Probatet DeLaney Law Offices Ltd, we recognize that many of you may have a lot of unanswered questions when it comes to certain aspects of Elder Law. We understand that this is a worrying and difficult time and we are always here to help.
As experts in our field, our job is to inform you of the most accurate and up to date information that is currently available. If, however, you would prefer to discuss your issues directly, we would welcome you to call us.
“What is Probate?”
Probate is the process by which the Probate Court identifies a decedent’s heirs and determines the validity of the decedent’s Will. It also identifies someone to be responsible for administering the probate estate (called an Executor if there is a Will or an Administrator if there is no Will), and supervises the administration of the decedent’s probate estate.
Technically, probate also includes guardianship petitions and administration. When people speak of “Probate” however, they are typically referring to the administration of decedent’s estates.
“What is the difference between probate and non-probate property?”
Generally, a “decedent’s estate” consists only of assets titled in the decedent’s sole name, payable to the decedent’s estate, and real property held as “tenants in common” with another person.
In certain instances, joint tenancy property may be a “probate” asset if the decedent included the survivor’s name on the account merely as a “convenience”, with no intent to transfer the property to the other upon death.
“Is probate always necessary?”
In Illinois, if the total amount of these assets of the decedent, in the aggregate, exceed $50,000, a probate estate must be opened.
Generally, if the estate is less than $50,000, a person (known as an “affiant”) may use a “small estate affidavit” to transfer such assets. A real estate titled in the decedent’s name, however, or as tenants in common, (either in Illinois or another state), generally cannot be passed using a small estate affidavit. Furthermore, an executor may choose to open a probate estate even if they are not required. An example of this would be if it is desirable to cut off creditor’s claims or to resolve a family dispute over the will.
Please note, that even if a probate estate will not be opened, if the decedent had a Will, it must be filed in the decedent’s last county of residence (concealing a Will can be a felony).
“What if the decedent owed money at death?”
Part of the probate process includes creditors being notified of the death. They must then file a claim for the amounts due and If the claim is approved by the executor, the bill is paid out of the estate. If the claim is rejected, creditors must sue for payment. If there are insufficient funds to pay debts, states have various statutes establishing who gets paid first. Executors are most likely to commence the sale of a property to pay off approved creditor claims. Any claims remaining are pro-rated.
“What about taxes?”
For federal and state tax purposes, a death will initiate two events:
* It ends the decedent’s last tax year for purposes of filing an income tax return.
* It establishes a new, separate entity for tax purposes, the “estate”.
For Federal tax purposes, it may be necessary to complete and file one or more of the following, depending on the decedent’s income, the size of the estate, and the income of the estate:
Final Form 1040 Federal Income Tax return.
Form 1041 Federal Fiduciary Income Tax returns for the estate.
Form 709 Federal Gift Tax return(s).
Form 706 Federal Estate Tax return.
For state purposes, an executor must file the appropriate state income tax return plus possible estate tax, inheritance tax and gift tax returns. In many states, gift, estate and inheritance taxes have been eliminated for most small and medium-sized estates.
The requirements for filing and payment vary widely from state-to-state.