Estate planning is one of the most important steps you can take to protect and provide for your family in the future. This process involves making arrangements during your life for what will happen to your estate when you become incapacitated or pass on, which might include planning ahead for your burial, preparing for the potential financial effects of a long-term illness, and making sure that your assets will be divided and distributed in line with your wishes when you die.
When it comes to distributing your most important assets — which might encompass your home, vehicle, financial accounts and securities, and important personal possessions — there are many different mechanisms to know, including wills and trusts. It is also important to have a working understanding of a few different terms you might come across with your estate planning attorney, including heir, legatee, and beneficiary.
These three terms are all used to refer to ways in which someone may receive property from a decedent. Heirs, legatees, and beneficiaries also constitute “interested persons” in a decedent’s estate, which gives them certain rights — such as the right to be notified or given updates throughout estate administration, and the ability to contest a decedent’s will. While heirs, legatees, and beneficiaries may overlap based on how you structure your estate plan, they may also be kept completely separate — and it’s important to understand their similarities and differences.
Let’s explore what it means to be an heir, legatee, or beneficiary in Illinois:
What Does It Mean to be an Heir?
Heirs are individuals who stand to inherit from a decedent according to the Illinois laws of intestate succession, which set down how a decedent’s assets must be distributed if they are not included in a valid will. Generally speaking, this means that heirs will be related to the decedent through blood, marriage, or adoption. Common examples of heirs include the decedent’s surviving spouse and children, as well as more extended family members such as parents and grandparents, siblings, nieces and nephews, aunts and uncles, and grandchildren.
The state of Illinois has fairly clear guidelines on how a decedent’s estate should be handled in cases where they pass without leaving a will, or fail to include relevant assets in their will. Ultimately, the exact distributions will depend on the decedent’s family circumstances.
For instance, if the decedent is survived by a spouse and children, then their spouse will generally receive 50% of their intestate estate and the children will split the remaining half, per stirpes (which means that, should a child predecease their parent, then their share will pass to their children — the decedent’s grandchildren). If a decedent does not have a spouse or children, then their surviving parents and siblings generally inherit the estate in equal shares, per stirpes. If the decedent has no immediate family, then succession will move on to more distant family members; if the decedent has no surviving family members who can be located, then the estate ultimately escheats to the county in which the decedent resided.
For a more complete overview of intestate succession in Illinois, please visit our article: “What Happens When Someone Dies Without a Will in Illinois?”
What Does It Mean to be a Legatee?
A legatee is anyone who receives a testamentary disposition of real or personal property by devise or bequest. In other words, this term is used in Illinois to refer to anyone who inherits property, real or personal, through a decedent’s will (in some states, the term devisee is used instead; while there are some archaic differences between devisees and legatees, the terms are now essentially used interchangeably.)
While an heir, by definition, will be related to the decedent in some way, a legatee can be anyone named in a decedent’s will; this could include friends, business partners, co-workers, charitable organizations, and the like. A family member who would qualify as an heir may be a legatee, depending on the contents of the decedent’s will; in contrast, someone who would be an heir under intestate succession does not count as a legatee if they are not included in the decedent’s will.
Wills are an extremely important estate planning mechanism because they allow you to express your wishes as to how your property is to be distributed when you are no longer around. This ensures that you are able to maintain control over important assets, and provide for your family members as you see fit. In addition to distributing property, wills can also be used to name a guardian for your minor children, and nominate the executor you want to oversee the administration of your estate.
What Does It Mean to be a Beneficiary?
We are concluding with beneficiary because it is by far the broadest term. For estate planning purposes, a beneficiary can be thought of as anyone who receives property from the decedent. This includes both heirs and legatees, as well as individuals who stand to receive property from a decedent through non-testamentary transfers, such as through a trust or a “payable-on-death”/”transfer-on-death” designation.
Many individuals utilize these “nonprobate” transfers to help streamline and speed up the estate administration process, while ensuring that their loved ones are able to access certain assets quickly and seamlessly.
In many cases, a decedent’s most expensive and important assets may be eligible to bypass probate administration, for any number of reasons. For instance, you may name a payable-on-death (POD) beneficiary to many different types of assets and accounts, including financial accounts, insurance policies, investments and securities, and some pension and retirement plans. This allows the asset or its contents to be distributed to your designated beneficiary at the appropriate time, without requiring oversight from the probate courts. Illinois also has a transfer-on-death instrument (TOD) which can be applied for real estate and motor vehicles. For more information, read on with our article: “Do All Assets Need to Go Through Probate in Illinois?”
Similarly, assets held in a trust are not considered part of a probate estate. A trust is a legal arrangement that allows a third party, known as the trustee, to hold and manage assets chosen by the grantor, on behalf of one or more chosen beneficiaries. Trusts are versatile, and can be used to help you achieve your goals in any number of different circumstances. For instance, trusts can be used to help protect your family’s privacy, and provide long-term support for minors or loved ones with special needs. For more perspective on what you need to know about this important estate planning mechanism, check out our article: “What Are Trusts, and How Do They Work? A Guide for Illinois Residents.”
Ready to Discuss Estate Planning and Probate With a Chicago Attorney?
Whether you’re planning for your family’s future or preparing to deal with a loved one’s estate or assets in probate, an experienced legal professional can help make the process less daunting. That’s where the experienced and compassionate attorneys and staff at the Law Offices of J. Jeltes, Ltd. can help.
As you get started with estate planning or prepare to update your current documents, our team can help prepare basic wills, trusts, powers of attorney, and living wills (also known as advance directives).
Need a guide in navigating the challenges that may arise during probate administration — from minor and disabled heirs and legatees, to dealing with creditors or unfunded trusts? Our attorneys have experience with both contested and uncontested estates, asset division, and probate administration.
Founded in 2009 and offering more than 20 years of combined experience, the attorneys and staff at the Law Offices of J. Jeltes work together to provide skilled, efficient, and affordable legal representation to individuals and families going through major life transitions in Illinois. Don’t hesitate to contact us whenever you’d like to begin the conversation.