In this article, we explain alternatives to probate in Illinois. We explain Illinois Small Estate Affidavits, summary administration of Illinois estates, and using a Bond in Lieu of Probate to administer an estate. We also answer the questions: “what is probate?”, “when is probate required in Illinois?”
Probate is a court case that is sometimes necessary to give the administrator of a deceased person’s (known as the “decedent”) estate the power to handle the decedent’s assets, pay the decedent’s debts and distribute the balance of the estate to the decedent’s heirs and beneficiaries. For more, check out our article: The Illinois Probate Process Explained.
In a probate case, the court oversees the executor or administrator (known as the “personal representative”) of the estate in the distribution of assets. The personal representative is required to provide certain notices and reports to creditors and beneficiaries of the estate.
Probate is generally required in Illinois when the decedent owned at least $100,000.00 in assets or any real estate assets (regardless of value) outside of a trust, joint ownership with right of survivorship, or an account that is automatically payable to a direct beneficiary upon death. For more on this, check out: When is Probate Required in Illinois?
If probate is not required, the personal representative may administer an estate through three alternative methods that we will discuss in more detail below.
Estate administrators can avoid opening a probate case and instead administer an estate without court oversight by using a Small Estate Affidavit if all of the following are true:
The affidavit requires the administrator to swear in writing that all of these conditions are met and to set forth how the assets of the estate will be distributed. The administrator will be legally empowered to collect and distribute the decedent’s property by presenting financial institutions with a copy of the Small Estate Affidavit, a copy of the death certificate, and a certified copy of any existing will.
The advantages of using a Small Estate Affidavit to administer estate as opposed to a probate case are that court appearances are not required, attorney costs are much lower, and assets can be distributed immediately as opposed to the lengthy wait for the resolution of a probate case.
The disadvantages of using a Small Estate Affidavit is that, unlike probate, creditors claims are not cut off if not filed within a 6 month deadline, disputes between beneficiaries are not necessarily resolved as part of the initial estate administration, and the administrator may incur personal liability after the fact if the assets are not distributed properly.
Summary administration is a rarely used technique that allows an estate to be administered through a court proceeding without appointing a personal representative. However, summary administration is only available in similar circumstances as the use of a Small Estate Affidavit.
Summary administration has all of the disadvantages of administering an estate through a small estate affidavit, with the additional disadvantage that the administrator must publish notice, provide surety bonds, and pay an attorney to prepare court documents and appear in court. Because summary administration requires most of the hassles of a full-blown probate case without any of the liability protection, there are very few situations in which it is the best option for estate administration, and we will not spend any more time discussing it here.
Using a Bond in Lieu of Probate i is helpful if the decedent’s assets slightly exceed the general requirements for administration via Small Estate Affidavit. When using this technique, the personal representative purchases a bond from an insurance company. This acts as insurance against the personal representative distributing the estate incorrectly.
Financial institutions and title companies may be willing to accept this bond, rather than the letters of office issued in a probate case, as security against liability for transferring the decedent’s assets to the personal representative for distribution. However, financial institutions are not required to accept a Bond in Lieu of Probate.
Because each financial institution will require a separate bond, and because Bond in Lieu of Probate carries all of the liability risk of administering an estate through a Small Estate Affidavit, using a Bond in Lieu of Probate only makes sense if:
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