Illinois 2015 Estate Planning Law Changes - Revised Small Estate Affidavit
This is the second in a series of posts about changes to Illinois estate planning law for 2015. The first post went over changes to the Power of Attorney Act, and particularly the new "Statutory Short Form" Power of Attorney for Health Care. Article 25 of the Probate Act, on "Small Estates," was also significantly changed.
The Small Estates portion of the Probate Act provides the option for a representative of a decedent to prepare and sign a "Small Estate Affidavit" to be provided to a bank or other financial institution or person holding estate assets, to facilitate payment and release of the estate's assets as directed in the affidavit. For eligible estates, the Small Estate Affidavit serves as a short-form, expedited process that can be used in lieu of a formal probate filing. Eligibility is primarily determined by the assets the decedent's personal estate not exceeding a total value of $100,000.
The Affidavit itself is a form provided in Section 25-1 of the Probate Act, and identifies (1) the affiant (person signing), (2) the decedent and date of death, (3) the gross value of the estate, (4) the decedent's known, unpaid debts and claims, (5) the decedent's heirs and legatees (persons named in the decedent's will), (6) whether the decedent had a will, (7) a statement of how remaining assets would be distributed to the heirs and legatees, after paying the known unpaid debts and claims.
Section 7 of the Affidavit has been changed to clarify seven "classes" of expenses and claims, which are ranked in order of priority for payment if the estate has insufficient funds to pay all. These are:
Class 1: Funeral and burial expenses, estate administration, and statutory custodial claims;
Class 2: Surviving Spouse or Child awards;
Class 3: Debts due the United States;
Class 4: Money due Employees of the decedent up to $800 each for services rendered within 4 months of death and expenses "attending to the last illness;"
Class 5: Money and property received/held in trust by the decedent that cannot be identified or traced;
Class 6: Debts due the State of Illinois and certain specified types of Illinois local governments;
Class 7: All other claims.
Like any legal affidavit, the Small Estate Affidavit is a written sworn statement, made under oath with potential criminal penalties for perjury. The previous version of the statute also provided an indemnification requirement, not part of the Affidavit form itself, and that is still there. But what has changed, is that the form itself now also provides a certification statement as to that indemnification, required to be in bold type not less than 14-point font, signed by the Affiant agreeing to indemnify and hold harmless anyone, such as a creditor, bank, heir, etc., who relies on the Affidavit and suffers loss due to an act or omission of the affiant, and expressly provides that any such person can also recover reasonable attorney's fees and expenses, from the Affiant.
A Small Estate Affidavit can be a helpful, cost-effective tool for administering small estates without the need to undergo the formal probate process. But the representative who signs such an affidavit should carefully consider its contents and the debts and claims against the estate, before signing and before making distributions from the estate, and recognize that there can be serious consequences to the representative who fails to do so. For this reason, it is in the administrator's and the estate's best interest to consult with legal counsel in preparing and considering whether to sign the affidavit (see a lawyer before signing!), to help identify and seek to minimize such liability risks.