In Illinois, the probate process makes sure that a deceased person’s property and assets are distributed correctly and that any debts or taxes are paid in full. Probate is a court supervised legal procedure that may be required after a person’s death. Although many estates are unable to avoid probate in Illinois, the process can be very difficult to navigate. If you’ve found yourself caught up in the probate process, the skilled estate planning attorneys at M&A Law Firm can help you navigate your way through the sea of paperwork you may find yourself drowning in.
The Probate Procedure
Nationally, the probate process is governed by the Uniform Probate Code (UPC). It is necessary in Illinois if assets of the deceased person were owned solely (as opposed to jointly), if all of the decedent’s assets are valued at $100,000 or more, and if the assets contain real estate. Most probate proceedings can be dealt with within a year, unless there are disputes or contests regarding the estate.
The circuit courts of Illinois deal with the probate cases. Larger counties in Illinois have specific probate divisions within the circuit court. Illinois’ courts will hear a case in the county of which the decedent lived.
An executor is a person who is appointed by the deceased person, or sometimes the court, to carry out the terms of a will. If there is no appointed executor in a will or no will at all, an individual can ask the court to be appointed as the “administrator,” or personal representative, of the estate, which is essentially the same position as an executor. An executor is responsible for proving to the probate court that the decedent’s will is valid, identifying the decedent’s assets and appraising the value, paying debts and taxes to creditors, and distributing the property as indicated in the decedent’s will. During probate, the executor’s responsibilities include gathering inventory of all the assets and safeguarding them or selling them per the will’s request, paying any debts, or paying for funeral expenses.
In Illinois, an executor files with the local county court and opens a probate case. The executor must notify the beneficiaries and inheritors of the estate of the probate proceedings. Additionally, the executor must directly inform known creditors and publish a notice in the local newspapers to alert any unknown creditors of the proceedings. Under Illinois law, creditors have six months to file claims against the estate, after which they are barred from collecting debts. Without probate court, creditors have two years to bring claims against the estate.
Avoiding Illinois Probate
A probate asset is property that passes through a will, or if there is not will, under Illinois’ rules of intestate succession. A will does not avoid probate, but it can make the cost of probate more affordable and efficient. For example, when the value of assets is less than $100,000 and there is no real estate, probate is not necessary. Assets that do not need to go through probate are assets that are clearly accounted for and have an undebatable inheritor.
Methods for avoid probate include giving away all assets before death, holding assets in a trust, assets owned in joint tenancy, tenancy by the entirety, or which has at least one surviving tenant, assets subject to a beneficiary designation (retirement accounts and payable-on-death bank accounts), and real estate subject to an Illinois transfer-on-death deed. Illinois’ transfer-on-death instrument was created to avoid probate and to transfer property quickly.
Living trusts are used for any asset including real estate, bank accounts, vehicles, and similar valuables. To create a living trust in Illinois, a trustee names someone to take over as trustee after their death and transfer ownership of all their property to themselves as trustee. Upon death, the successor trustee will have the ability to transfer the trust assets to beneficiaries without going through the probate procedure.
Joint ownership with survivorship rights allows property to pass from one owner to the other upon death. If it is not clear that survivorship was not intended, for example in tenancy in common situations or presumed tenancy in common situations, then the property must be probated.
Payable-on-death accounts occur when someone is named the beneficiary on a financial account in the event of death. The designated beneficiary has no rights in the property until the account owner’s death. At death, the funds are paid to the beneficiary and the account is closed.
The Illinois Small Estate Affidavit allows a decedent’s inheritors to process small estates without going through probate. To meet the requirements of the Small Estate Affidavit, the value of the assets must be less than $100,000, the assets must not include real estate, there are no issued letters of office, and there are no disputes with respect to the beneficiaries or the validity of the will. If an Small Estate Affidavit is executed, another person is not precluded from petitioning to open a probate estate. Another disadvantage is that these affidavits lack judicial oversight, whereas in probate court, a judge will settle disputes or conflicts.
Probate Taxes and Estate Disputes
Probate estates are taxpaying entities, which means the executor obtains a taxpayer identification (ID) number from the Internal Revenue Service for the estate. The executor uses the ID number to report income gains and losses during the administration of the estate for both state and federal income tax purposes. In Illinois, an estate tax return will be due if the estate is valued at more than $4 million.
If there are disagreements about the will, assets, or estate, the probate process can become very expensive and take a long time to carry out. Common court battles are over claims of unduly influence over the decedent, the decedent’s mental capacity, an invalid will (whether regards to the will signing or witnesses involved), interpretation of the will’s language, creditor claims over the assets or estate, over accusations of an unfaithful executor, and state law in the case there is no will.
Upon the closing of the estate, the executor files a final accounting recording layout how the assets were handled. The assets are listed with any income generated, amounts paid, administrative costs, and the distributions to beneficiaries and inheritors. The executor submits a final report for the court and gets receipts from those given estate property and assets.
The complex probate processes outlined above are much simpler with the help of a good estate law attorney. If you’re facing the complexities of probate, contact M&A Law Firm today.