Real estate and the Illinois Civil Union Act

It  used to be that only married couples could hold title to their primary residence as tenants by the entirety. The advantage of this form of ownership is that the property is protected from creditors if one spouse is sued or files bankruptcy (it’s not protected if both spouses get sued or file for bankruptcy).

Now,  under the new Illinois Civil Union Act, couples can hold title to their residence as tenants by the entirety, just like married couples. So what is the best way to hold title to real estate for couples united  under the new civil union act?

There are at least two options:

1. Tenants by the Entirety. This means that if one dies it snaps to the other avoiding probate. On the second death, however, a probate will be necessary to transfer title unless the property is transferred to a trust in between. The property is protected from creditors. I like this form of ownership if the couple has an existing mortgage or plans to refinance down the line.

2. A living trust as tenants by entirety. The law now allows a couple to hold title to their primary residence in a trust (or trusts)  as tenants by the entirety. So the couple gets the probate avoidance of the trust and the asset protection of tenancy by the entirety. The trust/tenancy by entirety law is new as of January 1, 2011.  I like this form of ownership for properties that  have no mortgage and where there are asset protection concerns or a high liability job.


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