The question of whether or not all property is subject to probate is often asked once someone has passed away. In this article, we explain what probate is, when probate is required in Illinois, what it means for an asset to be subject to probate, and what types of property do not need to go through probate in Illinois when their owner passes away.
Probate is a court case in which the court oversees the executor’s gathering of the assets of the deceased individual and the distribution of those assets to creditors, beneficiaries, and heirs. Probate is not required for every estate. For some foundational information about probate, check out our previous article: What is Probate?: An Introduction to Probate in Illinois.
An asset must go through probate if both:
If an asset is required to go through probate, this means that the distribution of that asset to creditors and/or heirs must be accomplished within the probate case, under the supervision of the court, and in accordance with the formalities of Illinois probate procedure. If an asset is not required to go through probate, it may be distributed immediately and directly to the beneficiary without the need for probate formalities.
There are some cases in which a deceased person’s property does not have to enter a formal probate proceeding. This occurs if the total value of the person’s estate is less than $100,000 and doesn’t include any real estate. In this instance, people who will inheriting the assets can use a simple Small Estate Affidavit to claim inheritance. For more detail on when probate is required, check out: When is Probate Necessary in Illinois?
Even if a probate case is necessary, certain assets may not be considered part of the probate estate and therefore do not need to go through probate. These include:
· Assets held in trust, such as a revocable living trust meant to avoid probate;
· Jointly titled property with a right of survivorship;
· Assets that are payable on death to a named beneficiary;
· Real estate that is subject to an Illinois transfer-on-death deed.
When property is held in a trust, it is not subject to a formal probate proceeding. Although the person who created the trust may have for all intents and purposes been the owner of the property, property held in trust is technically owned by the trust. Therefore, trust assets do not become a part of the deceased person’s probate estate. Trust assets are passed to beneficiaries of the trust according to the terms of the trust outside of probate, not according to the deceased person’s will.
Jointly titled property with a right of survivorship is property that is jointly owned between the deceased individual and another person and which grants the survivor between the two the right to automatically inherit the other’s share. This is most commonly seen in real estate owned by a husband in wife. In the context of real estate, the deed will explicitly state that the property is owned in joint tenancy with right of survivorship or in tenancy by the entirety (a special type of joint tenancy only available to married couples). Jointly titled property with right of survivorship passes directly to the survivor without becoming part of the deceased individual’s probate estate.
Some accounts, such as retirement accounts, life insurance policies and additional investment accounts, with a named beneficiary are not property eligible to go through a probate proceeding as long as the beneficiary is named and still living. Some financial institutions offer accounts that are “transfer on death.” This means that ownership of an account will automatically be transferred to the named beneficiary upon the original account owner’s death. However, these types of accounts may default to the probate estate if the named beneficiary dies before the owner of the account and if no successor beneficiaries are listed.
Recently, Illinois has introduced a transfer-on-death deed for real estate. This was designed to avoid probate and any disputes among who should become the owner of the real estate, and to facilitate a quick transfer of the property.