When a person dies, his or her estate is usually legally transferred to heirs through a legal process called probate. However, probate can be expensive and lengthy, which disadvantages all the heirs. It also makes the disposition of the deceased’s estate public record, which many people find too intrusive into their personal lives. Lastly, Illinois hasn’t passed the Uniform Probate Code, which offers a simplified probate process used in many other states.
For these reasons, many people try to manage their estate before death so their heirs end up avoiding probate altogether.
There are many legal means available in Illinois for avoiding probate. A number of those options are discussed below. It’s important to note that the mere creation of will is insufficient for avoiding probate in Illinois.
Create a Living Trust
A person can reorganize almost all of their assets into a trust and execute a document that transfers ownership of those assets to the owner as a trustee. This is called a living trust. In the the living trust document the owner/trustee can name the person who will take over as trustee when the owner dies.
Most assets can be placed in a living trust, including real estate, vehicles, and bank accounts. When the original trustee dies, the successor trustee can allocate the trust’s assets to other beneficiaries without having to go through probate.
A person does still need a will even with a living trust.
Transfer On Death
In Illinois, there are two types of assets one can transfer to beneficiaries automatically upon death and thus avoid probate. A brokerage account for stocks and bonds can be registered with a beneficiary through completion of a transfer of death form. The transfer of death form must be completed prior to the account holder’s death.
Real estate can also be transferred on death. A transfer of death deed is required, which also must be signed and recorded prior to the owner’s death. In both cases, the beneficiaries named in the transfer on death document have no legal interest in the account or real estate prior to the owner’s death. They can be removed as beneficiaries at any time before the owner dies. However, once the owner does die, the beneficiary or beneficiaries step into the shoes of the owner without having to move the asset through probate.
Payable On Death
Most types of bank accounts, including checking, savings, and certificates of deposit, can have a payable on death beneficiary designated. This works the same as the transfer on death forms. The beneficiary has no access to the money in the account until the account owner dies.
Generally reserved for married people or couples, joint ownership allows a surviving partner to get full ownership of an asset upon the death of the other partner. The key for this type of ownership is that the joint ownership is established at the same time. That is, partners can’t become joint owners of property they didn’t acquire together.