Probate/Estate and Trust Administration

The death of a loved one is always an emotional event. Pre-planning prior to death can ease the stress on those left behind when administering the estate. Estate administration is the process of settling the affairs of a deceased person. Estate administration involves identifying and gathering the estate assets and paying estate expenses and creditors. The estate representative then distributes the remaining assets to the proper heirs or beneficiaries at the close of estate administration.

Many of our clients are concerned about the probate process and we take steps prior to death to avoid probate. Probate is the court-guided process of authenticating the will in court, notifying heirs and creditors, publishing a claim notice in the newspaper, and waiting at least six months from that publication to close the estate. Although probate in Illinois is not as expensive as it once was, it does require filing several court documents and publishing in the newspaper, which in turn requires a significant expenditure of funds. In general, a probate asset is property owned by the decedent personally that does not automatically become property of someone else upon the decedent’s death via operation of a survivorship provision. The following is a non-exhaustive list of non-probate assets:
• Assets held in joint tenancy or tenants by the entirety (such as bank or investment accounts and real property)
• Assets that are payable on death or transfer on death (such as bank or investment accounts and real property)
• Life insurance with beneficiary designation
• Retirement benefits with beneficiary designation
• Any asset owned by a trust rather than by the decedent personally

Avoiding probate is not always desirable. Note that there are some risks and possibly taxes that are not desirable when titling assets to avoid probate if the joint owner has financial problems. These risks and tax consequences should be discussed with legal counsel and your tax advisor before transferring ownership.

In some situations when the total value of the decedent’s personal property is less than $100,000 in value, then the decedent’s family can avoid the expense of probate entirely and use a small estate affidavit to transfer property to the appropriate heir or beneficiary under the will.

The next step in the administration of an estate is to determine whether a Federal Estate Tax Return is due or desirable. In 2013, so long as the estate contains less than $4,000,000 in fair market value assets, no estate tax return will be due in Illinois and no Illinois Estate Tax will be owed. The federal exemption for 2017 is $5,490,000 and a Federal Estate Tax Return is not required; however, it may still be desirable due to “Portability”. Portability is the transfer of an individual’s credit to their spouse. This is accomplished by the filing of the Federal Estate and Gift Tax Return within the required statutory period. Given the uncertainty of our government and future tax laws, Portability may be desired regardless of the size of the estate.

If avoidance of the probate process is desired or if the total value of your estate exceeds 4 million in assets, you should contact an attorney to discuss how to title your assets and to minimize estate taxes. For further questions, please feel free to email attorneys Pam Apke or Joel Slater, or Kyle Boose of Oldfield Myers Apke & Payne Law Group, Ltd.