Small Estate Affidavits

By Cary A. Lind

True or false: If a decedent’s estate is less than $100,000, you can use a small estate affidavit to avoid Probate? Answer: Not necessarily.

Situations In Which You Cannot Avoid Probate.

If the “Probate assets” are greater than $100,000.00, you must go through Probate.
The small estate affidavit can only be used to transfer personal property. There are some ways to transfer real estate without Probate. Those techniques will be addressed in a future article. In most cases, however, “If you have real estate, you must Probate.”
If any interested party, including a creditor, petitions for Probate, the court will appoint a representative. A Probate proceeding is not like a lawsuit which the court can readily dismiss. The mere fact that a small estate affidavit can be used does not mean it may be used. Every interested party is entitled to his or her day in court.
If there is a dispute as to almost anything, Probate is necessary, even if the amount in issue or in the estate is relatively small.

The Small Estate Affidavit.

§25-1 of the Probate Act sets out the form for the small estate affidavit. While much of the information is basic and factual, there are some particular issues.

Paragraph 9 states the surviving spouse and dependent child awards. The minimums are easy to determine from the statute. What if more than the minimums are sought? If everyone agrees, that is fine. If not, Probate may be required.

Where the decedent did not leave a will, Paragraph 10(a) requires the name, address, and the “portion of the estate” of each heir. Considering the frequent errors that are made in heirships in court, that may not be an easy task. Issues of adoption, illegitimacy, relationships by the half-blood, etc., can complicate determination of the “heirs” and each heir’s share of the estate.

If there is a will, Paragraph 10(b) requires that the affiant swear that the decedent’s will is filed with the clerk of an appropriate court and that a certified copy of the will is attached to the affidavit. I have never had any third party actually require a copy of the will, let alone a certified copy. However, the original will must in fact be filed with the court.

Paragraph 11 – Payment.

Paragraph 11 of the small estate affidavit directs the third party how to pay the assets held. If all of the assets are held by one third party, it may be easy to direct separate payments for spouse and child awards, expenses, and distributions. However, what if you do not know the precise amount to be received from each third party? What if there are several third parties? How can you handle the logistics?

The statute provides a mechanism. §25-1(a) allows payment of the assets to an appointed agent. §25-1(c) gives the agent “power, without court approval, to gain access to, sell, and distribute the property for the benefit of all persons named in paragraph 11 of the affidavit.” For the protection of everyone and to comply with the statute, the authorizations must be given by everyone named in paragraph 11 and must be in writing. The statute does not authorize designation of an agent to pay estate bills. However, some parties and attorneys do directly specify payment of bills in the small estate affidavit. In a recent posting to the ISBA Online Discussion Group, an officer of a bank who frequently deals with small estate affidavits said that his bank is often asked in Paragraph 11 to pay bills directly. The bank issues separate checks for the requested expenses.

Paragraph 8 – Claims.

Paragraph 8 states that “[t]here is no known unpaid claimant or contested claim against the Decedent, except as stated in Paragraph 7.” Paragraph 7 deals only with the decedent’s funeral expenses. If there are any other claims, then what?

“Contested” claims are relatively easy to spot. If there are any, there will be Probate. However, virtually no estate will have no “known unpaid claims.” Who dies without at least one unpaid bill? Does a $15.00 ComEd bill mean that a small estate affidavit cannot be used? Even if claims are paid or settled before preparation of a small estate affidavit, those who paid them are entitled to reimbursement, and those rights are also “claims.” Looking at the literal language of the statute, no one could ever sign a small estate affidavit without potentially running afoul of Paragraph 8. In the end, if the “claims” will be paid, no one will be left to complain, and a small estate claim can be used (see below).

Practical suggestions:

In order to use the small estate affidavit, you may have to “ignore” the requirement of Paragraph 8 that there are no “known unpaid claimants.” If you cannot or will not do that, then you cannot use the procedure.
In general, where there are a limited number of interested parties who are working together and limited other issues, the small estate affidavit can work well. As the number of parties, third parties, complications, and difficulties increase, use of the small estate affidavit becomes more problematical.
Apart from the Paragraph 8 issue, in dealing with the small estate affidavit, I ask myself who can complain if the small estate affidavit rules or requirements are “bent.” I realize that the affidavit is sworn to under penalties of perjury. As much as clients would like to avoid Probate, perjury is not a viable alternative. However, if the only issue is claims, if all claims will be paid, and if there is no one to complain, then why not avoid Probate? You cannot do so if Probate cannot be avoided for other reasons (see above). However, I consider cutting corners where all interested parties have consented in writing and where there is no one to complain against my client or me.

Conclusion.

The apparently simple small estate procedure can in fact be potentially complicated, and there is no meaningful case law on its use. As attorneys, we are left to figure things out on our own and to fill in the blanks. If we choose to be literal and strict in interpreting the statute, we may find that we can never use a small estate affidavit. In the alternative, if we interpret the statute too liberally and go too far afield, we and our clients can be exposed to liability. It would be helpful if the Illinois legislature would clarify or modify the claims issue. The statute should provide that all known or reasonably ascertainable claims will be paid pursuant to the Probate Act and before any distribution is made. That language would track the requirements of the Probate Act itself and would make the end result the same with or without Probate. It would also allow us to use the small estate affidavit in more situations rather than less and as a truer “alternative” to Probate.