Disclaimer: This article is for educational purposes and does not constitute legal advice. Please consult a licensed attorney in Illinois for guidance specific to your situation.
Detailed Answer
Under Illinois law, certain assets pass automatically to beneficiaries at death without the need for probate. These include real property held in joint tenancy with rights of survivorship, bank or investment accounts with payable-on-death (POD) designations, life insurance proceeds paid to named beneficiaries, and retirement accounts governed by beneficiary designations. Such assets bypass probate because state statutes or contractual agreements create automatic transfer mechanisms at death.
1. Assets That Bypass Probate
- Joint Tenancy with Rights of Survivorship: Real property owned as joint tenants automatically vests in the surviving co-owner(s). (See 765 ILCS 1005/1.)
- Payable-on-Death (POD) Accounts: Bank and investment accounts bearing a POD or transfer-on-death (TOD) designation transfer directly to the named beneficiary.
- Life Insurance and Retirement Plans: Proceeds paid to designated beneficiaries under policy terms and federal ERISA rules.
- Trust Assets: Property placed in a valid living trust passes per the trust document without probate. (See 760 ILCS 5/102.)
However, any real property titled solely in the decedent’s name does not carry a beneficiary designation or survivorship right. That property must go through probate. Under the Illinois Probate Act (755 ILCS 5/4-1), probate is the court-supervised process to:
- Validate the decedent’s will (755 ILCS 5/6-2).
- Inventory and appraise the estate’s assets.
- Pay valid creditors, taxes, and expenses.
- Obtain court orders to transfer title of real property to heirs or devisees.
2. Why Probate Solely Owned Real Property
A probate court issues letters testamentary or letters of office that authorize an executor or administrator to convey property. Title companies and county recorders demand these letters to clear the chain of title. Without probate, buyers, lenders, and successors cannot ensure there are no outstanding claims against the property.
3. Simplified Procedures for Small Estates
If the total probate estate in Illinois is valued at $100,000 or less and does not include real estate, heirs may use the small estate affidavit procedure to collect assets without formal probate. (See 755 ILCS 5/24-1.) Note that this streamlined process does not apply to real property.
Helpful Hints
- Review how your property is titled and consider joint tenancy if appropriate.
- Add payable-on-death or transfer-on-death designations to bank and investment accounts.
- Use beneficiary designations on retirement plans and life insurance policies.
- Consider a revocable living trust to hold real estate and avoid probate.
- Consult an Illinois probate attorney early to understand court procedures and deadlines.