Death and Intestate Succession: What Happens if You Die Without a Will in Plano, Illinois?

 Posted on March 22, 2023 in Estate Planning

Covid-19 has created an awareness about wills and trusts. Unfortunately, over the last several years, the number of individuals facing death seems to be increasing. This article will discuss what happens when you fail to plan and have no Will or trust.

Designated Beneficiaries

The probate court may only be necessary if one has designated beneficiaries on their varying accounts. A person can direct beneficiary designations to inherit their assets upon death.

1. Bank Accounts

Bank accounts have accounts called "payable on death accounts, " meaning that the account's creator can specify who shall inherit the account upon their death. Generally, the bank has a designated form that you fill out to dictate who shall inherit your account balance upon your death. For instance, Sally gives her bank account to her daughter, Peggy Sue. Unfortunately, many people need help to designate a beneficiary or update their preferences. If a beneficiary has a disability or decreases, then there is a possibility of probate court. Designating a beneficiary is a form of essential estate planning without a will or trust.

2. Transfer on Death Instruments

Transfer on Death Instrument allows a person to designate a beneficiary upon death. The beneficiary of a Transfer on Death Instrument account, such as a brokerage account, does not have to sign anything. Instead, the account creator will have you fill out a form and give standard information about the designated beneficiary, such as their address and date of birth.

Often, time expires, and the account creator needs to remember who they designated as the beneficiary of the account(s). Generally, a transfer will occur despite whether you have a will or trust if you fail to re-title your assets into the revocable living trust’s name. Simply put, many people create a will, believing that their assets will be distributed consistently with their will. This is not the case. Your Transfer on Death Instruments will be distributed consistent with your designated beneficiaries filled out on the brokerage forms.

With a Transfer Death Account, you can distribute your assets upon your death to a specific person (or persons). That person may be deceased or have issues such as a disability, minor child, or nursing home care. Your designation will go to the beneficiary specified on the brokerage firm. If you have designated a minor as the account's beneficiary, the probate court will be required.

3. Life Insurance

Life insurance policies have a form to designate who the owner wants to receive their life insurance proceeds upon their death. If you pass away, the decedent's loved ones must contact the life insurance company and submit an insurance claim. The life insurance company will have a record of the life insurance policy's intended beneficiary(ies). There will be no issue if the intended beneficiaries are alive, not disabled, and over 18.

The problem arises when a person has failed to update a life insurance policy, such as removing their ex-spouse's name (which occurred due to death or divorce). Generally, life insurance will only be affected during a divorce if the owner of the life insurance account updates their beneficiary form. For example, an ex-spouse may inherit your life insurance if you fail to update your designated beneficiaries.

4. Retirement Accounts

Retirement accounts are generally designated by filling out a form and stating their preference. For instance, a person will split the inheritance among two children. Again, probate will be avoided if the intended beneficiaries are alive and healthy. However, in many instances, life changes, and people's intended beneficiaries become ill or deceased. Therefore, updating your designated beneficiaries is a crucial step.

What Problems Arise with Transfer on Death Instruments and Paid on Death Accounts?

There are five primary reasons why one should not rely upon a transfer on death or pay on death instrument. The first reason is people need to update their beneficiary designations. Life changes and people need to remember to update their designated beneficiaries. For instance, a person was married to another, and they went through a divorce. Your divorced ex-spouse will inherit your assets unless you update your designated beneficiaries.

The second reason for probate court is your beneficiary has a disability or an incapacity. The population is aging, and incapacity issues such as Alzheimer’s and dementia are becoming prevalent. If your beneficiary has any disability or capacity issues, the inheritance will end up in guardianship or probate court. Guardianship and probate court often require an attorney and may cost thousands of dollars in legal fees and costs. Furthermore, guardianship and probate courts restrict people's rights to do as they desire.

The third reason probate becomes an issue is when your beneficiary pre-deceased the account holder. For instance, a spouse makes the other spouse an heir, and they need to remember to update their beneficiary forms.

The fourth reason for probate court is minor children inherit. Minor children cannot inherit, which will trigger a probate proceeding for the minor child. The guardianship proceeding will require yearly updates, and the court will monitor the funds until the child becomes 18 years of age.

The fifth reason is the immaturity of the beneficiary. A beneficiary may be young and immature. A benefit of a revocable living trust is the ability to restrict a person’s inheritance until they reach a certain age. A revocable living trust can appoint a trustee to supervise the expenditures of one's monies until one gets a certain age. There are no required court dates and visits, unlike a guardianship court. With guardianship court, the guardian of the estate must account for the funds yearly and update the court on the status of the minor child's funds. The guardian may only distribute money with a court order. The guardian must inform and persuade the court why the expenditure is in the best interest of the minor child or beneficiary.

Intestate Succession Attorney in Plano, Illinois, Kendall County

Intestate succession occurs when a person does not have a will or a living trust. Intestate succession is the process of the State of Illinois presuming who should inherit a person’s assets. In Illinois, a deceased person whose spouse and children survive will equally split an inheritance. For example, the surviving spouse will inherit (one-half of the assets), and the children will inherit (and divide the other) ½ of the assets. If there is no surviving spouse, then the entire probate property will go to the children of the deceased equally. See 7355 ILCS 5/2-1, Rules of Descent and Distribution.