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Illinois Probate Estate Primer

The Law Offices of Jeffrey R. Gottlieb, LLC, represents independent and supervised executors and administrators for decedent’s probate estates in Cook County, Lake County, Kane County, DuPage County and McHenry County.     Contact us by e-mail or call us at (847) 991-2250 to discuss your probate matter.

To Probate or Not to Probate in Illinois

A threshold question in administering a decedent’s assets is whether or not to go to probate court to open a probate estate. This question is largely answered by examining the title and value of the decedent’s assets as of the date of death, and by gauging the estate’s liabilities. Generally, a probate estate will consist only of assets titled in the decedent’s sole name, payable to the decedent’s estate and real property held as tenants in common. If successfully contested, joint tenancy property may also be treated as a probate asset in certain situations.  However, assets titled in a trust, assets subject to a valid beneficiary designation (with a surviving beneficiary) and most joint tenancies do not pass under a Will and are not subject to probate.

For an Illinois decedent, if the total aggregate value of all probate assets exceeds $100,000 or if there is any real estate, opening a probate estate is going to be necessary to deal with the assets. If the total personal estate is valued at less than $100,000 and there is no real estate, a small estate affidavit may be used to bypass probate (But, read here for more on small estate affidavits and when they may be inapplicable or inadvisable, and bond in lieu of probate for real estate).

It should be noted that having a Will neither avoids nor triggers probate. The necessity of probate generally depends only on the value and title of the decedent’s assets, and in some cases, the decedent’s liabilities.

Purpose and Intent of Illinois Probate

Probate is the court supervised process by which a representative is appointed to collect a deceased person’s assets, pay the decedent’s debts and distribute the balance to the those entitled to receive. Probate law is governed primarily by state law, and secondarily by applicable local county procedure. The persons entitled to receive the estate are those identified in the decedent’s last valid Will, or if none, then the heirs under state intestate succession law. Probate law is primarily a statutory scheme that lays the groundwork for the procedure of administering and settling estates.

Intestate vs. Testate Estates

There are two basic types of probate estates: (1) intestate; and (2) testate. An “intestate” estate is the procedure used when the decedent did not leave a valid Will. A “testate” estate refers to a situation where the decedent does leave a valid Will. The primary difference is that for a testate estate, the Will controls who (the “legatees”) receives the decedent’s assets and who runs the estate (the “executor”).  In an intestate estate, state law dictates who is entitled to the estate (the “heirs” under the Illinois statute on “descent and distribution” — read it here) and who is entitled to run the estate (the “administrator”).

Another significant difference is that a Will can waive the executor’s requirement to purchase a “surety bond”. This requirement cannot be waived or excused when there is no Will, making the probate process more costly for intestate estates. A surety bond is also required when no executor designated in the Will is willing and able to act, in which case state law dictates who has preference to serve as the “administrator with will annexed”.

Opening the Illinois Probate Estate – Letters of Office

After the Will, if any, has been filed with the clerk of the court, the Illinois probate process may begin with the filing of a “Petition for Letters of Administration” (for intestate estates) or a “Petition for Probate of Will and for Letters Testamentary” (for testate estates) in the county where the decedent resided. The Petition is filed by the person seeking to act as, or appoint, the representative. A filing fee is paid, court date is scheduled and several other required documents must be prepared and filed (including an affidavit of heirship and the oath & bond of the representative). If the Petitioner is not the designated executor, then unless waivers are obtained, prior notice of the court date is required to be given to certain heirs (who have equal or greater preference than the petitioner).

At the initial court appearance to open the estate, the probate judge reviews the paperwork to ensure that all necessary documents have been properly filed and all disclosures and notices have been given. If there is a Will, the judge reviews the original Will to determine whether it appears to comply with the statutory requirements for a validly executed Will. If everything is in order and there are no objections, the judge will enter an Order opening the estate, appointing the representative and ordering “Letters of Office” to issue. Letters of Office is the (one page) court-sealed document that serves to notify third parties holding a decedent’s assets that a person has died and a representative has been appointed to act on behalf of the estate for all matters. Without this document, assets titled in a decedent’s sole name cannot be accessed (unless a small estate affidavit is able to be used).

Court Supervision and Involvement

There are two procedural methods of Illinois probate administration: (1) supervised administration; and (2) independent administration. Supervised administration requires prior court approval for many actions taken by the representative. Independent administration allows the representative to take most actions without prior court approval. Because the process is less burdensome, most estates are administered independently. However, if the estate is contested or if there are objections, supervised administration may be used or demanded. Many uncontested independent estates require only two court appearances by the estate attorney — to open and close the estate. Regardless of the method of administration, any interested party may bring issues arising during administration requiring court resolution in front of the probate judge. The remainder of this page will generally deal with independent administration.

Claims Filing and Payment Procedure

After the estate is opened and letters of office have been issued, the representative should publish notice of probate in an appropriate newspaper (Cook County estates may use Law Bulletin). This serves the very important function of helping to ensure that claims of potential creditors against the estate are time-barred if not properly filed within six months after the first publication date. Additionally, in order for the six-month limitation to apply, the representative must also give actual direct written notice to any and all “known or reasonably ascertainable” creditors. If proper publication and notices are given, then any claims not properly filed within the allowable six-month time period will be automatically and forever be time-barred, regardless of their substantive validity. Timely filed claims can then be classified according to statutory preference and disposed of by the representative, either by disallowing the claim (in which case the claim may be litigated in court to determine its validity), settling the claim or paying the claim in full.

Rights/Notice of Heirs & Legatees

In addition to creditors, everyone named as a beneficiary in the Will (the “legatees”) and everyone who would receive a share of the Estate if there was no Will (the “heirs”) are entitled to receive notice that the estate has been opened and a statement of their rights. Among these rights is the right to demand a formal proof of the Will (must be demanded within 42 days of admission to probate), the right to contest the Will (must be filed within 6 months after admission to probate) and the right to request, or in some cases demand, supervised administration.

Surviving Spouse and Minor Children

Surviving spouses and minor children are accorded special rights in probate estates. A surviving spouse has an absolute right to “renounce” (aka “spousal election”) the deceased spouse’s Will and instead take a “statutory share”. The statutory share in Illinois is 1/3 of the estate if there are living descendants; 1/2 of the estate if there are no living descendants. Note that this election applies only to probate assets, but generally does not apply to non-probate assets (e.g. trusts, joint tenancies, beneficiary designations). Also note that this election must be formally written and filed with the court within 7 months after the Will is admitted to probate.

A surviving spouse is also entitled to a “spouse’s award.” The current minimum award is $20,000, plus $10,000 for each minor and adult dependent child living with the spouse. The spouse may petition the court for a higher award based on need for 9 months of support in accordance with the spouse’s accustomed standard of living. Child’s awards are also allowable for minor and adult dependent children when there is no surviving spouse or the spouse does not live with the children.

Asset Collection and Inventory

In addition to notifying and dealing with creditors, heirs, legatees, a surviving spouse and minor children, the representative is responsible for locating, collecting, valuing, preserving, managing, and in appropriate circumstances, liquidating, the property in the probate estate. Attention should be given to the liquidity needs of the estate, proper investment and management of estate assets and the tax ramifications arising from the sale and distribution of assets. During administration, the representative will prepare an estate “Inventory”. The inventory is a listing of all assets (real and personal) in the estate as of the date of death, and their approximate values. The Inventory is generally not required to be filed with the Court, unless administration is supervised. In some instances, appraisals will need to be obtained for real estate, business interests and personal property.

Accounting to Interested Persons

Before closing the estate (and sometimes earlier), the representative is required to provide a Final Accounting to the beneficiaries. The accounting should list all of the inventoried assets, any assets coming into the representative’s possession since the inventory, all income earned by the estate, disbursements (debts and administration expenses) made from the estate and interim distributions that have been made to beneficiaries. The accounting will show the assets then on hand and a proposed final distribution to the beneficiaries. To prepare an accurate and complete final accounting, it is essential for the representative to keep detailed, accurate and complete records of all financial activity of the estate. In addition to Illinois law, local court rules dictate the form and manner for preparing and submitting accountings.

Distributing and Closing the Illinois Probate Estate

In addition to the Inventory and Final Accounting, the representative will need to prepare a Final Report for the court and obtain signed receipts from all beneficiaries entitled to distribution and from any outstanding creditors, to present to the court at closing. Finally, after receipts are signed, the representative will distribute the remaining assets as detailed in the Final Accounting and approved by the beneficiaries.

A Word About Taxes

The probate estate is a separate taxpaying entity. As such, the estate obtains its own taxpayer identification number from the IRS to report all items of income and gain (and deductions) accruing during the post-death administration process.  The income is reported on a Form 1041 Fiduciary Income Tax Return. The Estate may report its taxable activities on either a calendar year basis or a fiscal year basis (i.e. Decedent dies April 20, 2012; end of fiscal year March 31, 2013). The selection of fiscal year combined with the recognition or non-recognition of gains and losses, and expenses of administration, provides planning opportunities for fiduciaries and beneficiaries. The rules surrounding fiduciary taxation are substantially different from personal income tax rules, so a qualified professional preparer is advisable.

How to Get Started

To lean how to get started, please read our How to Get Started page and call us at (847) 991-2250 to discuss your situation or to schedule an appointment.

More Estate Information

For more information on Illinois Probate, please read our Probate FAQ.
For information on small estates that do not require probate, please read Small Estates.
For information on estate and trust disputes and litigation, please read Estate Disputes.
 

Related Blog Posts

Related Statutes/Websites

The Law Offices of Jeffrey R. Gottlieb, LLC, represents independent and supervised executors and administrators for decedent’s probate estates in Cook County, Lake County, Kane County, DuPage County and McHenry County.     Contact us by e-mail or call us at (847) 991-2250 to discuss your probate matter.

The Attorneys of the Law Offices of Jeffrey R. Gottlieb, LLC, Represent Executors and Administrators for Probate Estates in Cook County, Lake County, DuPage County and McHenry County

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Disclaimer: All content provided is brief general information and not intended as legal advice. Always consult an attorney before acting. Please read full disclaimer at the bottom of the page.

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