When you create your estate plan, you will likely have several inter-related estate planning goals in mind. By far, one of the most common of those goals is avoiding probate. Fortunately, careful estate planning on your part can result in your estate avoiding probate when the time comes to administer your estate.
Why Is Avoiding Probate Desirable?
The assets you won at the time of your death make up your estate. Unless you make plans to avoid it, your estate will be required to go through the legal process known as “probate” following your death. Although the probate process is unique for every estate, common steps in the process include:
- Identifying, locating, and valuing all estate assets.
- Categorizing assets as probate or non-probate assets.
- Opening the probate of the estate by filing a petition, along with an official death certificate, in the appropriate court.
- Notifying creditors of the estate that probate is underway.
- Identifying, locating, and notifying beneficiaries and/or heirs of the estate that the estate is being probated.
- Reviewing and approving or denying creditor claims.
- Prioritizing and paying approved claims.
- Selling assets, if necessary, to pay creditors.
- Defending any challenges to the Will or litigating any claims made by creditors that were denied.
- Calculating any paying federal (and state, if applicable) gift and estate taxes
- Effectuating the legal transfer of the remaining assets to the named beneficiaries and/or legal heirs of the estate.
Probate can be very costly, both in terms of time and money. If the estate includes valuable and/or complex assets, or becomes involved in litigation, probate could drag on for years. In the meantime, the estate assets involved in the probate process remain out of reach of the intended beneficiaries. Furthermore, the longer, and more complicated, the probate of an estate is, the more fees and costs are incurred as a general rule. For these reasons, avoiding probate is a common estate planning goal.
Common Ways of Avoiding Probate
There are several steps you can take when creating your estate plan that will help your estate avoid probating when the time comes. Amon the most popular of those are:
- Setting Your Estate Up for Small Estate Administration. Like most states, Illinois offers an alternative to formal probate for small estates that qualify. If the estate qualifies, an Illinois Small Estate Affidavit may be used to facilitate the transfer of estate assets in lieu of the need for formal probate. By making lifetime gifts and using other estate planning tools and strategies you can set your estate up to qualify for small estate administration. To qualify for the use of the Small Estate Affidavit in Illinois, the following conditions must be met:
- The value of the “probate assets” must be less than $100,000.00;
- The “probate assets” must not include real estate;
- No letters of office have been issued, nor is a petition for such letters contemplated; and
- There is no dispute with respect to heirship or a will.
- Using a Trust As Your Primary Method of Distributing Assets. Not all assets are required to go through probate. Assets held by a trust, for example, bypass the probate process altogether and can be distributed to beneficiaries as soon after your death as you wish. Using a trust to distribute assets offers other benefits as well, such as the ability to stagger an inheritance instead of leaving a lump sum to a young beneficiary.
- Titling assets and accounts in a way that they avoid probate. The manner in which assets are titled can also be used to avoid probate. Real property, for example, can be held jointly with rights of survivorship, allowing your interest in the property to pass directly to the co-owner upon your death without first going through probate. Certain accounts can also be designated as “Payable on Death (POD)” or “Transfer on Death (TOD)” accounts which allow you to designate a beneficiary who will automatically become the owner of the assets held in the account upon your death. Unlike jointly held assets, however, a beneficiary of a POD or TOD account has no ownership interest in the asset while you are alive.
Contact Illinois Estate Planning Attorneys
For additional information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about avoiding probate, contact an experienced Illinois estate planning attorney at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.