Probate is the legal process in the state of Illinois for administering the property of someone owning real estate and assets valued at more than $100K, who is deceased, incapacitated, or under 18 years of age. The word is derived from Latin, meaning “to test and find good.”
Since temptingly large sums of money and/or people who are unable to make their own financial decisions are involved in probate proceedings, the executor or administrator is usually required by the will or the court to get a probate bond, sometimes called a fiduciary or surety bond. This serves as a form of insurance against any malfeasance or mistakes on the part of the court-appointed guardian or representative.
The rules and procedures of probate court are complicated and they can be difficult to understand without a trusted professional by your side. Keep reading to learn more about these types of bonds, when they’re necessary, and how this might affect your estate planning discussions.
Managing Assets in Good Faith
When a person passes away, a petition is filed by an interested person or party in probate court to start the process of settling the estate. All possible beneficiaries are notified and given the chance to learn the terms of the will, if applicable, and file any objections.
With an estate plan or will in place, a trusted family member or friend is usually designated as the executor. If there’s no Will that appoints an Executor, then the court will appoint an administrator. Unless good cause is shown, a bond is almost always required in cases where there was no Will.
In cases where there is a Will, unless the will or the court expressly waives this requirement, the executor of the estate has to purchase a bond, also known as a surety. This is a three-way contract between the administrator purchasing the bond, the heirs of the estate, and the organization providing the surety or insurance.
An executor is expected to perform with full accountability and in the best interest of the heirs. If they are suspected of mishandling funds, a petition is filed with the court to investigate and a claim is filed with the surety company, which will reimburse the estate and recoup the full amount from the bondholder.
It’s in the best interest of everyone involved for the trustee, conservator, or executor to acquire a surety bond. This protects both the beneficiaries and the person in charge of the assets. It serves as a show of good faith and a guarantee that the heirs can recover their assets in the event of fraud, errors, or other wrongdoing.
The Process
The amount of the bond will be set by the probate judge, depending on the valuation of the estate. The more assets that are involved, the larger the bond will need to be.
The creditworthiness of the administrator will also be taken into consideration, as well as any disputes among the heirs. The premiums for the bond are paid yearly, until such time as the estate is completely settled.
If you’ve been designated as an executor or guardian and need to apply for a surety bond, it’s always best to retain the services of an experienced probate attorney.
Once the bond is secured, the executor must assess the debts of the deceased and notify any creditors. They also need to undertake a complete inventory of the estate, including non-tangible assets such as:
- Stocks
- Treasury bonds
- Real estate
- Bank accounts
- Retirement plans
- Business investments or ownership
Real estate appraisals might be needed to get a complete picture of the bottom line. After the assets are fully quantified, all expenses related to the probate process should be paid before any distributions to the beneficiaries. Approved expenses are classified by the Illinois Probate Act, and include:
- Burial and funeral costs
- Tax burdens
- Payments due to employees of the deceased
- Municipal debts
Any remaining funds are to be managed according to the terms of the decedent’s will or the laws of Illinois. For night net worth estates or guardianships, the executor could be controlling a substantial amount of money for many years.
An administrator may appeal to the court for the reduction or removal of the bond if the estate falls below a certain threshold or the heirs submit a written petition to waive it.
Get the Legal Guidance You Need
Navigating the Illinois probate process is challenging, whether you’re a beneficiary of the estate or the designated executor, especially during a difficult time. Emotions are sure to be involved, and seeking the best possible counsel will ensure your interests and assets are protected.
For more than a decade, the attorneys and staff of the Law Offices of J. Jeltes have been providing Chicagoland residents with highly skilled and compassionate legal representation. With over twenty years of experience, our attorneys are ready to help your family through major life transitions.
Every situation is unique, and everyone deserves individualized attention. Reach out today to schedule a one-on-one consultation to discuss your concerns and create a comprehensive estate plan.
