The Truth About Probate

Probate: What it is. Why you should avoid it.

Probate is the process of administering the estate of someone who has died or become incapacitated. It exists because no one can legally sign your name, even your spouse. In 1990, the AARP published a comprehensive report, Probate: Consumer Perspectives and Concerns. The report found that people in the United States spend over $2 billion on probate-related expenses. The average cost is 2-7% of each estate. Nearly 40 years later, you can imagine that cost has increased exponentially.

During your lifetime, you should have a current Financial Power of Attorney, which appoints a trusted person as your agent if you are physically or mentally unable to sign your name and manage your affairs. Doing so can help you avoid a costly guardianship over your estate. Guardianship often leads to unnecessary complications.

What happens at your death?

Your Financial Power of Attorney will not help. POA revokes by operation of law at your death. If you have assets solely in your name when you die, the Probate Court processes them. A judge appoints an executor with authority to sign your name, pay your creditors, and distribute your assets to your heirs. If you have a Will, the beneficiaries listed in your Will will most likely receive their stated share of your estate. If you do not have a Will, your heirs will receive your estate in proportionate shares.

Having a Will does not avoid Probate. Just the opposite is true. You must file every Will in the county clerk’s office within 30 days of your death. When you die, no one can sign your name to transfer assets to your heirs without a Probate Court order. The Probate process can take years. On average, it takes 18 months. The system is not designed to administer every person’s estate.

In Cook County, over 1,000 new Probate records are filed each month, with tens of thousands of cases in the system. Only 6 judges handle decedents’ estates. Also, property owned in different states must be probated in that state and also in the state where the person resided at the time of death – multiple Probate proceedings.

What is not subject to Probate?

• Jointly held property passes to the surviving joint tenant, often a spouse. However, when the survivor dies, there will be Probate. So joint tenancy only delays Probate.
• Estates with a value less than $150,000 can be administered through a Small Estates Affidavit, outside the Probate Court.
• Deferred compensation, life insurance, POD, and other accounts pass directly to the adult beneficiary. However, if the beneficiary is a minor or has another legal disability, the proceeds must go to Probate. The funds are held until the minor turns 18. Also, any proceeds for a beneficiary who has a physical or mental disability are subject to Probate. The funds can be held for the duration of the disability, often for the beneficiary’s lifetime.

Your best plan to completely avoid Probate is a Living Trust.

A Revocable Living Trust is a written, legal document that allows you to privately and efficiently pass your assets (real property, bank accounts, stock, savings certificates, personal property, etc.) to your family, friends, or charitable organizations after your death – outside of Probate Court.

• At the creation of your Trust, all of your assets will be transferred from your name and titled in your Trust.
• You retain unlimited access to and full control of your assets during your lifetime while you have capacity.
• A Revocable Living Trust allows you to appoint someone of your choice (as Successor Trustee) to manage your assets after your death or during your incapacitation.
• It may be amended or revoked at any time as long as you are mentally competent.
• Your assets and belongings will be distributed privately and efficiently to your beneficiaries, under the terms that you have established within your Trust.

Avoiding the cost, time, and headaches of Probate is advisable. A Living Trust estate plan is the most efficient and effective estate plan; when properly drafted and funded, it avoids the Probate process for your family.

Learn More

If you have questions about Living Trusts or other concerns, please contact us today for more information or visit Tuohy Law Offices.

Dylan Hunn

Attorney at Law

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Tuohy Law Offices
312-559-8400
17W220 22nd Street  
Oakbrook Terrace, Illinois, 60181

This blog entry is for information and planning purposes. It is not intended to be, nor should it be substituted for, legal advice, which turns on specific facts, as well as laws in specific jurisdictions. No reader of this blog should act or refrain from acting based on any information included in, or accessible through, this blog without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the reader’s state, country, or other appropriate licensing jurisdiction.