The probate process can be very complex. Throughout the process, you're bound to hear some terms that you've never come across before. In order to truly understand the probate process, it's helpful to first become familiar with some basic terms.
Below are some of the most commonly used probate terms and their definitions. We hope they provide some clarity to the process.
A beneficiary is an individual who is designated to receive assets from a will or trust. Creators of trusts and wills can name as few or as many beneficiaries as they wish.
An executor is a person who is assigned to carry out the terms set forth within a will. Chosen by the will's creator, or testator, the executor is expected to act in an unbiased manner. He or she is essentially the representative of the will creator. If the person to serve is not named in your will, he or she is called an administrator.
A decedent is someone who has died. When it comes to probate, the word "decedent" is typically used to describe the deceased who owned the property immediately before death, and which is the subject of the probate proceeding.
A beneficiary is a person who receives assets after being designated to receive them in a trust or other instrument. In contrast, an heir is a person who receives assets under the law that applies in the event that a decedent fails to create a will. Generally, an heir is a spouse or blood relative of the decedent.
A testator is a person who creates a will. This is the person whose wishes will be enforced by the probate court, if the will is valid.
When it comes to probate, the term "inventory" refers to a list of all the assets that are included in a will. An inventory lists not only money, but possessions, debts, contract rights, potential claims and intangible assets as well. Usually listed by the estate's representative, an inventory is required by the probate process, and facilitates the proper distribution of assets in a probate proceeding.
Intestate is the term used to describe the fact of a person dying without a will. When a person dies without a will, his or her assets are subject to the probate courts, and the Illinois law of intestate succession. Basically, if a person doesn't have a will, the State writes one for them.
Inheritance and Estate Taxes
Most states do not have an inheritance tax. An inheritance tax is levied on the heir, and is generated by the amount received from the decedent. Six states currently have such an inheritance tax, being Iowa, Kentucky, Nebraska, New Jersey, Pennsylvania and Maryland. Maryland also has an estate tax. Most, but not all, other states have an estate tax, which is levied on the assets passing to heirs, and paid by the decedent's trust or probate estate.
Estate taxes are levied first at the federal level, by the IRS. These taxes are taken out of an estate as it goes through the probate or trust administration process. Generally, estate taxes can be reduced or avoided through strategic estate planning. Then, and as part of the same process, state estate taxes may apply. Currently, federal estate taxes are due on estates of persons dying in 2018 with a gross estate of $11,200,000, indexed for inflation through 2025. The amount excluded from federal estate taxes is sometimes called the exemption amount. The state in which a decedent resides may also have an estate tax, often with a smaller exemption amount. New Jersey is the lowest currently, at $675,000.00
Fiduciary duty is a term used to describe the responsibility of a person required by law to act in the best interest of the person or organization that he or she is representing. A good example of this would be a trustee's responsibility to act in the best interest of beneficiaries.
A living will is a document that specifies an individual's preferences for end-of-life medical care. This document is used in the event that its creator becomes incapacitated and cannot communicate his or her wishes to the doctor.
Sometimes called an advance directive, a living will is an often overlooked part of estate planning. It does not need a third person to determine when it operates; just the physician.
In Need of a Probate Attorney in Park Ridge, Illinois?
Do you require the services of a probate attorney? Are you looking for a probate attorney in Park Ridge, Illinois? If so, the expert attorneys at John J. Pembroke & Associates have you covered.
Regardless of the nature of your case, we can help you. Contact us today to schedule an appointment!