Most people understand that having an estate plan is a good idea. However, many of us don't take the steps to have an estate plan prepared because we don't understand the nuances between wills and trusts – and dying without either. 

Here's what generally happens if you die intestate (without a will or trust), with a will, or with a trust. For this example, we're assuming you have children, but no spouse:

Intestate

If you should die intestate, your estate will go through probate, and all the world will know what you owned, what you owed, and who got what. Your mortgage company, car loan company, and credit card companies will all seek payment on balances you owed at the time of your death.  

Small Estate Affidavit threshold in Illinois (currently $100,000 and no real estate) — estates above this require probate.

Under Illinois law, intestate succession is governed by the Illinois Probate Act of 1975 (755 ILCS 5/2-1).

If you die without a will in Illinois and have children but no spouse, your children inherit your estate in equal shares. However:

• Probate is required through the Illinois circuit court in the county where you resided.

• The court appoints an administrator (not your choice).

• If you die without a valid will, the court, not you, will decide the futures of your minor children. The court will appoint a guardian of its choosing to manage the money for your minor children until they become adults, and possibly a separate guardian to raise your minor children.  

• Shockingly, that guardian can charge a lot of money to manage the funds for your minor children and be a total stranger, as can the guardian who raises your minor children.  

• Minor children cannot inherit outright — a guardian of the estate will be appointed to manage funds until the child reaches age 18.

• At age 18, the child receives the entire inheritance outright.

This is particularly important in Illinois, where 18-year-olds legally gain full access to inherited funds unless planning states otherwise.

Keep in mind that since your death has been published to alert valid creditors, predators (fake creditors) can come forth and make demands for payment – even if they're not owed anything. Creditor claim period in Illinois probate (generally 6 months from issuance of letters of office).

The bottom line? Dying intestate allows state law and the court to make all the decisions on your behalf – regardless of what your intent might have been. Publicity is guaranteed.

Will

If you die with a valid will, your assets will still go through probate. In Illinois, even with a properly executed will:

• Probate is required if assets exceed $100,000 or include real estate not held in joint ownership.

• Probate proceedings are public records in Illinois.

• Guardianship nominations for minor children are strongly considered by Illinois courts, but must still be formally appointed.

After creditors have been satisfied, the remaining assets go to whom you've identified in your will.  

• If you want to leave money to your children and name a guardian for the minor ones, the court will usually abide by your wishes.  

• The same holds if you specified that you wanted to give assets to a charity, your Aunt Betty, or your neighbor.  

• Keep in mind that predatory creditors are still an issue, as your death has been publicized. Even with a will, probate is a public process.

The bottom line? While a court oversees the process, having a will allows you to tell the court exactly how you want your estate to be handled. But a public probate is still guaranteed.

Trust

If you've created a trust, you've taken control of your estate plan and your assets.  Trust assets are not subject to probate, and one of the most important benefits of trusts is their privacy. Although notices to creditors may be published, most of the other details (your assets, who is receiving what, etc.) remain private, helping your family minimize the risk of predators.  

As part of the trust drafting process, you'll name a trustee to manage your estate when you are no longer able to, and provide him or her with specific instructions on how your assets should be dispersed and when.  

One word of caution – trusts must be funded to bypass probate. Funding means that your assets have been retitled in the name of your trust. Think of your trust as a bushel basket. You must put the apples into the basket just as you must put your assets into the trust for either to have value.

Even if you have a trust prepared, you still need a will to pour any assets inadvertently or intentionally left out of your trust and to name guardians for minor children. However, this type of will is much shorter and less complicated than one that is responsible for disposing of all of your assets to your beneficiaries.

In Illinois:

• Properly funded revocable living trusts avoid probate under the Illinois Probate Act.

• Real estate must be retitled into the name of the trust.

• Trust planning allows you to delay distributions beyond age 18 — a major advantage for families with young beneficiaries.

• Trusts can provide creditor protection planning and blended family planning options under Illinois law.

The bottom line? Trusts allow you to maintain control of your assets through your chosen trustee, avoid probate, and leave specific instructions so that your children are taken care of – without receiving a lump sum of money at an age where they are more likely to squander it or have it seized from them.

Don't let the will-versus-trust controversy slow you down. Contact our office today so we can answer any questions you may have and put together an estate plan that works for you and your family, whether it's a will, a trust, or both. 

This article is a service of Jacklyn A. Truppa of Dynasty Law, LLC. We don't just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Family Wealth Planning Session, during which you will get more financially organized than you've ever been before and make all the best choices for the people you love.

The content is sourced from Dynasty Law, LLC, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own, separate from this educational material.