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Small Estate Administration Can Be Simple

Handling an estate for a loved one who has passed can be a real headache, but someone needs to do it. If the loved one has done his estate planning, the process will be easier than it would be if he has done nothing. Most estates, however, have to go through “probate”, and the probate process is not quick, or easy or cheap. The probate process can particularly be a burden on small estates.

The probate process takes about nine (9) months. Maybe more, maybe less. For starters, probate is a court process. It requires hiring an attorney. It starts with a petition that is filed in court. The administrator (or executor) must be approved by the judge. Then, notices must be mailed to all the heirs, all the legatees (people named in a Will) and to all the known creditors. Notice must also be published in a newspaper once a week for three successive weeks. Then a six-month claims period must pass before the process of winding down the estate can begin.

The good news, however, is that small estate administration can be simple!

For years, the State of Illinois has provided an alternative mechanism for handing small estates. A person has a “small estate” when the total value of the personal property (subject to probate) is less than $100,000.  Property is “subject to probate” when it doesn’t have a built in mechanism to pass on at death to someone else. The small estate threshold is determined by the total value of the personal property (in other words, excluding real estate).

Two years ago, prior to a legislative change, small estate administration was not available if the decedent (deceased person) had any debts. Beginning January 1, 2015, however, the Legislature eliminated the no debt requirement. The amendment opened up the possibility of small estate administration for many more estates.

Small estates can be handled by any adult willing to sign a Small Estate Affidavit and to be personally responsible for the administration of the estate. Caution should be noted. The affiant (person signing the Affidavit) is considered a fiduciary. That means the affiant owes duties to the estate, the beneficiaries of the estate and the creditors of the estate. The fiduciary duty makes the affiant personally liable if the estate is mishandled to the detriment of someone else.

For that reason, anyone who plans to take on the responsibility of handling a small estate (or any estate for that matter) needs to understand the legal duties that are required. The fiduciary duty should not be taken lightly. Getting legal advice is highly recommended. With small estates, unlike probate estates, no judge will look over your shoulder to make sure things are done properly.

In the probate process, many requirements must be followed that are designed to ensure that all interests are protected. Those requirements also protect the administrator who follows them. The requirements include preparing an inventory, an accounting and other paperwork that provides a record of the entire estate. The process ensures that all issues are addressed and the property, ultimately, is transferred to the people who have a legal right to receive it without fear of competing claims. The probate process is platform for making sure that all interests and claims get resolved.

If there are any known disputes, threatened claims or uncertainties, probate might be a good idea even with s small estate.

The person who handles an estate pursuant to a Small Estate Affidavit takes on the responsibility to pay off the debts and to distribute the estate to the rightful recipients. The debts and the ultimate recipients of the estate after all the debts are paid must be listed in the Affidavit. This is part of the fiduciary duty. Anyone with an interest in the estate can challenge what is done in court.

Usually, a close family member is willing to step forward. Often, the person who takes on the responsibility of the Small Estate Affidavit is someone who already knows the decedent’s affairs, who the heirs are and has a good idea of who the creditors are (or where to find out). Unless the estate is complicated with disagreeable relatives, unknown creditors or large debts, a Small Estate Affidavit is the simplest, cheapest way of handling an estate.

Banks and other third parties who have possession of the decedent’s assets are allowed by the law to honor a Small Estate Affidavit that is presented to them. Most of them will allow access to the decedent’s assets, including any safety deposit box in the decedent’s name, without question. The Affidavit, itself, must follow the statutory form that states that signor of the Affidavit indemnifies and holds harmless anyone who relies on it from any losses based on that reliance.

The affidavit allows the signor to pay all the debts of the decedent and to distribute the remaining assets to the lawful recipients without the delay, cost and burden of a probate proceeding. This is good news for many people who have lost a loved one who leaves behind a modest (“small”) estate.

Kevin G. Drendel
Drendel & Jansons Law Group
111 Flinn Street
Batavia, IL 60510
630-406-6179 fax
[email protected]