Upon Death Do My Assets Automatically Transfer to My Spouse or Children?
In Illinois, for those passing away without any estate planning, the rules of descent and distribution govern who inherits the assets of the deceased. Considering that less than 50% of Americans have a Will, it is not unusual for the rules of descent and distribution to apply to an estate. But the rules of descent and distribution are a dangerous prospect – the pattern of distribution is often not the intended distribution of the decedent. It is always recommended to have a Will regardless of assets and income, and often a Trust is a great option in addition to the Will. But in the event a person fails to create one, the following rules will govern for Illinois probate estates.
Illinois Rules of Descent and Distribution, 755 ILCS 5/2
The rules of descent and distribution are determined upon a person’s death based on the existing family members. Assets are distributed in the following order among the following family members:
The rules of descent and distribution continue to more distant relatives in the event that closer relatives do not exist. It is usually unlikely that assets will pass to more distant relatives, but it occasionally does happen.
What if I Do Not Want Assets to Pass to My Family in This Order?
A large majority of people would rather have one hundred percent of their assets pass to their spouse upon death rather than splitting the assets with the children. The idea is that the surviving spouse will need the assets to survive, and only upon the surviving spouse’s death should the assets go to the spouses’ children. But this is not what the rules of descent and distribution do. Instead, they force the split of assets among the surviving spouse and the children or descendants. This can leave the surviving spouse destitute- unable to afford much needed living expenses, healthcare expenses, or long-term care expenses. How can such a situation be avoided?
Create an Estate Plan to Avoid the Rules of Descent and Distribution
The rules of descent and distribution are often not the intended distribution of assets for families. So in order to avoid this default distribution, create an estate plan. An estate plan will at minimum include a Will, which names an Executor to oversee estate assets and probate. For those with specific needs, a Trust in addition to a Will may be a good option. Trusts are particularly useful for those with minor children, those with beneficiaries who are not good with money, those with beneficiaries who have special needs, and those whose estates may be subject to the Illinois estate tax ($4,000,0000 exemption in 2019) or the Federal estate tax ($11,400,000 exemption in 2019).
In addition to a Will and Trust, it is also advised to have powers of attorney in place, including a power of attorney for healthcare to make healthcare decisions, and a power of attorney for property to make financial decisions. JTLG LLC’s estate plans also include a Living Will, HIPAA authorization, and transfer on death instrument for real estate or trustee deed. These documents are essential for a successful estate plan. Having a plan in place is a great way to decide exactly how your assets pass to your loved ones upon your death.
Additional Options for Certain Assets
Certain assets, such as real estate and retirement plans, can actually pass to intended beneficiaries even in the absence of a Will or Trust. For real estate held jointly with right of survivorship or tenants by the entirety, the surviving spouse or joint owner will inherit the property outright. The issue becomes what happens to the property upon the surviving spouse’s death? That is why it is important to have a transfer on death instrument or trustee deed to ensure that upon the second spouse’s death the home continues on to the family without flowing through probate court.
For retirement plans such as a 401k, beneficiary designations will send the money to the intended beneficiaries provided that it was set up correctly. Beneficiary designations will control the distribution of the asset with or without a will or trust. It is important to verify that you have beneficiary designations on all of your financial accounts.
Contact the Libertyville Will Lawyers at Johnston Tomei Lenczycki & Goldberg LLC Today
If you do not have any estate planning documents in place and are worried about the potential for probate and the rules of descent and distribution, then now is the time to reach out to our estate planning attorneys to put the right documents in place. JTLG LLC offers a no charge initial consultation to determine what documents you may need for your estate plan. We will discuss your assets and family to formulate a plan that captures your testamentary intent. Contact us today to find out more about estate planning.
Phone Number: (847) 549-0600
Fax Number: (847) 589-2263
350 N. Milwaukee Ave., Ste. 202
Libertyville, IL 60048
223 N. IL. Rt. 21, Ste. 14
Gurnee, Illinois 60031