This article was published in the Southland Voice earlier this Month
“I need to do a will” is one of the most common call ins I get into my office. It’s a sentiment I rarely disagree with. I’ve written before that I believe everyone should have a will for a variety of reasons. Often times, however the reasons I think someone should have a will are very different from the reasons they think they should have a will and my ideas for their estate plan are very different. Most people realize that a last will and testament directs what’s to be done with one’s “estate”, one’s possessions after they pass away. The estate, however, is somewhat more than just a collection of items that one had when they pass away, and truth be told, many items one had may not ever be part of the estate. To explain, the estate is a legal entity that comes into being when one passes away. The estate can administer property, sue on behalf of the decedent, be sued on behalf of creditors for actions undertaken by the decedent, and stand in for the decedent for some limited proceedings.
The will controls how assets owned by the estate are to be distributed but many items are never considered part of the estate. For example, accounts with beneficiary designations, such as pensions, life insurance, 401(k)s, and IRAs are set up to be transferred upon the death of the account holder and are never considered part of the estate. Property held in trust is also not considered part of the estate because the decedent didn’t actually own it. Finally, proper estate planning can give beneficiary designations to certain stocks, cash accounts, and even residential housing if you consult with an estate planning attorney. The goal for most estate planning is to keep the value of one’s estate under $100,000.00 because that is the statutory limit for when an estate must go through the court probate process which is both time consuming and expensive (but if you think an estate must be probated it’s wise to consult with an attorney). Real property not effectively planned for, such as a house, must go through probate as well even if the value is under $100,000.00 (there are some ways to avoid this though, given certain circumstances). The goal of estate planning is to take inventory of not just what one has, but also what would be considered part of the estate, and plan for the distribution of those items in the most efficient manner possible.
The other issue regarding an estate is who speaks for it. Most wills will appoint a trusted family member (or bank/attorney) to be the executor of the estate, but that alone doesn’t give someone full control of the property with no accountability. The executor has a duty to all heirs and people named in the will to make sure they get their inheritance. Therefore an executor has to give a bond to the probate court as collateral to make sure they don’t steal from the estate. A will can waive the cash portion of this bond, referred to as a surety, but the executor must still give their oath and can be liable if assets are stolen, squandered, or otherwise misappropriated. This oath must be followed even if the estate doesn’t end up in probate so an executor is always accountable.
This is an extremely basic overview of the process but it can frequently become more complicated, particularly if the will gets contested. There is a lot of misinformation regarding this area of law so consulting with an attorney is critical. My office serves the Chicagoland area and I’m always happy to discuss your problems. Lythberg Law can be reached at 815-239-0200 or by email at email@example.com. Consultations are free. Thank you.