When a person dies, a family will typically look through the decedent’s belongings and find out what he/she owned, bank accounts, retirement accounts, life insurance, etc. The family will then go to the local branch of the bank that the decedent had a savings and/or checking account. If the account only has the name of the decedent, then the bank will automatically freeze the account. The family is then confused about what to do next. The banker will say to them, do you have a letter of authorization. The family will say no. The banker will say go see an attorney to get such a “letter.” The attorney then gets the phone call where the family says…we need a letter, according to the bank, can you give us one?
Therein lies the problem. The bankers typically do not know what the “letter” really is, and how to obtain it. First of all, if the entire estate is less than $100K, the Illinois statutes provide that the family would only need a Small Estate Affidavit to get access to the accounts. The bankers generally do not know this. They just read off of the instructions that are given to them in their training. The “letter” they are requesting is actually a formal “Letters of Office” that must be issued by the Judge in a probate court. This is not something to obtain quickly and easily. The family would have to hire an attorney that will help them with the proper documents, to file them in court, and to appear on their behalf, about 4-6 weeks later, in court to request the “Letters of Office.” It is only then that the funds would be released. The cost of probate can be significant. It is about $3K-$5K to start, and can go up from there, depending on how much fighting there is among the beneficiaries, or how many claims are made against the estate. The time to go through probate is roughly 10-12 months minimum, and can go on for years, again, depending on the circumstances. The last disadvantage of probate is that it is a public record. The decedent’s estate and names of beneficiaries, and their addresses are all in public record, and anyone can take advantage of them.
So when your family member dies, and you want to get access to their accounts, ask additional questions of the banker. Can you provide a Small Estate Affidavit, in lieu of the “letters”? It’s important to know that the banker may not be the right person to talk to. You may need to speak to a manager, who will likely then confer with the legal department.
Instead of the family going through this process, the better solution is to prepare an estate plan now with an estate planning lawyer in Schaumburg, IL. Do not wait for the family to have to go through these situations. If you plan properly, they will be able to get access to all accounts and assets immediately, without needing court approval.
Thanks to Bott & Associates, Ltd. for their insight into estate planning and bank requirements at death.