Probate
An Overview of the Probate Process
Probate is often the least convenient, most expensive option for passing assets on after death.
So what exactly does happen in the probate process? One of the first things is that the probate court will make a determination on whether a decedent's will is valid. If the court then decides that the will is valid, an executor (typically someone named in the will) will carry out the decedent's wishes under the probate court's supervision. In Illinois, a will can provide for "Independent" administration, simplifying the process to as little as two court appearances. If there is no will, an administrator will be appointed by the court.
Next, the executor will go about the business of gathering and accounting for the estate's assets. After settling any legitimate claims against the estate and paying off the decedent's outstanding debts - the executor will then distribute whatever is left to specified beneficiaries. If there is no will, instate heirs may have to be identified and located.
Executor's Duties
The executor is the person named by the decedent in the will to administer the estate. The executor has many important functions to complete, including:
- Assets owned in joint tenancy with rights of survivorship, if there is a survivor
- Payment on Death (POD)/Transfer on Death (TOD) bank, brokerage and mutual fund accounts paid to a named beneficiary
- Life insurance paid to a named beneficiary
- IRAs, 401(k)s, and other tax-deferred retirement plan proceeds also paid to a named beneficiary
The executor owes fiduciary duties to anyone who has an interest in the estate. This means that the executor owes a duty of loyalty and must act in the best interests of the estate. For example, if the executor mismanages estate assets and causes the estate to lose value, he or she can be held liable for these actions and may have to repay the estate the amount of the lost value.
Preserving Estate Assets
An important but sometimes neglected responsibility in administering an estate is to look for opportunities to preserve assets for distribution. Reducing estate taxes is one way that an estate can retain more of its wealth for the decedent's heirs. Some of the ways to accomplish this are:
- Consider whether administration expenses and casualty losses should be reported on the estate tax return or on the estate's income tax return
- Consider whether there are income tax savings opportunities on the decedent's final return (such as whether or not a joint income tax return should be filed with the surviving spouse)
- Consider whether assets should be valued at the date of the decedent's death or six months later (or, if assets have been distributed prior to six months after the decedent's death, the date of the disposition of the assets)
Avoiding Probate
Probate can be an expensive, drawn-out process, especially for beneficiaries who may have to wait any where from one to two years to receive the property left to them in the will. There are certain types of assets that do not have to go through probate and become available to the beneficiaries upon death of the decedent. These generally include:
- Property owned in joint tenancy with rights of survivorship
- Payment on Death (POD) bank accounts
- Transfer on Death (TOD) securities
- Life insurance proceeds
- IRAs, 401(k)s, and other tax-deferred retirement plan proceeds
Probate-Related Disputes
The last thing most people want to have happen after they die is to have their loved ones fighting over their estate. Unfortunately, probate litigation is not uncommon. Will contests, breach of fiduciary duty claims, allegations of executor misconduct - all are good examples and all of which go to show that it's true: You can't please everyone.
While we can't prevent every possible dispute, our attorneys can help you to avoid some of the more common "flashpoints" of litigation, including arguments that you were competent when the will was signed or that you were under duress or undue influence by another person when the will was signed.
State Intestacy Laws
The laws of intestacy apply when you die with "probate" assets (not in trust, no surviving joint tenant, no effective beneficiary designation. Each state is different in how these situations are handled. Read more on your State Intestacy Laws
