When a person dies, if they have assets, they will need to be distributed. Probate is necessary when a person’s assets are titled in such a way or are a certain amount, that a court needs to appoint an estate representative to collect and distribute them, under the court’s supervision. Probate may also be necessary to pay or discharge debts and taxes of a deceased person.
In Illinois, even if you have a Last Will and Testament, if your estate assets are over $100,000.00, a probate estate must be opened to have your executor appointed and granted letters of office to administer the estate.
Reasons to Avoid Probate
The primary reason to avoid probate in Illinois is that administering a probate estate can be costly and time consuming. There are filing fees and attorney fees that cannot be avoided if a probate estate is needed. Further, in probate estates, certain people are entitled to notice of the proceedings. Even if you have disinherited someone through a Last Will and Testament, if they are an heir to your estate they are entitled to notice of the case. This may invite unwanted litigation for your loved ones who you desire to receive your assets.
Further, if you do not have a will and have a probate estate, you do not get to determine who will get those assets. A person’s heirs at law are determined by the Probate Act. Therefore, even if your loved ones know that you wanted your assets to be divided in a certain way, the law will control.
Finally, probate cases are public record and the pleadings can be accessed by anyone. If you would like your assets to remain private, then avoiding probate may be particularly important.
Estate Planning Tools to avoid Probate
Create a Living Trust
The simplest way to avoid probate in Illinois is to create a Living Trust, which designates a trustee to distribute assets and pay debts at the time of your death. When you create a living trust it is important to ensure that your trust is “funded,” which means titling assets to the trust. Generally, during your life, you will act as trustee of the funds and you can use them however you wish. Then, if you become incapacitated and/or when you die, a designated trustee will step in to manage and distribute the assets according to your wishes.
With a Living Trust, you can designate who you wish to receive your assets upon your death and can customize how those assets are distributed, if you’d like. For example, if one of your beneficiaries is disabled or a minor, at the time of your death, you can set up a sub-trust where a trustee can continue to manage and disburse the assets for the benefit of your beneficiary.
If a living trust is properly funded, you can avoid probate entirely. This is preferred over a Last Will and Testament because no Probate Estate will need to be opened.
Joint Titling of Assets
Another way for a person’s assets to pass, avoiding probate, is to title them jointly. If an asset is titled jointly between two or more people, when one of the owners dies, the property passes automatically to the surviving owner(s).
While joint titling is an effective tool to avoid probate, it can cause unintended consequences. It is important to contact an attorney to fully understand the implications, during and after your lifetime, of jointly titling assets before using this as a means to avoid probate.
Naming Beneficiaries on Individual Accounts
Another estate planning tool to avoid probate is to name beneficiaries on all of your individual accounts. This means contacting all of the institutions where you have assets or policies and directing them to pay out named beneficiaries, in percentages you designate, upon your death. Beneficiary designations pass outside of probate and if done properly, you can entirely avoid a probate estate. If you do not do this with all of your assets, it is possible you will still end up with a probate estate.
If you’re interested in planning your estate or have any questions about How to Avoid Probate in Illinois, please contact us.