When a person (called a “decedent”) dies in Illinois without a will or other estate planning instrument, some of the decedent’s property may pass to his or her heirs pursuant to the Illinois rules of intestate succession. The Illinois rules of intestate succession are the default rules for inheritance in our state. This article will cover the following topics:
- A brief overview of the Illinois Probate Process;
- What property is subject to the Illinois Rules of Intestate Succession;
- The Illinois Rules of Intestate Succession.
A Brief Overview of the Probate Process
When a person dies in Illinois, the decedent’s debts must be paid and any property remaining must be distributed to the decedent’s heirs and/or legatees (people who receive gifts under a will).
There are two primary ways that an estate is administered in Illinois. The estate is either administered under the Illinois Small Estate Affidavit or through the formal in-court Illinois Probate Process.
The Illinois Small Estate Affidavit is typically available in estates where the probate assets are less than $100,000.00, the estate does not contain real estate, no fighting is expected, and formal probate has not been initiated. If the Small Estate Affidavit is not available, formal in-court probate is necessary.
In either case, assets are distributed in the following steps:
- Assets that are not probate assets pass outside of probate;
- Probate assets are used to pay claims in accordance with claim class priority; and
- Remaining probate assets are distributed pursuant to a will or the Illinois rules of intestate succession.
As one can imagine, there are many intricacies to administration, especially in formal probate court. I have linked to other articles below if you would like to learn more about the Illinois probate process or the Illinois Small Estate Affidavit.
When Is Probate Required in Illinois
The Illinois Small Estate Affidavit
Next, this article will address the types of property that pass outside of probate. Understanding this concept is necessary to understand what property will be subject to the Illinois rules of intestate succession.
What Property Is Subject to the Illinois Rules of Intestate Succession
When people ask questions about the Illinois Rules of Intestate Succession, they are usually trying to figure out whether they will inherit from a family member or who will inherit their assets when they die. Many people assume that if they do not have a will everything will pass through intestate succession, but that is seldom the case. In fact, for many middle-class people their most valuable assets will pass outside of probate and the rules of intestate succession because the property is not a probate asset.
Only probate assets pass through the Illinois rules of intestate succession. A probate asset is a property interest owned solely in the name of a decedent without a beneficiary designation. Non-probate classes of assets commonly include the following:
Property Owned Jointly
Property owned “jointly” or in “joint tenancy” with the right of survivorship is not a probate asset if there is a surviving co-owner. This property immediately transfers to the survivor upon the death of the decedent.
If the decedent is the last surviving owner of jointly owned property, the property will be a probate asset.
Jointly owned property is most commonly seen in real estate, bank accounts, and some investment accounts. Many times a decedent’s most significant assets are jointly owned (commonly with a spouse).
Note: Not all property with more than one owner is jointly owned. If the property is not titled “jointly” or in “joint tenancy” the decedent’s interest in the property will pass as a probate asset, even if the interest is only a partial share of the property.
Real Estate Owned in Tenancy by the Entirety
Tenancy by the entirety is almost the same as joint tenancy except it is a form of ownership that can only exist between spouses and can only be used to own the marital home. In addition to the right of survivorship, tenancy by the entirety offers some protection from creditors.
When the decedent dies, property owned in tenancy by the entirety immediately passes to the surviving owner (always a spouse).
Assets That Have a Named Beneficiary
Certain types of assets have a named beneficiary that is designated to receive the asset after the death of the owner. Theses are not probate assets and pass immediately to the named beneficiary upon the death of the owner.
However, there are two situations where this class of assets becomes a probate asset. First, if the beneficiary designation is left blank, which happens with striking regularity, the asset becomes a probate asset. Second, if the beneficiary dies before the decedent and there is no successor beneficiary, the asset becomes a probate asset.
Assets that commonly have a named beneficiary include life insurance, retirement accounts, payable on death bank accounts, investment accounts, and real estate under an Illinois Transfer on Death Instrument.
Property Owned in Trust
Property held in trust is owned by a nominal owner, called a trustee, for the benefit of one or more persons called beneficiaries. In many cases the trustee is also a beneficiary, but this is not always the case.
A trustee that is not also a beneficiary typically has limited legal rights and is not what people usually think of when they think of an “owner” of property. In many cases the trustee only has the power to do what the trust document tells him or her to do or, in other cases, what the beneficiary tells the trustee to do. If the non-beneficiary trustee dies, the trustee position is filled with a successor trustee and there is no transfer of the beneficial use of assets.
The beneficiary of a trust is what one would normally consider the “owner” of trust assets. The beneficiary typically has the right to use the asset and often also has the right to sell, lease, and mortgage the asset as well. When a beneficiary dies, the trust assets pass to the people designated as successor beneficiaries.
Trust assets are not probate assets because they are not “owned” by the beneficiary, the trustee is the owner.
Trust assets almost never pass through intestate succession because the trust is typically drafted and maintained by a lawyer. To discover how a trust asset is inherited the trust instrument must be analyzed.
Trusts are commonly used as a more flexible estate planning instrument than a will and they can contain any sort of asset. In Illinois, a special type of trust (land trust) can be used to hold real estate.
The Illinois Rules of Intestate Succession
As mentioned previously, the Illinois rules of intestate succession are the default rules that govern the distribution of probate assets when a decedent dies without a will. In general, the decedent’s property passes to the closest living relatives or the heirs of a close relative if that relative died before the decedent (for example, grandchildren receive their parent’s share of the grandparent’s estate if the parent died before the grandparent).
Understanding Per Stirpes Distribution
Illinois also uses a rule called per stirpes distribution. Understanding this rule is important to understand how property is distributed if a person that would have normally received assets died before the decedent. Under per stirpes each line of descent takes an equal share of the decedent’s estate. For example, David has no living spouse and has three children, Alice, Bob and Cara. Alice has no one child, Bob has two children and Cara has three children. Sadly, Alice, Bob, and Cara all died before David, but all of their children (David’s grandchildren) survived. When David dies with no will his probate assets will pass to his grandchildren. However, because Illinois uses the per stirpes rule, the grandchildren will not receive equal shares.
If David dies with $900.00 in probate assets, each of his children will receive $300.00. However, since all of his children died before him, each child’s share will be split equally among that child’s children. Because David’s children each produced a different number of grandchildren, each grandchild’s share will be different (the grandchildren divide their parent’s share rather than the whole pool being divided among the grandchildren). Thus, Alice’s single child will receive the full $300.00, Bob’s two children will each receive $150.00, and Cara’s three children will each receive $100.00.
Examples like this demonstrate the criticism of per stirpes distribution. Each grandchild shares an equal level of relatedness with the decedent, but their share of the probate assets are vastly different due to the fact that they had more or fewer siblings. Because of this, some states have adopted per capita distribution – which distributes an equal amount to each person in a generation. Unfortunately, Illinois still follows the per stirpes rule.
The Rules of Distribution
The Illinois rules of intestate succession are set forth in 755 ILCS 5/2-1. In most estates the rules are pretty simple. Things get a little more complicated when a decedent dies leaving no close heirs or a complicated family structure.
Level 1 spouses, children and descendants
One of the quirks the Illinois rules of intestate succession is that if a person dies with a spouse and children the spouse does not receive everything. Many people do not complete estate planning documents because they think their husband or wife will inherit all assets when they die. The children (no matter how young) of a married person will receive half their estate when they die. This causes particular hardship when the children are very young because an estate must often be set up and the young children cannot gift the assets back to their mom or dad until they are 18.
Spouse only: If the decedent dies leaving a spouse, but no descendants (children, grandchildren, great-grandchildren ect.), the spouse inherits everything.
Spouse and descendants: If the decedent dies leaving both a spouse and descendants half the decedent’s assets go to the spouse and half to the descendants, per stirpes.
Descendants only: If the decedent dies leaving only descendants, all assets go to descendants, per stirpes.
Level 2 siblings and parents
Parents or siblings, but no spouse or descendants: If the decedent dies leaving no spouse and no descendants, but leaving parents or siblings, the estate goes to the parents and siblings in equal shares. However, if one parent dies before the decedent, the surviving parent receives a double share. If a sibling died before the decedent, that sibling’s share goes the that sibling’s descendants, per stirpes. If the sibling that died before the decedent has no descendants, then that share is distributed among the parents and other siblings.
Level 3 grandparents and descendants of grandparents
Grandparents, but no spouse, descendants, parents or siblings: If the decedent dies leaving a grandparent or descendants of grandparents (aunts, uncles, cousins), but no spouse, descendant, parent or sibling, half the estate goes to the maternal grandparents in equal parts, or to the surviving maternal grandparent if only one is living, and half the estate to the paternal grandparents in equal parts, or to the surviving paternal grandparent if only one is living. If there are no surviving grandparents on the maternal side, that half of the estate goes to their descendants, per stirpes. If there is no surviving grandparent on the paternal side, that half of the estate goes to their descendants, per stirpes. If this is no grandparent or descendant of the grandparents on one side, the entire estate goes to the other grandparents or their descendants, per stirpes.
Level 4 remote relatives
It is very unusual to have to go beyond grandparents and their descendants to find an heir to an estate. If this is necessary, the representative of the estate continues to go back a generation (great-grandparent, great-grandparent ect.). With respect to familial heirs, the Illinois Rules of Intestate Succession ends by stating that the estate goes to the nearest kindred in equal parts and equal degree. Contrary to popular belief, the decedent truly has to have no living relatives, no matter how remote, for their estate to go to the government.
Level 5 the state
If there is no surviving spouse or known kindred, the decedent’s real estate goes to the county in which it is located. The personal estate physically located within the state or outside the state, but subject to ancillary administration, goes to the county in which the decedent was a resident at the time of death. All other property goes to the state.
Summary
The Illinois rules of intestate succession regulate the distribution of probate assets owned by the decedent in situations where the decedent did not have a will or advanced estate planning. To determine how assets will pass, non-probate assets, such as jointly owned property, property held in trust, and property with a named beneficiary, must be subtracted from the estate and then the Illinois rules of intestate succession are applied. The rules generally direct assets to the closest living relatives or their descendants, though it is important to keep in mind that in Illinois a decedent with a spouse and children splits his or her assets between them (everything does not go to the spouse).
If you recently lost a close family member and need help administering their estate (either through the full probate process or via an Illinois small estate affidavit) you can click this link to request a consultation with an attorney.