I have written several blog posts about what happens to your property if you do not have an estate plan together, what Probate court is, and why you might want to avoid it. However, what happens to your property if it does not need to go through Probate court, but it also has not been distributed through a Trust, payable upon death designation, or otherwise? This is where a Small Estate Affidavit comes into play.
When to use Small Estate Affidavit
For some background, if an individual dies with over $100,000.00 in assets or owning real property, neither of which were transferred upon death, a Probate estate must be opened to transfer those assets. A Small Estate Affidavit can be used when someone dies owning less than $100,000.00 of assets and no real property (or real property that was otherwise transferred outside of Probate through Joint Tenancy or a TODI). A Small Estate Affidavit cannot be used if a Probate estate has already been opened.
Additionally, situations can arise where the Decedent completed their estate plan, yet a Small Estate Affidavit is still necessary to transfer assets. For example, S worked with an attorney to draft a Revocable Trust and funded most of her assets into the Trust. After S’s death, her Trustee found an old bank account containing $20,000.00 that had not been funded into the Trust. S’s Trustee would use a Small Estate Affidavit to liquidate that old account and put that money into the Trust.
How to Use a Small Estate Affidavit
The Small Estate Affidavit is a state-specific form that a representative of the Decedent completes to liquidate the Decedent’s property outside of court. The representative fills out information pertaining to the Decedent, Decedent’s heirs and legatees (if there is a Will), value of the estate including vehicles, as well as debts of the Decedent.
After the Small Estate is complete, the representative must sign it, have it notarized and attach the death certificate. The representative can then bring the Small Estate Affidavit to banks and financial institutions to collect the Decedent’s assets and distribute them to the heirs. Debts, including awards allowed by the law for children and surviving spouses, must be paid prior to distribution to heirs.
While a Small Estate Affidavit is a much simpler process than opening a Probate estate, the best practice is to have a properly executed Estate Plan, which can allow assets to pass through a Trust or other forms that allow for your assets to be passed to your heirs automatically, upon your passing.
If you have questions about Small Estate Affidavits, Probate or are ready to put your Estate Plan together contact attorney Lauren Kaplan at lkaplan@curlerlaw.com or (312) 952-1077 ext. 2 for a free consultation.