Estate Planning, Probate & Elder Law Attorneys

» Small Estate Affidavits and Claims

In Illinois, you can avoid a probate if the decedent owned less than $100,000 in probate assets (that is, assets in his or her own name), and owned no Illinois real estate, at the time of death.

You can do so by presenting a small estate affidavit to the people or entities holding the decedent's assets: banks, insurance companies, IRA custodians, etc. The affidavit sets forth the facts -- that the decedent died (attaching a death certificate), that the decedent had or didn't have a Will (attaching a copy of the Will, if the decedent had one), etc. You also list the decedent's probate assets, and tell who should receive them in what percentages. The people or entities holding the decedent's assets should then distribute them as provided in the affidavit, thereby avoiding probate.

There's a small estate affidavit form in the Illinois Probate Act, but the form has a problem. Here's the relevant part:

7. (a) All of the decedent's funeral expenses have been paid, or (b) The amount of the decedent's unpaid funeral expenses and the name and post office address of each person entitled thereto are as follows:

Name and post office address Amount

(Strike either 7(a) or 7(b)).

8. There is no known unpaid claimant or contested claim against the decedent, except as stated in paragraph 7.

The issue is, what do you do in the typical small estate situation, where there are some assets and also some bills? Do those bills rise to the level of "known unpaid claimant" or "contested claim"? Can you in good faith sign this document under penalties of perjury, including paragraph 8, if you know of a potential claim? Local attorney Cary Lind has a nice discussion here (note that this is an old article -- hence the reference to a $50,000 amount rather than $100,000).

» The Reverse Mortgage Probate Problem, and Liquidity

Reverse mortgages have become more popular in recent years. The concept, in a nutshell, is this:

-you (62 years old or older) borrow against the equity in your home
-instead of paying down the mortgage over time, your mortgage grows. But it doesn't have to be paid back until the house is sold or until you die

I've encountered this situation in the probate context a few times recently: mom dies, reverse mortgage is now due, and guess what? The house can't be sold because of the bad real estate market.

The bigger problem, of course, is one of estate liquidity. When a person dies, there are bills that have to be paid. Some of those bills are small, and some of them can be avoided. But certain bills can't be avoided, and are going to cause a real headache for your survivors if you've left them with no liquid assets. There are lots of older people, even those who aren't particularly sophisticated, who take action to prevent their heirs from being stuck with hard-to-pay bills. That's why there's funeral insurance. But you also have to think about the extent to which your assets are in illiquid forms like real estate.

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