What Happens if I Die Without a Will or Trust in Illinois?

Yorkville Estate Planning Attorneys for Wills and Trusts

Many people in Illinois believe that probate only happens when someone does nothing at all. Others may assume that probate can be avoided simply because they named beneficiaries on accounts or added payable on death (POD) designations. The reality under Illinois law is far more complicated.

Probate is not required in every situation, but it becomes unavoidable far more often than families expect, especially when beneficiary designations fail, assets are overlooked, or family members die close together in time. The estate planning attorneys at Gateville Law Firm can help families understand when probate will be required and why families often end up in probate court even when they believed they planned ahead.

Probate Is Not Always Required in Illinois

Probate in Illinois is generally required when a person dies owning assets in their individual name with no beneficiary designation, a failed or outdated beneficiary designation, or no living trust to receive the assets. Probate may be avoided when:

• Assets are properly titled in a living trust.
• Valid beneficiaries are named and alive.
• Ownership of assets is coordinated correctly.

The Beneficiary Designation Myth: "I Named Someone, So I'm Fine"

Beneficiary designations are a valid planning tool, but they are not a complete estate plan, and they carry serious risks. Beneficiary designations will take precedent over wills and trusts, and they offer no asset protection, do not plan for incapacity, and do not handle contingencies well. They must be updated regularly, and they fail more often than many people realize.

Relying on beneficiary designations alone is one of the most common causes of unexpected probate in Illinois.

When Beneficiary Designations May Fail and Trigger Probate

1. The Beneficiary Died First (or Recently)

If a person who was named as a beneficiary on their spouse's account dies before the account owner, and the beneficiary designations are never updated, the asset will typically be considered part of the account owner's estate, triggering probate. This can be especially common when spouses die close together or when children die before their parents.

2. Family Changes

Life changes occur regularly, but beneficiary designations may not be updated when these changes take place. Beneficiary designations can become outdated after a divorce or remarriage, when a child or grandchild is born, or after a death in the family. This can result in:

• An ex-spouse receiving assets meant for other family members
• Stepchildren not receiving an inheritance
• Litigation and probate court involvement

3. Minor Beneficiaries or Beneficiaries With Special Needs

Beneficiary designations do not work well in cases involving minor children, children with disabilities, or beneficiaries who receive government assistance. In Illinois, inheritances cannot be received directly by minors, and beneficiaries with special needs may lose SSI and Medicaid benefits after inheriting assets. When this happens, courts may need to step in, guardianship cases may be opened, and probate cases may remain open for years or decades.

Case Study: Probate That Lasted Decades

A parent died, leaving assets to a family member with special needs through beneficiary designations. No trust was in place. As a result:

• Benefits were lost.
• A first-party special needs trust was required.
• Court supervision continued for years.
• Annual reports were required.
• Legal fees never stopped.

Decades later, the probate file was still technically open.

Timing Matters When Creating Special Needs Trusts

When inheritance mistakes happen, a family may need to create a first-party special needs trust. This type of trust will be funded with money belonging to the beneficiary, and it can be expensive and restrictive. Court supervision may be required, and Medicaid may need to be paid back for benefits after a beneficiary's death.

Third-party special needs trusts, by contrast, are created before the death of a person who plans to leave an inheritance to a person with special needs. They can help ensure that the beneficiary will qualify for benefits, avoid Medicaid payback requirements, and ensure that a family can maintain control over assets. However, proper planning is essential to ensure that a first-party special needs trust will function correctly.

Incapacity: The Hidden Probate Trigger

Probate problems often begin before someone dies. If a person becomes incapacitated, and they have no trust or used short-form or statutory powers of attorney, guardianship may need to be established.

Many powers of attorney fail to address incapacity correctly because they:

• Do not authorize access to retirement accounts

• Do not allow for Medicaid planning

• Do not permit the funding of a trust

• Are rejected by financial institutions

When that happens, families may be forced into court, even in situations where they thought they had planned ahead.

Probate Costs

Illinois probate often takes nine to 18 months or longer. The costs may be 4–7% of the estate or more. The matter will become public record, and a case may involve emotional and financial conflict. Grief, money, and family history may collide. Siblings may stop speaking with each other. Stepchildren may feel erased. Caregivers may feel betrayed. Probate does not just cost money—it can destroy families.

Case Study: The $5 Million Illinois Estate Tax Disaster

A married couple owned approximately $5 million in assets. They relied on beneficiary designations and had no trust. After the death of the first spouse, everything passed outright to the surviving spouse. This meant that the first spouse did not use the exemption of $4 million that is allowed under Illinois estate tax laws.

When the second spouse died, the estate exceeded the Illinois estate tax exemption. The estate owed Illinois estate taxes of more than $100,000. As a result, the family was required to liquidate assets to pay the tax. With proper trust and subtrust planning, much of this loss could have been avoided.

The Reality of Estate Planning and Probate in Illinois

Probate is not required in every case, but it may be unavoidable in certain situations, including:

• Beneficiary designations are outdated or beneficiaries are deceased
• No contingencies exist
• Minors or people with special needs are named as beneficiaries
• Incapacity occurs without the proper documents in place
• Estate tax planning is ignored

Contact Our Yorkville, Illinois Estate Planning Attorneys

In Illinois, probate is often the result of partial planning. Beneficiary designations alone can put assets. Powers of attorney alone may not fully address a person's potential incapacity. Wills alone will require an estate to go through probate. Doing nothing at all will leave decisions up to the state.

A properly designed estate plan will coordinate beneficiary designations, use living trusts, plan for incapacity, protect beneficiaries with special needs, and avoid probate whenever legally possible. Estate planning can preserve family relationships in addition to protecting assets. To make sure your family is ready for whatever may come in the future, contact our Yorkville estate planning lawyers today by calling 630-780-1034.