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What Happens if Your Spouse Dies and the Real Estate Was Only in Their Name?

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"YorkvilleThis article discusses the impact on spouses dying when real estate is their sole name. In Illinois, significant others and couples reside in real estate when one person's name is on the legal title. Mortgages are often placed in one's spouse's name due to poor credit, or one spouse has a higher income and a credit score to meet the underwriting standards of mortgage providers. 

People obtain mortgages without a spouse or another person for multiple reasons. First, the person was qualifying for the mortgage primary by the leading financial contributor. Mothers often stay home and place their families above their economic needs. Moreover, self-employed persons need help securing mortgages because the underwriting guidelines are more complicated than those employed by a company. Mothers (and fathers) also tend to work part-time or have flexible work arrangements so that they can cater to their children's extracurricular activities and school schedules. The cost of childcare also is a significant consideration for parents. However, these family sacrifices produce legal obstacles, which place families under challenging circumstances. People may also need to improve their credit, be proactive, and obtain estate planning before an incident. 

Oswego Quit Claiming Deed Lawyer: Adding a Person to Title

Spouses often inquire about adding one spouse onto the legal title at closing. However, depending on the circumstances, the spouse may be unable to be added to the lawful title at the house closing. In other instances, the family gets busy and needs to remember to add the family member to the legal title. Adding a person to a legal title is called a "quit claim deed." The failure of both spouses to be on legal title creates problems. People falsely assume that when one spouse dies, the surviving spouse will automatically inherit all their real estate, personal, and financial assets.

In Illinois, intestate succession governs the distribution of property when a person dies without leaving a will or a designated beneficiary. See 755 ILCS 5/2-1. Probate law is the relevant law that addresses appointing an administrator or executor upon death when one has failed to leave a designated beneficiary or a testament. 

As a rule, intestate succession is the process that governs the distribution of a person's assets upon death or is otherwise called a "decedent." A decedent's estate consists of debts, taxes, or support that do not have a designed beneficiary. The probate process is administered and supervised by a court in the county where the decedent last lived. A person's estate consists of assets that were not jointly owed.

Designated Beneficiaries

Designated beneficiary designations on retirement accounts always precede instructions in a person's will. But, this means a person's established beneficiary designation rules in case of a conflict with their will. For example, suppose a person will distribute one's retirement assets contrary to their retirement designation at their job or financial institution. In that case, the specific beneficiary they listed as their beneficiary will overrule their will. Complex rules and regulations govern retirement accounts; the designated beneficiary is legally entitled to receive the decedent's assets.

It is highly recommended that you regularly update your designated beneficiaries to ensure proper intent. Otherwise, there are significant consequences for your loved ones after you pass away. In addition, major life events such as a divorce, marriage, or birth or adoption of a child are good times to re-evaluate one's designated beneficiary designations.

In summary, designated beneficiaries should be carefully selected and updated, especially if one's adult child has special needs. In addition, special consideration must occur if a person has unusual circumstances that warrant careful estate planning consideration. Overall, carefully selecting and updating one's beneficiary designations will produce a smooth process upon death.

Designated beneficiaries result in problems when a person dies without a will or trust because, even though the decedent named beneficiaries for retirement assets or benefits, the way a person's retirement assets are labeled are the instructions their administrator will follow upon their death. Designated beneficiaries will bypass the probate process if the designated beneficiaries are alive and well. However, there are multiple instances where a designated beneficiary will be deceased, has developed a disability in life, or may not be the designated beneficiary a person desires upon death. Failure to update one's designated beneficiary status leads to estate conflicts and disputes among beneficiaries and heirs. This results in legal costs and attorney's fees to determine who is the rightful heir or beneficiary of these assets.

Divorces occur, and divorced spouses must re-title their retirement assets to include new beneficiaries. Furthermore, people's loved ones can die unexpectedly, which causes significant legal problems and risks. A testament ("will") is one method people use to cover these legal gaps. A major downfall to a will is the requirement that a will must go through a court process called "probate court." Another problem is naming minor children or disabled adults as beneficiaries causing severe issues. Minor children cannot legally inherit without a probate proceeding called "guardianship," a sub-court of probate court. The guardianship court is for disabled adults and minor children, and the guardianship court addresses the appointment of guardians and distribution of children's inheritances. Children's inheritances require annual accountings and the appointment of a guardian to legally protect the estate's inheritance in property and require yearly accountings. The guardianship court will appoint a guardian to manage one's inheritance for minor children. The guardian of the estate is responsible for investing the minor's children's assets and safeguarding the funds for the support, education, and welfare of minor children under eighteen years of age. Upon the child or children reaching the age of eighteen, the children will receive an outright distribution of funds without further court supervision or any financial constraints. 

Real Estate & Inherited Property

An unprobated estate is an estate that does not go through probate court. Real estate is a significant type of asset that needs to get probated. There is an exception in some instances where the heirs and beneficiaries can cooperate and finalize the sale of the decedent's real estate. The rules of descent and distribution govern unprobated estates because it explains who has rights as an heir and beneficiary. Unprobated estates may not occur when the beneficiaries designated in a will differ from the distribution process governed by Illinois intestate succession (unless the parties can agree to collaborate). Where there are differences, these differences are best suited for probate court. The probate court can determine the rightful owner of real estate. 

A significant problem arises when a spouse dies when one spouse's name is on the legal title. The problem occurs when either a surviving spouse or the decedent's children cannot cooperate in selling real estate together. However, the situation turns consequential when a surviving spouse and stepchildren distrust one another.

Under Illinois underwriting guidelines, "unprobated estates" have a specific process that must be followed to sell "unprobated real estate." However, the cost of probates, such as filing fees, attorney's fees, and time delay, can be avoided in certain circumstances. These circumstances typically occur when the heirs and beneficiaries can prove their relationship to the decedent, called an "affidavit of heirship and can satisfy the title insurance company that no fraudulent activity is occurring. Navigating unprobated estate issues involving real estate requires precision and a real estate team that is qualified to assist you or your family members.

Call the Strong Real Estate Team at Peace of Mind Asset Protection to Navigate Your Unprobate Estate Interests 

The Peace of Mind Asset Protection, LLC team involves real estate attorneys and support staff with over 50 years of real estate and title insurance experience. Gateville Law Firm is a real estate law firm that owns Peace of Mind Asset Protection, LLC. In addition, our support team has over 32 years of title insurance experience, which is significant when unprobated estate issues arise. Experience is essential because we can flawlessly navigate the procedures and processes the title insurance company needs. Call Gateville Law Firm today at 630-882-2467 or contact us through the online contact form on the website.


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