Most married couples hold title to their home in “tenancy by the entirety.” Married couples quit holding title as joint tenants when tenancy by the entirety was allowed in the mid 90’s in Illinois.
This means that if one dies, the house snaps to the other avoiding probate. Also, the house is protected from creditors. So if there is a court case against one spouse, the winner of the court case cannot enforce the judgment against the house. If the court case is against both spouses, the creditor can try to take the house.
Until recently, if the married couple had a living trust, and chose to deed the house to their trust, the couple lost the protection of tenancy by the entirety. A new law just passed that allows a married couple to hold title to their home (it only applies to a primary residence) in a living trust and keep the protection of tenancy by the entirety. (To be honest, I’ve never understood why the legislature allows married couples to protect their assets from creditors, but not single, divorced or widowed folks?)
The deed will convey title to the living trust, but will also state that title is being held as tenants by the entirety. Both spouses have to be trustees of the trust and the trust has to be for their benefit.
This is all brand new and was just passed last month.
Many living trusts that I review have only one trustee. From what I see, the trust will have to be amended to add both spouses as co-trustees. I almost always put both spouses on as co-trustees so changing title to the new tenants by entirety/living trust hybrid will be pretty easy for me.
I like the new tenancy by entirety/living trust form of ownership and suggest that clients take advantage of this (almost) free form of asset protection.
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