One of the most common misconceptions when it comes to inheritance planning is that you need to have a large estate before an estate plan becomes necessary. Nothing could be farther from the truth. Every adult should have at least a basic inheritance plan in place. As your estate, and your family, grow you will definitely want to expand and build on that basic plan; however, there are several reasons why you should have a basic estate plan without regard to the size of your estate. As a Lincolnshire inheritance planning attorney explains, keeping the state out of your estate is reason enough to get started on your inheritance plan.
Testate vs. Intestate Estates
To understand the importance of inheritance planning, you need to first understand the difference between a testate and an intestate estate. A testate estate is one in which the decedent left behind a valid Last Will and Testament, or possibly a basic trust, that serves to distribute the decedent’s estate assets after death. An intestate estate is one in which the decedent failed to leave behind a valid Will or trust.
Understanding the Probate Process
All estates must go through the legal process known as probate after the death of the estate’s owner. If the estate is small enough, it may qualify for a small estate alternative to formal probate; however, it will still need to pass through some type of probate. Probate is intended to serve several important functions, including:
- Authenticating the Will presented for probate.
- Litigating challenges made against the Will
- Identifying, locating, and valuing estate assets.
- Notifying creditors of the estate and reviewing claims submitted against the estate.
- Paying estate taxes
- Transferring assets to the new owners
What Happens to Assets in a Testate Estate Administration?
If the decedent died testate, the terms of his/her Last Will and Testament, and any other estate planning documents such as a trust, will dictate how the estate assets are distributed. Gifts made pursuant to a Will can be specific or general. For example, the decedent might have made specific gifts by leaving her firearms collection to a favorite niece and/or all funds held in a specific account left to a sister. General gifts might include a gift of half of the entire estate. Assuming the Will has been properly drafted, the provisions of the Will should completely distribute the decedent’s entire estate.
What Happens to Assets in an Intestate Estate Administration?
If the decedent died intestate, it means there is no legal document to be used for guidance when handling the distribution of the estate assets. Consequently, the state intestate succession laws will be used to distribute the decedent’s assets. The intestate succession laws are state specific, meaning that each state enacts their own laws. In all states, however, intestate succession laws are aimed at distributing the assets to close relatives. In the State of Illinois, for example, your children and/or spouse are first in line and then parents and/or siblings. Among the many reasons why you may not wish to allows the State to determine how your assets are distributed after your death include:
- Assets are divided equally among heirs, meaning an heir might get much more, or much less, than you intended.
- Assets may have to be sold to create the required distributions
- Charities, friends, and even more distant relatives such as a favorite nephew
- Family heirlooms can be lost forever
- The court decides who will oversee the probate process instead of you deciding
Keeping the State Out of Your Estate
The knowledge that the State will decide what happens to your estate assets after your death should be incentive enough to create at least a basic inheritance plan. You don’t allow the State to decide how your assets are handled while you are alive, why allow them to decide how they are handled after your death? Contact an inheritance planning attorney to get started on your plan today.
Contact Lincolnshire Inheritance Planning Attorneys
For more information, please download out FREE estate planning worksheet. If you have additional questions or concerns regarding inheritance planning, contact the experienced inherita attorneys at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.