In this article we will explain how an executor of an Illinois probate estate should handle real estate assets of the deceased. We answer the questions "what is an inventory of an estate?", "when does real estate have to go through probate in Illinois?", and "how should an executor distribute real estate in an Illinois estate?" We discuss how to find out what real estate a deceased individual owned, what to do with a decedent's real estate during administration of an estate, and notice of probate for real estate in Illinois.
For more on administration of Illinois estates generally, check out our article: How to Administer an Estate in Illinois.
One of the duties of an executor or administrator of an estate (known as a “personal representative”) is to create an inventory of the deceased individual’s property. The inventory includes a description of the property as well as the property’s fair market value. This inventory is provided to creditors and beneficiaries of the estate. If the estate is under supervised administration, the inventory is also filed with the court.
The first step in administering the real estate owned by a decedent (the deceased individual) is to determine what real estate he or she owned. This is not always easy. The personal representative should search for items like a deed, real estate tax bill or mortgage statement. He or she may also review the decedent’s income tax return to look for mortgage interest deductions or real estate tax deductions.
The attorney for the personal representative can also run a title search through the County Recorder’s office for the decedent’s name or the names of any known trusts, which may be the entities on title for certain properties.
Illinois law provides that the personal representative is required to take possession of all of the real estate of the decedent except real estate that is in the possession of heirs or beneficiaries of the estate. While the estate is being administered, the personal representative should maintain the real estate as an owner would. This includes paying utility bills, performing repairs, and providing for lawn mowing and landscaping.
The personal representative can take possession of real estate occupied by an heir or beneficiary if decedent’s will explicitly directs him or her to do so or if sale of the real estate is necessary for payment of claims against the estate, the expenses of estate administration, or distribution of the estate.
If the personal representative does not sell or transfer the decedent’s real estate during administration of the estate, the personal representative must file a notice of probate with the County Recorder’s office in the county in which the real estate is located.
Before selling or transferring real estate from the estate, the personal representative should notify any lenders with mortgages on the property to determine whether the mortgage contains an acceleration clause that requires the estate to pay the mortgage upon transfer.
Generally real estate must be included in a probate estate if the decedent owned the property in his or her individual name. If the property is owned by a trust, the property can be distributed according to the terms of the trust without becoming part of the probate estate. If the property is owned jointly with another person and deed states that the other person has rights of survivorship over the property, then the survivor will inherit the real estate automatically without the need for probate.
If the will provides that the real estate should go to a particular individual or group or individuals, the deed to the real estate should be transferred to those beneficiaries, assuming that there are enough other assets to pay claims against the estate.
If the will is silent on the subject, then the baseline action that the personal representative should take is to sell the property for fair market value and use the proceeds to first satisfy the estate’s debts, taxes, and other expenses and then distribute the remaining proceeds to heirs and beneficiaries according to the terms of the will or Illinois’ intestate laws.
However, before selling any real estate, we recommend working with the heirs and beneficiaries of the estate to build a consensus as to whether the real estate should be transferred to one or more of the heirs or beneficiaries rather than sold. The heirs may agree that the recipient of the real estate shall receive a reduced share of the remainder of the estate or purchase the real estate directly from the estate. In these cases the personal representative should obtain the signed agreement of all heirs and beneficiaries the transaction.
O'Flaherty Law is happy to meet with you by phone or at our office locations in: