliminate tenancy by the entirety protection.
A TODI is a probate-avoidance tool that preserves lifetime ownership and creditor protections for married couples, but works most effectively with a revocable Trust.

The correct choice depends on your marital status, creditor exposure, tax considerations, family structure, and long-term planning goals.

Estate planning should be intentional and coordinated—not piecemeal. If you are unsure which approach aligns with your objectives, a consultation can clarify your options and prevent costly mistakes.

Estate planning is not one-size-fits-all. These tools should fit into a broader, personalized strategy designed with your unique circumstances in mind. Working with an experienced estate planning attorney ensures that your plan reflects your wishes and protects your loved ones.

If you found this blog post helpful, please consider liking and sharing it with others who may benefit from this information. If you're ready to create or update your estate plan, reach out today to schedule a consultation. Don't wait until it's too late – let's work together to ensure your future is protected and your wishes are honored, no matter what lies ahead.

Disclaimer

The information contained in this article is for informational purposes only and should not be construed as legal advice, nor relied upon as legal advice. The transmission and receipt of information from this website does not create an attorney-client relationship. Laws and regulations change, and this material may not reflect the most current legal developments. You should not act or refrain from acting based on this information without seeking professional legal counsel regarding your specific situation.