Wills, Probate, & Trusts
A will is a written and signed document by which an individual directs the eventual distribution of his or her property after death. In this context, the word property is a reference to such assets that are owned by the maker of the will (the testator) individually without any beneficiary designation, joint tenancy status, or payable on death (POD) status. Assume that a person holds a bank account in his and his wife's name as joint tenants; if that person dies and his wife survives him, she succeeds to the account without any intervention of the will; the joint tenancy statute of the state dictates that the account becomes the property of the surviving joint tenant. Using another example, assume that the husband survives his wife and succeeds to the individual ownership of his and his wife's jointly held assets; such assets, while continuing to be in the joint registration, will be deemed as the husband's individually held assets and subject to probate upon his death in other words, subject to the terms of his will.
Probate and Requirements for a Valid Will
When is there a need for probate? Often, a surviving family member is named as a beneficiary under the terms of a deceased party’s will. Such person may believe that he or she becomes the owner of whatever the will ostensibly leaves to him or her; for example, the will states that the executor is to make a specific gift of the residence to a certain brother or sister; in order to gain control of the residence, the named beneficiary will have to have the will probated in order for legal title to the residence to pass to the named beneficiary. “Probating” is to prove the will, to prove that the will is a valid and enforceable document and that the execution of the document meets the requirements of the particular jurisdiction; in Illinois, this would mean that the testator has reached majority (is not a minor), is of sound mind and memory, and that at least two adults have witnessed his signing of the document. It is recommended that the witnesses are in the same room with the testator and that they actually observe the signing of the will by the testator.
In Illinois, if you have a document which on its face appears to be the will of a deceased party, you have the obligation to file such document with the Clerk of the Circuit Court for the county of the decedent’s residence. This does not mean that you or another interested party has to probate the will. Assume that the decedent has $500,000 in assets held in an account jointly with his surviving spouse, even though the decedent’s name is on the account, there is no need to probate the will since all of the assets (the $500,000) will pass to the wife as the surviving joint tenant; What if the overall estate value of all types of property is in the area of $1,000,000, but only $80,000 thereof is registered in the individual name of the decedent? The surviving spouse can use an “Illinois Small Estate Affidavit” (an “ISEA”) as a means of effecting the desired transfer of the asset to the proper beneficiary named in the will and there is no need here to go through probate. The ISEA is a form of probating the $80,000 asset without the need for going to court. Think of a will as the unilateral and personal document of the testator while he is alive with no involvement of other parties (such as a trustee); additional parties only get involved after death, as perhaps the executor of the will or a trustee named to such capacity in the body of the will. The executor is an individual or an entity (such as a bank) that is named by the testator to such capacity under the terms of the will; assuming the person or entity named is willing to serve, such person or entity so named will in most instances be appointed by the probate court upon petition of an interested party. Once appointed by the court, the executor has the duty and the authority to carry out the terms of the will (pay the debts of the decedent, pay estate administrative costs, and then distribute the balance of the estate to the proper beneficiaries who are named in the will).
There may also be the need to probate the estate of an individual who does not have a will. Such individual may have individually owned assets that can be transferred to his heirs at law only by operation of the probate process. In such situation, an interested party may petition the probate court for the opening of the individual’s estate and the appointment of an administrator to handle the administration and eventual distribution of the estate to the heirs of the deceased individual pursuant to the jurisdiction’s laws of descent and distribution.
Unlike a will, a trust is an agreement between the settlor of the trust and the trustee; the settlor lays out the terms of the trust such as the administration of the trust assets during his life and thereafter; for example, Individual A transfers $500,000 to you in trust and you are to hold and administer such funds pursuant to the terms set forth in the trust agreement by Individual A as settlor; during Individual A’s lifetime, you are to distribute income earned in the trust to Individual A and principal only at your discretion; upon the death of Individual A, you as trustee would look to the terms of the trust for guidance as to the ongoing administration of the trust and the eventual disposition of the trust assets., (i.e., distribute to you if you survive Individual A, otherwise such assets to be held in trust by a successor trustee for eventual distribution to your children at specified times upon reaching certain ages).
The example above is a ‘living trust” because the settlor established the trust while he or she is still alive; a “testamentary trust” is one that comes into existence only upon the death of the settlor; i.e., a person has a $1,000,000 in his estate; he has a will that directs his executor to distribute all of the net estate to a person or entity (bank) as trustee and to hold the $1,000,000 and administer such funds per the terms of the trust. Such terms are set forth in the will, not a separate document as in the case of a living trust. This is a “testamentary trust” since the testator directs the executor of his will to establish the trust from estate assets after the death of the testator.
Perhaps the most common type of trust is the so-called “living trust” in which an individual names himself as trustee. This is often referred to as a “self-declaration of trust”. This type of trust often becomes the “will substitute” document, since it is intended to take the place of a will and allow for the avoidance of probate. A frequent problem in this area is the failure of the settlor to actually transfer his assets into his name as trustee, an oversight that often results in requiring a probating of such assets in order to have legal title thereof transferred to the successor trustee after the death of the settlor. The transferring of assets into the trustee registration can often be far more time-consuming than the actual drafting and execution of the trust. The term “living trust” is inclusive with the term “trust”. It is important to understand that a will is just a piece of paper until it is “probated” which is to say “proven” to be the actual will of the decedent with such requirements of proof as specified in the jurisdiction of the decedent. In Illinois, the testator needs at least two adult witnesses who, in the presence of the testator, see the testator sign the document and can attest to his or her being of sound mind and memory, are of legal age, and are under no constraints or undue influence. With a trust, you have an agreement between the settlor and the trustee.
This section is provided to offer some basic answers to questions people often have. Please consult with a Family Law Attorney for specific answers and advice relating to your particular circumstances.