Selling a longtime home happens alongside other major life changes.
An older homeowner may be downsizing, moving closer to adult children, transitioning to assisted living, or leaving a home that has become difficult to maintain.
Health can also change unexpectedly in the middle of that process. When it does, questions about who can sign documents, complete a sale, or transfer the property can quickly become part of the real estate transaction.
A Health Change Can Affect a Sale
Consider an older homeowner who decides to move out of state to live with an adult child.
Her house needs some work before it can be sold, so her daughter is given power of attorney and begins overseeing the renovations and eventual sale.
Then the homeowner becomes seriously ill.
The daughter may have authority to act while her mother is alive, but what happens if her mother dies before the property is sold? A power of attorney generally ends at death. Without other planning in place, completing the sale or transferring ownership can become much more complicated.
This is similar to a situation our firm recently encountered. An elderly homeowner had moved out-of-state to live with her daughter while her Illinois home was being prepared for sale. When the mother developed pneumonia and was hospitalized, her declining health created an immediate concern about what would happen to the property if she died before the transaction was completed.
Different Circumstances May Require Different Tools
There is no single solution for every older homeowner.
A power of attorney may allow someone to handle a real estate transaction if the owner becomes unable to manage it personally. A personal trust may allow a successor trustee to step in and deal with the property. In some circumstances, a Transfer on Death Instrument, commonly called a TODI, can provide a way for ownership of Illinois real estate to transfer upon the owner’s death.
In the situation involving the mother who moved out-of-state, a TODI was prepared and recorded while she was still able to sign it. If she remained alive through the sale, her daughter could use the power of attorney to complete the transaction. If she died before the property was sold, the TODI provided another path for transferring ownership of the home.
Timing Can Change the Options
These decisions become more difficult once a health crisis is already underway.
An older homeowner who is preparing to downsize or sell may still be fully capable of making decisions and signing the necessary documents. If that person’s health deteriorates quickly, however, some of the options that were available earlier may no longer be available.
That is why conversations about the property should happen alongside conversations about where someone will live next. Who owns the property? Who has authority to act if the owner cannot? What happens to the property if the owner dies before it is sold?
Those questions can be especially important when a home needs renovations before listing, a sale is expected to take several months, or an older homeowner is already experiencing significant health concerns.
Think About the Real Estate Before It Becomes Urgent
A decision to downsize or move closer to family may begin as a lifestyle decision. Changing health can quickly add another dimension.
Thinking through ownership, authority, and the eventual transfer or sale of the property before a crisis develops gives families an opportunity to determine what arrangements are appropriate for their circumstances.
Health can change in a heartbeat. When an older homeowner has real estate to sell or transfer, planning for that possibility should be part of the conversation.
The Minchella & Associates Difference
With over 40 years of experience in Illinois real estate law, Erica Minchella has represented thousands of home sellers and buyers, landlords, and commercial and investment property owners.
For more information, schedule a consultation today.
