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

 Posted on March 22, 2023 in Estate Planning

The Covid-19 campaign has raised public awareness about wills and trusts. There seems to be a rise in the number of people close to death during the past few years. What transpires when you don't plan and don't have a will or trust in place will be covered in this article.

Designated Beneficiaries

The probate court may not be necessary if one has chosen beneficiaries on their various accounts. A person has the authority to specify the beneficiaries who will receive their assets following their passing.

1. Bank Accounts

Payable-on-death accounts allow the account owner to designate a beneficiary to receive the funds following their death. Typically, you fill out a form the bank provides to choose who would welcome your account balance upon passing. For instance, Sally allows her daughter Peggy Sue to access her bank account. Sadly, many people need to remember to choose a beneficiary or change their preferences. In addition, a probate court may be necessary if a beneficiary is disabled or dies. Without a will or trust, essential estate planning can be done by naming a beneficiary.

Transfer on Death Instruments

A person can name a beneficiary in a Transfer on Death Instrument for when they pass away. No documents are required to be signed by the beneficiary of a Transfer on a Death Instrument account, such as a brokerage account. Instead, the account creator will merely ask you to complete a form and provide primary data about the intended beneficiary, like their address and birthdate.

Time passes frequently, and the account's creator must remember to identify the beneficiary (s). If you fail to re-title your assets into the name of the revocable living trust, a transfer will often occur regardless of whether you have a will or trust. Simply put, many people write a will and assume that the distribution of their assets will follow it. That is not the situation. Your specified beneficiaries listed on the brokerage forms will be your Transfer on Death Instruments recipients.

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 specified beneficiary stated on the brokerage firm. A probate court will be required if you have designated a minor as the account's beneficiary.

2. 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 records of the life insurance policy's intended beneficiary(ies). There will be no issue if the intended beneficiaries are alive, not disabled, and/or 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.

3. 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 decrease. 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 predeceased the account holder. For instance, a spouse makes the other spouse a beneficiary and needs to remember to update their beneficiary forms.

The fourth reason for probate court is that 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. One of the benefits 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 reaches a certain age. There are no required court dates and visits, unlike a guardianship court. With guardianship, 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.