Probate is the legal process of settling the estate of a person who has died. It’s a distinct division of Illinois circuit court that deals only with estates and guardianships. Avoiding probate can save your loved ones time, stress, and expense. Read on to learn about the role of estate planning professionals, the tools they use, and how they can help your estate avoid probate in Illinois.
Why Avoid Probate in Illinois
Probate has a negative connotation because people believe it’s where wills are needlessly scrutinized and inheritances delayed. When wills are probated the information is also released publicly, another reason that people seek to keep their estates out of the process.
Illinois probate takes an average of 8 months and costs an estate an average of $12,000 (up to 5 percent of the estate’s value) in legal fees, expenses, and executor costs. Yet if you consult an estate planning expert, your assets can bypass probate, your heirs pay fewer fees, and your family will receive their inheritances without delay.
How Estate Planning Bypasses Probate
Estate planning professionals examine clients’ portfolios of properties, assets, investments, and cash to determine the best strategy to avoid taxes, bypass probate, and provide your family the maximum inheritance in the shortest period of time. Their primary tools include:
- Trusts. These are tools that can be irrevocable or revocable and require the designation of a trustee to manage them. Your assets are transferred to the trust vehicle, removing them from the reach of probate. Trustees oversee the distribution of assets.
- Beneficiary designations. By adding a beneficiary on your accounts and assets, such as life insurance, 401 (k), and pension fund, the asset is passed directly to that person, avoiding probate.
- Joint ownership with survivorship. If you own property, having a co-owner on the deed, specifically with the right of survivorship, ensures that ownership of the property will pass directly to them upon your death, avoiding probate.
- Wills. A will is a necessary tool in estate planning as it provides directions for distributing your assets and names heirs or others who should benefit from your estate.
- Powers of Attorney. Having a power of attorney that turns over the responsibility of decision making to a competent, trusted individual smooths the path for a stress-free transition. These may be limited in scope to a specific area, like medical decisions, or general management of your estate.
- Executor. An executor is the person who files the will with probate court and oversees settling the estate of the deceased. An executor is paid for their time, so setting up automatic transfers of accounts limits the amount of time they spend on estate settlement.
How to Successfully Avoid Probate in Illinois
Setting up a trust and including your assets in it is the single most effective step in avoiding probate. But that step is intertwined with others in a complete strategy to avoid probate and streamline the estate settlement process. The following is the approximate sequence:
- Gather all of your financial documents, deeds, and records of assets.
- Consult with an estate planning professional about the best approach, which is likely to involve most of the planning tools mentioned above.
- Set up beneficiaries for accounts.
- Create a trust and transfer ownership of your assets to it, including having deeds recorded as part of the trust.
- Make sure your will provides clear direction about your wishes and names your heirs. A “pour over” will can convey any remaining assets into an established trust.
- If your estate value exceeds the $4 million exclusion set up by Illinois, plan to give your heirs annual tax-free payouts to lower the total value of your assets. As long as the annual gifts stay below the federal maximum of $19,000 per person, there is no gift tax.
- Keep the identity of your will’s executor up to date so the probate court doesn’t have to appoint a new one. Make it easy for the executor of your will to pay any bills efficiently by keeping a list of accounts current.
Contact the estate planning professionals at Legacy & Life Law Firm LLC for a consultation on protecting your assets and minimizing or avoiding probate.