Recent Changes to Illinois Estate Planning 2025

Estate Planning Updates 2025

Power of Attorney Act

The Illinois Power of Attorney Act is the statutory authority for principals to name an agent, giving the agent the power to make decisions on behalf of health care and property.

The Act now provides that a third party is unreasonable in honoring a properly executed statutory short-form power of attorney for property. Two common reasons given are that the form is not the institution’s form or that too much time has passed since the document was originally executed.  

As of January 1, 2025, third parties must “honor a statutory short form power of attorney properly executed in accordance with the laws in effect at the time of its execution. The only proper grounds for refusal are based on any one of the following:  

1. “The power of attorney is not on a form the third party receiving such power prescribes, regardless of any form the terms of any account agreement between the account holder and third party require;  

2. There has been a lapse of time since the execution of the power of attorney;  

3. On the face of the statutory short form power of attorney, there is a lapse of time between the date of acknowledgment of the signature of the principal and the date of the acceptance by the agent;  

4. The document provided does not bear an original signature, original witness, or original notarization but is accompanied by an attorney-certified copy; or  

5. The document appoints an entity as the agent.”  

Reasonable causes for refusing to honor the Illinois Statutory Short Form Power of Attorney:  

1. “The refusal by the agent to provide an affidavit of properly executed Agent’s Certification and Acceptance of Authority, Successor Agent’s Certification and Acceptance of Authority, or Co-Agent’s Certification and Acceptance of Authority;  

2. The refusal by the agent to provide a copy of the original document that is certified to be valid by an attorney, a court order, or a governmental entity;  

3. The person’s good faith referral of the principal and the agent or a person acting for or with the agent to the local adult protective services unit;  

4. Actual knowledge or reasonable basis for believing in the existence of a report having been made by any person to the local adult protective services unit alleging physical or financial abuse, neglect, exploitation, or abandonment of the principal by the agent or a person acting for the agent;  

5. Actual knowledge of the principal’s death or a reasonable basis for believing the principal has died;  

6. Actual knowledge of the incapacity of the principal or a reasonable basis for believing the principal is incapacitated if the power of attorney tendered is a nondurable power of attorney;  

7. Actual knowledge or a reasonable basis for believing that the principal was incapacitated at the time the power of attorney was executed;  

8. Actual knowledge or a reasonable basis for believing: (A) the power of attorney was procured through fraud, duress, or undue influence, or (B) the agent is engaged in fraud or abuse of the principal;  

9. Actual notice of termination or revocation of the power of attorney or a reasonable basis for believing that the power of attorney has been terminated or revoked;  

10. The refusal by a title insurance company to underwrite title insurance for a gift of real property made pursuant to a statutory short form power of attorney that does not contain express instructions or purposes of the principal with respect to gifts in paragraph 3 of the statutory short form power of attorney;  

11. The refusal of the principal’s attorney to provide a certificate that the power of attorney is valid;  

12. A missing or incorrect signature, an invalid notarization, or an unacceptable power of attorney identification;  

13. The third party: (A) has filed a suspicious activity report as described by 31 U.S.C 5318(g) with respect to the principal or agent; (B) believes in good faith that the principal or agent has a prior criminal history involving financial crimes; or (C) has had a previous, unsatisfactory business relationship with the agent due to or resulting in material loss to the third party, financial mismanagement by the agent, or litigation between the third party and the agent alleging substantial damages; or  

14. The third party has reasonable cause to suspect the abuse, abandonment, neglect, or financial exploitation of the principal, if the principal is an eligible adult under the Adult Protective Services Act.”  

A financial institution can require both an Agent’s Certification and Acceptance and an Attorney’s Certificate of Validity.  

Additionally, naming someone as a power of attorney automatically makes that person a fiduciary, unless the document states otherwise.  

Trust Changes

A trustee must now retain trust records for a period of at least seven (7) years after the trust has been terminated.  

Trustees are also now required to search for any unclaimed or abandoned trust property prior to dissolving or terminating the trust.  

Small Affidavit Proposed Changes

As of now, the maximum amount for a small estate affidavit is $100,000.  A bill has been introduced that would raise that amount to $150,000. This is not yet the law.  

What is Estate Planning in Illinois?

Estate planning in Illinois is essentially a preparation plan that sets our what you want to happen in the event that you get sick, become physically or mentally incapable of making decisions for yourself, where you become physically or mentally incapacitated i.e. unconscious or in a coma, where you fall ill with a serious illness and want to make sure that your healthcare wishes and carried out, what happens upon your death, Lastly, what you want in respects to your financial and personal dealings if the aforementioned events occur.

Electronic Wills and Remote Witnesses Act

The Electronic Wills and Remote Witnesses Act initiates a new era of estate planning in Illinois. This Act allows for remote witnessing of wills, a significant development in today’s increasingly digital world. The testator can now execute their will remotely, providing property power to designated individuals, even if they are not physically present.

This Act includes the following amendments:

• Redefines the concept of ‘presence,’ allowing individuals in separate physical locations to be considered ‘present’
• Authorizes the creation of electronic wills
• Permits the attestation of wills through audio-video communication

These amendments guarantee proper documentation of life support decisions, enhancing the security of the estate planning process through health care power.

Estate Planning Tools in Illinois

There are many tools in the Illinois Estate Planning toolbox that can help you carry out your wishes upon your death or incapacitation:

1. Living Trusts- In Illinois A trust is a contractual binding agreement between the trust settlor (the person creating the trust) the trustee (the person that manages the trust for the trust settlor) and the trust beneficiaries (people benefiting from the trust). In Illinois there are several types of trusts such as revocable trusts, irrevocable trusts, testamentary trusts, and living trusts. We will only expand on living trusts in this article a living trust in Illinois is a way for you to receive money from the trust during your life and automatically upon your death the trust res will pass to the trust beneficiaries (this will avoid probate but cause tax consequences), or you may have the trust’s trustee manage the trust after your death for the trust beneficiaries who may have special or supplemental needs or where the trust beneficiaries should be given the trust at the trustee’s discretion. Similar to a Power of Attorney listed below, you may have someone manage your healthcare and property in the event that you become mentally or physically incapacitated. A trust does not need to be filed with the Probate Court because it is private, compared to a will which must be filed with the Probate Court.

2. Wills- In Illinois a will is a document that you the testator validly create when there are two competent witnesses who are of the age of majority present, in Illinois the age of majority is age 18, where the witnesses are in your presence, when you execute your will. The witnesses must sign the will along with yourself. A will dictates what will happen upon your death. It is mandatory in Illinois that a will is filed with the Probate Court upon your death.

3. Living Wills- In Illinois living wills are utilized when a person makes their wishes pertaining to medical care and treatment known to their healthcare professionals such as doctors and nursing home staff. A living will discusses your wishes and tells the doctor’s what to do in the event of a person becoming so ill or incapacitated that death is likely to occur. A person through a living will be able to decide whether or not they would like to have life-support, or other preventative life-saving procedures done in order to keep them alive in a situation where they are likely to pass away soon. A living will can be revoked at any time by the person who created it, in order for the revocation of the living will to be valid the person who is revoking the living will needs to inform the doctors and other health care providers notice of the revocation. The revocation will not be valid if the doctors and other health care providers do not receive notice of the revocation of the living will that they were originally informed about.

4. Remote Wills-Illinois recently changed its law under the Electronic Wills and Remote Witnesses Act, to allow for the testator to execute his will remotely using remote witnesses. The witnesses may witness the the will remotely via video conference. The will must state that the place of the execution of the will, is the State of Illinois. The two witnesses age 18 must be competent witnesses, the witnesses must also be present within the United States of America, the video stream must be clear reliable and stable so that the testator and the witnesses can see each other signing the will as it happens. There is also a requirement that the testator must complete a paper copy of the will being signed. There are other important requirements under Illinois law consult one of our highly trained Estate Planning Attorneys at O’Flaherty Law to help guide you through this new law, you can read more about that new law here.

5. Powers of Attorney- In Illinois there exists Property Power of Attorney for Property and Healthcare Power of Attorney.  In the Power of Attorney for Property scenario, a person acts on your behalf and in your best interests to manage your financial affairs. In the Power of Attorney for Healthcare scenario, a person acts in your best interests to your healthcare decisions. If you become ill or incapable of making decisions for yourself or incapacitated, you attorney-in-fact will act in your best interests and will have the authority and duty to act for you with respect to healthcare or financial decisions. Upon your death the Power of Attorney will be terminated.

6. Payable on Death Accounts- Payable on Death Accounts are financial accounts such as checking or savings accounts that pass to the named designated beneficiary or beneficiaries automatically upon your death.  

7. Life Insurance- Life insurance is a policy or contract between you and an Insurance Company, there are many different types of life insurance such as term life insurance which only lasts for a certain period of time, i.e. a set number of years, and whole life insurance which lasts for an entire lifetime. Upon your death the named beneficiaries of your life insurance policy will automatically receive the funds from the life insurance policy contract. It is important to note that life insurance policy proceeds are non-taxable  for income tax purposes, so your beneficiaries will not have to pay taxes on the life insurance proceeds that they receive.

8. Joint Tenancy Titled Property- In Illinois a joint tenancy titled property, two individuals are named on the deed to real property, upon the death of one tenant the Joint Tenancy will pass automatically to the surviving Joint Tenant.  

9. Small Estate Affidavit- A Small Estate Affidavit is used in Illinois when the decedent has less than $100K in cash, personal property, assets, and real property, at the time of his or her death. Probate Court can be avoided in these situations, probate is time consuming expensive and should be avoided when there is not a lot of assets or property within the decedent’s estate at the time of his or her death.  

Collaborating with an Illinois Estate Planning Attorney

A collaboration with an estate planning attorney can significantly streamline the estate planning process. A proficient attorney can help create precise and clear estate planning documents, ensuring your estate plan is robust and comprehensive. This section explores how to find the ideal attorney and the significance of nurturing an ongoing relationship with them.

An adept attorney can propose comprehensive solutions that address diverse aspects of your life, such as asset protection estate planning. They can provide invaluable guidance in navigating the complexities of estate planning and ensuring that your plan aligns with your wishes and needs.

It is a good idea to sit down and speak with an experienced attorney that will help guide you through the estate planning process. It is imperative that you plan for your future, many times we see clients die “intestate” which means without a will and that complicates things for your potential surviving spouse and heirs. Our experienced Attorneys at O’Flaherty Law are highly skilled and have many years of experience to help you navigate your way through the confusing process of estate Planning.  

Frequently Asked Questions

What are the proposed changes to the Illinois estate tax?

The proposed changes to the Illinois estate tax include increasing the exclusion amount to $8,000,000 for persons dying on or after January 1, 2023, up from the current $4,000,000. This change is effective immediately.

What is the inheritance tax exemption for 2023 in Illinois?

In 2023, the inheritance tax exemption in Illinois is $4,000,000 for estate tax purposes, whereas the federal exemption for Federal Estate Tax purposes is $12,920,000.

How long can an executor take to settle an estate in Illinois?

Probate in Illinois can take anywhere from months to years, with the process typically lasting around one year if there are no complications. Any remaining assets will then be distributed to the beneficiaries.

How much can you inherit without paying taxes in Illinois?

In Illinois, estates worth less than $4 million are not subject to state-level estate taxes. If the total value of the estate exceeds $4 million, it could be responsible for Illinois estate taxes.

How much does estate planning cost in Illinois?

In Illinois, the cost of estate planning can range from $500 to $7800 or more, depending on the complexity of your estate and the attorney's experience. It's important to consider the essential documents such as a will, trust, power of attorney, and health care directive in this cost estimation.