When a loved one passes away, most people experience a period of deep emotions during which they do not want to be bothered with the practical legal ramifications of their loved one’s death. If you were named as the Executor of the estate of a recently departed loved one, however, you must deal with those practical and legal issues as part of your job as the Executor. Keep in mind that the decedent had a considerable amount of faith in your ability to keep a level head and do a good job administering his/her estate. To help you, the Waukegan probate attorneys at Hedeker Law, Ltd. created a list of the “10 Most Common Probate Mistakes” in the hope that you can avoid making them once you are aware of them.
Before focusing on common mistakes, it may help to gain a better understanding of the probate process and why it is required after someone dies. When an individual dies, he or she leaves behind assets. Those assets make up the decedent’s estate. Probate is the term given to the legal process that oversees the eventual transfer of those estate assets to the intended beneficiaries and/or heirs of the estate. Probate also serves other functions, including:
- Authenticating the decedent’s Last Will and Testament if one was left behind
- Identifying, locating, securing, and valuing estate assets
- Locating legal heirs of the estate if the decedent died intestate, or without a valid Will
- Allowing creditors the opportunity to file claims against the estate
- Litigating any challenges to the Will or estate
- Ensuring the taxes owed by the estate are paid
Common Probate Mistakes
- Failing to consider alternatives to formal probate. Failing to consider if an alternative to formal probate can be used in lieu of formal probate is a very common mistake. In Illinois, for example, a small estate affidavit may be an option instead of formal probate and may save the estate a considerable amount of money and save the beneficiaries a considerable amount of time.
- Failing to handle assets correctly. Most first-time Executors are not sure what steps need to be taken and when they need to be taken. Consequently, assets are sometimes not handled properly. As the Executor or Personal Representative of an estate, one of the first things you need to do is to secure all assets as soon as possible. This can mean different things depending on the asset in question. For financial accounts, you may just need to close the account, for example, whereas for real property you may need to physically lock up the property and arrange for its maintenance and upkeep.
- Failing to properly categorize assets. Not all estate assets are required to go through probate. As you identify estate assets, make sure you put them in the appropriate category. Common examples of non-probate assets include:
- Trust assets
- Proceeds of a life insurance policy
- Certain types of jointly help property
- Funds held in certain types of retirement accounts
- Forgetting “Date of Death” values. One of the things you will need is a “Date of Death” value for all estate assets. The sooner you get started on these the easier they will be to calculate. You may need to retain the services of professional estate appraiser or real estate appraisers to help you with this task.
- Failing to hire an estate planning attorney. It is usually a mistake to not retain the services of an experienced estate planning attorney. Hiring an experienced attorney will dramatically reduce the likelihood that you will make costly mistakes during the probate process.
- Failing to properly handle creditors. All potential creditors of the estate must receive notice of the probate of the estate. Known creditors can be notified personally; however, unknown creditors must receive notice via publication in a local newspaper. You must then keep the probate open for a statutory period of time to give creditors the opportunity to file a claim against the estate.
- Failing to communicate with beneficiaries/heirs of the estate. While this is not a legal error, it can be a huge mistake. Sometimes it can even lead to unnecessary litigation. Remember, beneficiaries/heirs are also dealing with heightened emotions and they are dependent on you to let them know what is going on with the estate. This is yet another reason to retain the services of a probate attorney because your attorney can act as your conduit of information with the beneficiaries/heirs as well as creditors.
- Distributing assets too soon. As the Executor/Administrator you have the authority to approve creditor claims and pay creditors as well as to distribute assets to intended beneficiaries. Sometimes, however, an estate does not have sufficient assets to pay all claims and honor gifts in a Will. When that is the case, creditors must be prioritized according to law and assets distributed according to that priority. If you fail to follow the law and distribute assets accordingly, you could be held personally liable.
- Calculating estate taxes incorrectly. All estates are potentially subject to federal gift and estate taxes. In addition, the State of Illinois also imposes a state-level estate tax. Failing to properly calculate both federal and state estate taxes can be a costly mistake. Estate tax returns must also be filed on by the Executor on behalf of the estate. This is yet another reason to work with an estate planning attorney to prevent making a mistake that could dramatically diminish the value of the estate that is left for beneficiaries.
- Forgetting to submit a closing inventory. Some courts require an Executor to file a closing inventory at the end of the probate process. It can be easy to forget this after the lengthy probate process.
Contact Waukegan Probate Attorneys
For additional information, please join us for an upcoming FREE seminar. If you have additional questions or concerns regarding the Illinois probate process or acting as an Executor in the State of Illinois, contact the experienced Waukegan probate attorneys at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.