If the decedent left a Will (referred to as dying “testate”), the person who manages the estate is called the executor. If the decedent had no Will (referred to as dying “intestate”), the person managing the estate is called the administrator.
WHO SERVES AS PERSONAL REPRESENTATIVE?
An executor is nominated by the decedent in the Will. If there is no Will, an administrator is nominated, generally by the decedent’s family. Individuals, banks, and trust companies can serve as executors or administrators. An administrator must be a resident of Illinois. An executor must be a resident of the United States but does not have to be an Illinois resident. Each executor or administrator must be approved and appointed by the court.
WHAT ARE THE RESPONSIBILITIES OF A PERSONAL REPRESENTATIVE?
The duties and responsibilities of a personal representative, either an executor or administrator, can be generally described as gathering and protecting the assets, paying the legitimate creditors, and distributing the remaining assets pursuant to the terms of the Will, or if there is no Will, to the heirs pursuant to the state statute.
Opening the Estate
Once a person dies, the person in possession of the Will is required by law to file the Will with the circuit clerk within 30 days of the date of death. Then the person nominated as executor is responsible for asking the court to probate the Will.
Not all Wills need to be probated. For example, in 2015, if the assets subject to probate are less than $100,000, under certain circumstances, a small estate affidavit can be used to avoid probate.
Duties with the Court
Executors and administrators have certain duties to the court:
• To send out legal notices.
• To inventory the estate’s assets.
• To resolve the claims of creditors.
• To petition the court as necessary in the management of the estate’s assets.
• To provide accountings and receipts as needed.
• To make disbursements and distributions.
Duties as to Property
Executors and administrators have certain duties as to estate property:
• Collect and inventory all assets of the estate (including assets in a safe deposit box).
• Preserve, manage, and insure assets during the probate administration.
• Manage the decedent’s business as needed.
• Obtain valuations and appraisals of assets.
• Sell property that is not distributed in kind.
• Collect life insurance benefits as needed.
• Pursue claims in favor of the estate.
• Defend claims against the estate.
• Transfer assets as needed (like stocks, bonds, and bank accounts).
• Distribute the estate in accordance with the terms of the Will or, if there is no Will, distribute to the heirs pursuant to the state statute.
• Keep records of money coming in and all money going out.
• File the decedent’s final income tax return.
• File the necessary income tax returns as fiduciary for income and expenses generated during the course of administration.
• File gift tax returns as needed.
• File an Illinois estate tax return if required.
• File a federal estate tax return if required.
• Provide for the payment of all taxes.
• Provide beneficiaries with appropriate tax information.
WHAT IS JOINT TENANCY?
Joint tenancy is a common form of ownership for property. Husbands and wives often have residences and bank accounts in joint tenancy. It is used less frequently with non-spouses for a variety of reasons.
In most cases, the estate of someone who dies owning property must be “probated.” This is the Court supervised process by which a decedent’s property is transferred to those who are to receive it. The process typically begins with the Court naming a “personal representative” who takes charge and reports to the Court as the decedent’s wishes are fulfilled.
WHAT IS A PERSONAL REPRESENTATIVE?
A personal representative manages the decedent’s estate. Executors and administrators are personal representatives.
Each joint tenant, regardless of which one purchased or originally owned the property, has the right to use the jointly owned property. When two people own property in
joint tenancy and one of them dies, the survivor becomes the 100% owner of that property and the deceased joint tenant’s interest terminates. The surviving joint tenant then owns the property free of
any claims by the heirs of the joint tenant who died, unless certain limited exceptions apply.
Joint tenancy shouldn’t be relied on as a substitute for a Will. It doesn’t cover unanticipated contingencies nor does it provide a comprehensive plan for the disposition of one’s entire estate as does a Will.
IS JOINT TENANCY THE ONLY WAY TO HOLD TITLE TO PROPERTY WITH
No. Two or more persons may also own property as tenants-in-common or tenants by the entirety. Tenants-in-common, like joint tenants, each have the right to use and share in the income from the property. But there is no right of survivorship with tenants-in-common. When a tenant-in-common dies, his or her interest passes to his or her estate and not to the surviving co-tenant. The property passes, instead, as part of the estate to the heirs, or the beneficiaries under a Will.
Tenancy by the entirety allows a husband and wife to hold their primary residence free of claims against only one spouse. As with joint tenancy with the right of survivorship, in the case of tenancy by the entirety, at the death of the first spouse/owner, the surviving spouse/owner automatically becomes the sole owner.
PAYABLE ON DEATH
If an asset is registered to “A payable on death (POD) to B,” the asset is not owned in joint tenancy. Rather, the asset is payable to B on A’s death, but B has no rights during A’s lifetime.
Illinois has adopted a statute that allows financial accounts, such as with a brokerage firm, to be registered as transfer on death (“TOD”). These are similar to a payable on death account. At the death of the owner, the assets in the account are transferred to the designated beneficiary.
TRANSFER ON DEATH INSTRUMENT
Illinois has recently adopted a statute that allows certain real estate to be transferred on death through a “Transfer on Death Instrument.” It is similar to a “POD” designation described above. The beneficiary of the transfer on death instrument has no interest in the real estate until the death of the owner.
WHAT ARE SOME OTHER FEATURES OF JOINT TENANCY TO BE CONSIDERED?
• All joint tenants must agree to the sale or mortgage of the property.
• Any one joint tenant may withdraw all or a part of the funds in a joint bank account.
• The creation of a joint tenancy has important legal consequences. Estate, gift or income taxes may be affected.
Joint tenancy may have other consequences. For example: (1) if property of any kind is held in joint tenancy with a relative who receives welfare or other benefits (such as social security bene fits) the relative’s entitlement to these benefits may be jeopardized; (2) if you place your residence in joint tenancy, you may lose your right to advantageous senior citizen real estate tax treatment; and (3) if you create a joint tenancy with a child (or anyone else) the child’s creditors may seek to collect your child’s debt from the property or from the proceeds of a judicial sale.
IS JOINT TENANCY A GOOD OR BAD IDEA?
Joint tenancy is useful in the right cases. However, joint tenancies are not a simple solution to estate problems but can, in fact, create problems where none existed. The costs of preparing a Will, tax planning, and probate may be of little significance compared with the unintended problems that can arise from using joint tenancies indiscriminately. For a full explanation of the advantages and disadvantages of joint tenancy in your particular situation, you should consult a lawyer. With his or her advice, you will be able to make an informed choice of the best way to accomplish your objectives.
Lageotakes Law Firm
Thomas Lageotakes, Attorney & CPA
1699 E Woodfield Rd Suite 400
Schaumburg, IL 60173
111 E Jefferson Ave
Naperville, IL 60540
Chicago office by appointment only: Coming soon
Phone: 224 324-4400
Phone: 630 753-8035 630 753-8035
From our office in Schaumburg and Naperville, Illinois, we handle matters in areas of DuPage County, Cook county, Will County, and Kane County including Aurora, Barrington, Bartlett, Carol Stream, Hoffman Estates, Naperville, Oak Brook, Roselle, Schaumburg and Streamwood.
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