What is Homestead and Exempt Property and What's a Family Allowance?

 

Learn about how families can stay supported during a probate proceeding.

ADVERTISEMENT -

.
 

Many states don't count certain property when they set out small estates limits. There are three common kinds of property that is excluded in this way. The amounts each states' laws set for each kind of excluded property differs, but the concept is similar.

A "homestead" is the name for legal protections that states offer to a  certain amount of equity in a person's primary residence. This differs from state to state, but the basic idea is that a person's homestead property is protected for their spouse and children and, in some states, safe from creditors.

Exempt property refers to property that is set aside to be safe from creditors.

Family Allowance, like it sounds, is property (cash and belongings) that are set aside to be available to a surviving spouse and minor children so that they have resources to live on before the probate is completed.

Learn More with AI: 

In probate law in Illinois, what protections from creditors claims are afforded by such things as "homestead" and "family allowance?"  
Are there allowances or exclusions in the small estate limits for "homestead" or  a "family allowance". Please provide references and citations to Illinois law.
And are these limits adjusted for inflation? if so, please provide the current amounts and links to where the current amounts are published.

Try this prompt on:
Perplexity.ai Google Gemini ChatGPT4Claude.ai

Created with Gemini, March 26, 2024

In Illinois probate law, there are no allowances or exclusions for creditor claims or family allowances when determining the value of an estate for purposes of the small estate affidavit. However, there are exclusions for homestead property. Here's a breakdown with references:

Homestead Exclusion:

  • The value of a decedent's recorded homestead property is excluded when calculating the total estate value for the small estate affidavit. ([755 ILCS 5/13-201(d)])

Creditor Claims and Family Allowance:

  • Debts (creditor claims) and any potential family allowance are not excluded from the estate value for purposes of the small estate affidavit. This means the total value of the estate, including these potential liabilities, must be under the threshold to qualify for the small estate process.

Reference:

  • Illinois Compiled Statutes (755 ILCS): [Illinois Compiled Statutes | Illinois General Assembly (.gov) ilga.gov]

Important Notes:

  • The Illinois small estate affidavit threshold is for estates valued at less than $100,000, excluding the value of any homestead property.
  • Since creditor claims and family allowance are not excluded, it's crucial to consider potential liabilities before assuming you qualify for the small estate affidavit.

Recommendation:

  • Consulting with an Illinois probate attorney is highly recommended to determine if your specific situation qualifies for the small estate affidavit, especially if there are potential creditor claims or a family allowance might be necessary. They can advise you on navigating the probate process and ensuring a smooth estate administration.
Created with Claude AI, March 26, 2024

Yes, under the Illinois Probate Act, there are certain allowances and exclusions that affect the determination of a small estate in Illinois. These include:

  1. Homestead Allowance:
    • Under 755 ILCS 5/15-2, a surviving spouse or child(ren) are entitled to a homestead allowance of $20,000 from the decedent's estate.
    • This allowance is intended to help the surviving spouse or children retain ownership of the family home.
  2. Family Allowance:
    • Under 755 ILCS 5/15-1, a surviving spouse and minor children whom the decedent was obligated to support are entitled to a reasonable allowance for their maintenance during the period of administration.
    • The amount of the family allowance is determined by the court based on the condition of the estate and the condition, habits, and resources of the surviving spouse and minor children.
  3. Exclusions from the Small Estate Limit:
    • Under 755 ILCS 5/25-1(b), certain assets are excluded from the calculation of the small estate limit, which is currently set at $100,000.
    • Excluded assets include personal property and assets that pass directly to a surviving spouse or minor children, such as joint tenancy property, life insurance proceeds, and certain retirement accounts.

It's important to note that the specific application of these allowances and exclusions can be complex and may depend on the unique circumstances of each case. It's advisable to consult with an experienced probate attorney in Illinois for guidance on your specific situation.

Sources:

  • Illinois Compiled Statutes, 755 ILCS 5/ (Illinois Probate Act)
  • 755 ILCS 5/15-1 (Family Allowance)
  • 755 ILCS 5/15-2 (Homestead Allowance)
  • 755 ILCS 5/25-1 (Small Estates)
 
 

Can you explain what types of assets are excluded in from the small estate limit and quote the statutory language if possible.

Yes, the Illinois Probate Act provides specific exclusions from the calculation of the small estate limit. According to 755 ILCS 5/25-1(b), the following assets are excluded:

"For the purposes of determining whether an estate may be administered as a small estate, the value of the real and personal property in the estate shall be ascertained as of the date of death and shall exclude the value of any property which is reserved to the surviving spouse by prenuptial or postnuptial agreement or which passes to the surviving spouse by intestate succession, survival or joint tenancy and the value of any life insurance payable to a beneficiary other than the estate."

In simpler terms, the following types of assets are excluded from the small estate limit calculation:

  1. Property reserved to the surviving spouse by prenuptial or postnuptial agreement.
  2. Property that passes to the surviving spouse by intestate succession (when there is no will).
  3. Property held in joint tenancy with the surviving spouse.
  4. Life insurance proceeds payable to a beneficiary other than the estate.

The statute further clarifies in 755 ILCS 5/25-1(c) that certain retirement accounts and other assets may also be excluded if they pass directly to a designated beneficiary:

"The value of any pension, employee benefit plan or similar arrangement payable to a beneficiary other than the estate shall also be excluded from the estate for the purpose of determining whether an estate may be administered as a small estate."

So in summary, assets that pass directly to a surviving spouse, minor children, or designated beneficiaries outside of the probate estate are generally excluded when determining if the estate qualifies as a small estate under Illinois law.

 
 

Does Illinois honor Transfer on Death Deeds?

Yes, Illinois does recognize and honor Transfer on Death Deeds (TODD), also known as Revocable Transfer on Death Instruments.

The relevant statute is the Illinois Residential Real Property Transfer on Death Instrument Act, 755 ILCS 27/1 et seq.

Under this Act, an owner of residential real estate in Illinois can execute a revocable transfer on death instrument which allows the owner to retain full control over the property during their lifetime, but transfers the property upon their death to the beneficiary named in the instrument without going through probate.

Some key points about Transfer on Death Deeds in Illinois:

  • It only applies to residential real estate containing four or fewer dwelling units (755 ILCS 27/5).
  • It must be recorded with the county recorder before the owner's death (755 ILCS 27/35).
  • It is revocable by the owner at any time during their lifetime (755 ILCS 27/25).
  • The beneficiary acquires full interest in the property upon the owner's death, subject to existing liens/encumbrances (755 ILCS 27/40).
  • It overrides any contrary provision in a will (755 ILCS 27/60).

So in essence, a Transfer on Death Deed allows for the transfer of residential real estate in Illinois outside of probate, directly to the named beneficiary upon the owner's death. This can be a useful estate planning tool in Illinois.





Jurisdictional relevance: ST

There are versions of this article for each State.