Understanding Probate « »
AN OVERVIEW OF ESTATE PROCEEDINGS
Filing the Will – When a person dies, under Illinois law, any person holding a decedent’s Will (and codicils) has a duty to file the Will with the clerk of the court in the decedent’s last county of residence.
Declaring Heirship – To begin the administration of an estate, the probate court must declare a decedent’s heirship. Someone familiar with the decedent’s family or his or her family tree must produce testimony of the decedent’s heirs, either in person or by affidavit. Based on this testimony, the probate court determines the decedent’s heirs.
Testate Estates – If the case involves a testate estate, a petition for admission of the will to probate is filed and a hearing is scheduled. Once a will is submitted to probate, the representative must file an oath of office and, unless provided otherwise in the will, a surety bond. A surety bond protects a decedent’s creditors and taxing bodies in the event a representative acts improperly.
If the person named representative in the will declines to serve, the probate court may appoint a suitable administrator.
Electing Against the Will – Once the probate court determines a will is valid, a surviving spouse is given the option of choosing to take the share which he or she would have received in the absence of a will, in lieu of the amount given in the will.
Will Contests – The law presumes the validity of wills, making will contests rare and difficult. If, however, a person does oppose a will, he or she will have an opportunity to put forth his or her objections, to cross-examine witnesses in favor of the will, and to provide evidence in opposition to the will at a hearing.
Intestate Estates – If there is no will, after proof of heirship, the probate court appoints an administrator. The order in which persons have the right to appointment are specifically outlined in state statutes. Once an administrator is appointed, the administrator, like a representative, must file an oath and a surety bond.
Filing of the Inventory – One of the representative’s initial duties is to have all estate assets inventoried and appraised. A representative also sets any allowances needed for certain beneficiaries to meet their living expenses during the period of estate administration. Allowances are included in the assets of the estate, but are given priority in payment over most creditors. Allowances are subject to approval by the probate court.
Payment of Claims and Taxes – After the filing of the inventory, a representative must pay taxes and claims against the estate. During the course of estate administration, creditors must submit their claims to the representative or the probate court. The representative may either consent to the claim or contest it. If a claim is contested, the probate court conducts a hearing to determine the validity of the claim. The probate court also fixes the priority of claims for payment, according to statutes, in the event an estate is unable to pay all its claims. If a representative has a claim against the estate, the probate court will examine it carefully and, if the claim is contested, may appoint a special administrator to oversee the contest.
The payment of taxes includes: a decedent’s income taxes; the estate’s income taxes; federal estate taxes, if the estate is required to pay estate taxes; and, in some states, local death taxes. Real estate is taxed in the state where it is located. Personal property is taxed, in some states, according to a decedent’s residence. Estate assets are subject to liens for the payment of taxes. (Note: the federal government has a right to examine a decedent’s personal property to determine its value. Before the property is distributed, a representative may want to secure, from the IRS, a waiver of its right to inspect the property.)
Determining the amount of taxes due usually is the most time-consuming part of settling an estate. Theoretically, estates must remain open “in probate” for at least six months. Often, however, the period may extend one, two, or even three years while tax returns are prepared, filed, and audited.
Federal Estate Tax – The federal estate tax is a tax on a decedent’s entire estate. It is based on the total value of the estate and applies to both probate and nonprobate assets. For example, jointly owned property and life insurance proceeds are both subject to estate tax (special rules apply).
Deductions – The federal estate tax, however, does allow deductions for a decedent’s debts and estate administration expenses. Married persons who are United States citizens are permitted unlimited deductions for property passing to each other in a qualified manner. Bequests to charity may qualify for the estate tax charitable deduction.
Post-Mortem Planning – It is possible to engage in estate tax planning after death. One such method employs qualified disclaimers of assets. A disclaimer must be signed by the intended recipient prior to his or her asserting ownership and control over the disclaimed asset and must be filed within nine months after death.
Distribution of Assets – Probate assets are typically distributed to a decedent’s heirs and/or beneficiaries after estate proceedings are completed and an account has been given to the beneficiaries. A representative may distribute assets before the end of probate, but he or she may then be personally liable if the probate court later determines the distribution should not have been made (for example, if during the course of administration, an estate’s tax liabilities exceed its remaining assets).