What you don’t know could cost you
As the cliché goes, the only certainties in life are death and taxes. Fittingly, probate covers both. Although not every estate needs to go through the court-sponsored probate process, individuals who die with substantial assets or complicated familial situations will probably need to think about its implications. These four items serve as a good starting point for understanding the rules and regulations that govern probate in Indiana.
1. The “Probate Estate” Doesn’t Cover Everything
Although “probate” is often incorrectly used as a shorthand to describe what happens to a person’s assets after their death, the process isn’t all-encompassing. Several classes of assets aren’t dealt with as part of the so-called “probate estate,” including:
- Retirement accounts with a designated beneficiary
- Assets held in living trusts
- Payable-on-death bank accounts that pass directly to a beneficiary
- Property held in joint tenancy or tenancy-by-the-entirety
Certain other asset classes may be exempt from probate as well.
2. Some Probate Alternatives Exist
Those who have small, simple estates may take advantage of certain probate alternatives. Indiana allows for two such alternatives, both of which may be used on estates worth less than $50,000:
- Simplified probate allows a designated representative to distribute assets directly to heirs named in the deceased individual’s will
- Affidavit probate allows heirs to prepare sworn statements that outline the assets to which they’re entitled and the reasons for said inheritance
3. Probate Can Be Supervised or Unsupervised
Although all probate cases require a personal representative to handle the affairs of the deceased individual, some may be executed with minimal court supervision. Unsupervised probate cases are handled almost exclusively by the personal representative: The only court-filed paperwork requirement is a sworn “closing statement” that must be filed within a year of the estate-holder’s death. By contrast, supervised probate is overseen by a judge.
To qualify for unsupervised probate, all of the estate’s heirs and beneficiaries agree to it. The estate must also be solvent.
4. Heirs Must Pay Attention to Tax and Credit Issues
Although some debts are absolved in death, creditors may file claims against an estate for others. In Indiana, creditors have three months after the publication of a probate notice to make such claims. If the probate judge agrees that a given debt is valid the claim is paid from the estate assets or the creditor may be allowed to repossess the collateral to satisfy the debt.
These four useful tips merely represent the tip of the probate iceberg. While many probate cases are uncomplicated, others can take a great deal of time and effort to work through. If you still have questions or concerns about what happens to your assets or those of a loved one after death, give us a call at (317) 842-8283 or visit us online to consult with an experienced probate attorney.