The Probate Process
The process unofficially “begins” when a person dies. The person who passed away, known as the decedent, may or may not have left a will (or may have even left one or more one will or codicils to a will!). If the decedent left a will the law requires that all originals wills be filed with the Clerk of the Court in the county where the testator (the person who made the will) last resided. If there is no will, the estate is known as an intestate estate and the law of “intestate succession” will govern the disposition of estate assets.
A person wanting to pursue a probate case will file a petition with the court to open a probate estate. The law, in the case of an intestate estate, requires prior notice to certain other heirs in advance of the initial hearing. In those cases where a will exists, notice is generally sent to both heirs and legatees after the will is admitted to probate and the executor is empowered to represent the estate.
Next, barring a will contest or formal proof of will, the named executor in a will or some interested party in the case of intestacy will be declared the personal representative of the estate by the probate court. The representative’s duties, in essence, are quite simple and basically consist of collecting and preserving the assets of the estate, paying the debts and taxes and distributing the remaining assets as directed by the intestacy statute or by the last will. As simple as this sounds, the task may be daunting regardless of the size of the estate. A personal representative must keep track of the records of all transactions involving the estate as an accounting and inventory must be prepared to present either to the heirs or to the court, depending on the manner of administration. Once the estate is open, the court will issue “Letters of Office” to the personal representative which, with a death certificate, will allow the representative to act on behalf of the estate.
In addition to certain notices to heirs or legatees, the law requires that notice of the opening of the estate be given to the public through publication in a newspaper so that the decedent’s creditors, if any, may make their claims on the estate. The Probate Code also requires that the personal representative directly notify any of the estate’s creditors who are “known or who may be reasonably ascertained.” The estate representative has a to exercise due diligence by checking through the paperwork and effects of a deceased person to determine who is or who might be a creditor and to notify those creditors or potential creditors of the probate proceedings.
Notified creditors then have a time window within which to file their claims known as the “claims period”. If a claim is not filed within the claims period, it will be barred. A simple estate will be open for a minimum of six months from the date the executor is appointed and notice is served on creditors. This term is mandated by statute and is instituted to allow creditors of the decedent an opportunity to file claims against the estate. In those cases where there are no claims filed or where the claims are simple or small, provided all of the other administration can be completed in time, the estate can be closed shortly after the expiration of the statutory claims period. In the case of estates handled outside of probate, such as when there is a trust or an unprobated will, the claim period is two years.
There are two “death tax” returns that might need to be filed during the administration of the estate. The first, commonly known as the “706” is the U.S. Estate Tax Return filed with the federal government. The second is the Illinois Estate Tax Return. These “death tax” returns must be filed if the entire estate, not just the probate estate, has assets in excess of a statutory amount. These days, the Federal and State taxes kick in at different dollar amounts. Both returns, if required, are due and the taxes must be paid within nine months from the date of death.
In addition to estate taxes, an estate must usually file a final income tax return for the final year of the decedent’s life. This return is usually due on April 15 just like any other income tax return. Finally, the personal representative may have to file an income tax return on behalf of the estate itself, known as a Form 1041, for the income generated by the probate assets during the time the probate estate is open.
After all claims are paid and the inventory and accounting are completed and approved, the personal representative can distribute the estate assets as per the will or intestate succession law, collect receipts from estate recipients, and close the probate estate. The entire process can take anywhere from seven months to many years depending on the size and complexity of the estate.