What is Probate Administration?
Most people die with a variety of assets – as well as debts – in their name. These assets and liabilities are lumped together upon your death, forming your “estate”.
Assets are divided into two groups, non-probate and probate. Probate assets consists of anything solely in your name at your death and are subject to the probate process. Non-probate consists of property that transfers on your death, such as transfer on death accounts, IRAs and insurance policies, which avoid the timely probate process.
When you die, your estate must be administered by a personal representative. In other words, someone is appointed to collect all your assets, pay all your debts, close all your accounts and distribute anything that is left over. You can choose who that person is, called an executor, if you have a will. If you don’t the court will appoint one for you, in this case known as an Administrator. There are two major risks behind a court appointed administrator. The courts choose your administrator by statutory guidelines, they don’t hold interviews. If you have a child who can’t remember where they put their own wallet, would you want them to manage the distribution of your estate. Even worse, an untrustworthy family member who could steal money from the estate might be appointed. A trust or even a simple will can help address this problem. Additionally, if you die without a will, your estate will take longer to continue. Without a personal representative, your estate cannot be distributed. If you name an executor in a will, your family can skip the time-consuming process of asking the court to name one of them administrator, and distribute your estate quickly.
Once a personal representative has been appointed, your estate will begin the timely process of administration. Your personal representative must obtain a variety of documents, including your death certificate, Letters of Office, and set up a bank account to hold your estate assets. Your creditors will be notified, and they will file claims against your estate. Before your beneficiaries can receive anything from you estate, your debts must be settled. To settle debts, your representative has the power to sell any of your property to obtain the required funds. Without a will, the old muscle-car you built for your son, or your grandmother’s pearl necklace may be sold to satisfy your deaths. Without a will, your personal representative may have no idea you would rather have your house sold to pay off your debts than pawn family heirlooms. The personal representative must follow a variety of duties when administering your estate, including:Duty to Provide Notice
The personal representative must give notice to all your heirs and legatees, creditors, and beneficiaries of the administration of your estate. If proper notice is not given, your estate will be subject to future litigation, no matter how long ago your estate was closed.Duty to Account
Meticulous records must be kept not only for what assets your estate holds, but the various costs and expenses the personal representative incurs on behalf of your estate. This can include funeral expenses, court costs, and professional fees, such as accountants or attorney fees. Keeping accurate accounting is a necessity to prevent possible claims of fraud or self-dealing.Fiduciary Duty
The personal representative has a fiduciary duty to your estate. Essentially, the personal representative is required to gather your assets, open and estate account to hold the assets, and to properly invest the assets while the estate is administered. Additionally, debts must be paid, and taxes must be filed. The personal representative cannot self-deal, or benefit from the estate in a way that would not be possible if they did not hold the title of personal representative. For instance, an executor should not be able to buy your home for a mere five dollars just because they have the power to do so. If the personal representative is not competent to handle an aspect of administration, such as filing taxes, they may hire professionals to assist them.
After all your debts have been settled, your estate will be distributed. If you die without a will, your property will be distributed according to Illinois law. Again, a multiplicity of problems arise. Your estate might be distributed to those you do not intend to receive any benefit. Your priceless heirlooms might be sold, not to pay debt, but so your estate can be divided equally. You might have litigious heirs, who will sue your estate because they want more than they will receive, greatly delaying the administration process.Contact Experienced Chicago Estate Planning Lawyers
The firm of Bellas & Wachowski Attorneys at Law can help you make the necessary estate planning decisions in a cost-effective manner. Contact Attorney Tracy Ries at firstname.lastname@example.org 847.823.9030 x221 for more information.