Probate & Estate Planning
Probate Questions
Probate is a court process for handling someone's business affairs after they have died. A probate court can enter orders appointing an executor (or personal representative) to be in charge of the decedent's affairs. The Court can also enter orders allowing for assets to be sold or distributed to heirs. Finally, the court ensures that all of the decedent's financial responsibilities are met, including tax filings, payment of debts, collecting monies owed to them, and paying for their final expenses, including burial and funeral expenses.
The easiest way to understand this is to first understand what non-probate assets are. These are assets that are transferred automatically when someone dies, under a contract, or beneficiary provision. Because they transfer automatically, there is no need for an executor to "probate" them or transfer them through the courts. Some examples would be life insurance policies or retirement accounts that have named beneficiaries, joint banking accounts, assets that are held in trust, and real estate or other property that is “transfer on death” property. In contrast, "probate assets" are those assets that do NOT transfer automatically and must be "probated" through the Court.
Not necessarily. Indiana law has some provisions that allow for assets to be transferred under “small estate” rules. These rules apply if the net probate assets are worth less than $50,000.00. Net probate assets are those assets that would be left after the family pays bills, final expenses, including burial expenses, or other debts. There are also some rules that might allow for a home to transfer without having to go through probate.
When an estate qualifies as a small estate (meaning that the net probate assets are worth less than $50,000.00), then the law allows families to transfer assets by a simple affidavit. There are, of course, some rules that apply to this process, and one of them is that you have to wait until at least 45 days after someone has died before you can transfer under a small estate affidavit. This waiting period is even longer if you are seeking to transfer real estate without probate.
It is always best to talk with a lawyer when a loved one dies in order to find out what might be needed to wrap up their affairs. Your lawyer can give you advice and guidance on whether a probate estate is required, whether assets are non-probate assets, or whether you can use a small estate process.
The decision to go through probate, or use a small estate transfer process doesn’t change whether your loved one had a will or not. It is based on the type of assets and their value.
However, the determination of who will be heirs is different if your loved one dies without a will. In that case, the rules of “intestate succession” will be used to figure out who their legal heirs are. You should always talk with a lawyer who can go through the family tree with you and advise you as to who might inherit under the rules of intestate succession as this is a complicated plan. That said, here is a very general idea of who those heirs might be:
- Spouses will receive between 50% and 100% of the estate, depending on whether the person who died had children or parents who were living when they died. However, there is an exception if the deceased person had children living, but those children were not their spouse’s children. In that case, the spouse would only receive 25% of the net value of any real estate, plus a percentage of the personal property.
- Anything that doesn’t go to a spouse, will go to the children of the person that died.
- If there aren’t any living children, then everything other than a spouse’s share would go their parents, siblings or other close relatives. There is a priority scheme in the statute to determine which of these other relatives would inherit and what percentages they would get.
The law allows for wills to be challenged, but only if you can prove that the person was not competent to sign a will, that there was something wrong in how the will was signed, that the person was threatened to sign the will, that someone put an unfair amount of pressure on them to sign the will or include certain things in the will, or that the will was fraudulent in some way. The process of challenging a will can be very costly and will take a long time. You may also be required to pay the estate’s costs if it turns out the will was valid and that your challenge to it had no merit.
Indiana law gives some money to a spouse even if they are not named in the will. A spouse is entitled to receive a spousal allowance of $25,000.00 from the estate. They may also be allowed to “take against the will” and to receive up to 50% of the person’s net personal property and real estate. This amount would be less than 50% if the decedent had children from a previous relationship.
There is no legal right to inherit anything from your parents in Indiana. As long as your parent was competent to make a will and there isn’t any legal reason to challenge their will, you can be excluded and inherit nothing. This happens often where a parent and child are estranged, or where a parent has given a lot of money to the child while they were alive. It can also happen if your parent is concerned that an inheritance might have a negative effect on other income or benefits you receive. If you have been excluded from your parents will and you don’t know why, or are surprised by that, then it would be a good idea to talk with a lawyer and see if you have a case for challenging the will. Just remember, though, that there is no right to inherit, and a person who is of sound mind s allowed to leave their property to anyone that they wish.
Estate Planning Questions
A Last Will and Testament (or "Will" for short) is a document that tells your loved ones (and a court) what you want to happen to your property when you die.
Most people do need to have a Will.
Indiana has something called "intestate succession" which is a plan that the State of Indiana has created for people who die without a Will. In some cases, what you want to happen to your property is exactly what the Intestate Succession law would do. If that is the case, you might not need a Will.
However, in many cases the State’s plan is not what you’d want. Writing a Will allows you to be specific about how you want to distribute your property when you're gone. It also allows for "contingencies" or back up plans, in case someone you love dies before you. A Will lets you designate who you want to be in charge of your affairs when you're gone. Finally, a Will allows you to place property into a trust when you die, in order to care for children and grandchildren that are not old enough or mature enough yet to manage their own finances.
A "Trust" (or more specifically a Trust Agreement) is a contract that allows someone you name to hold your assets for your benefit and/or the benefit of those you love. The person that you name as "trustee" is a fiduciary, which means that they are required by law to follow the plan that you have made in your Trust Agreement.
Like a Will, a Trust allows you to create a specific, unique, plan to provide for your loved ones during your lifetime and after you die. However, not everyone needs a trust. We typically recommend a trust for those who have a variety of different assets, for those who want a more complex plan for distribution of their assets, for those with young children, who want to avoid probate, or who want to put conditions on how money will be distributed to their beneficiaries. Your need or desire for a trust is going to be unique to your situation and family needs, and it’s something we will talk with you about during your initial estate plan meeting.
There are different types of Trusts. Your need or desire for a trust is going to be unique to your situation and family needs, and it’s something we will talk with you about during your initial estate plan meeting.
A "testamentary trust" is a Trust that is created in your Will. No assets are owned by the Trust until after you die. After you die, your bills are paid and the leftover assets are then transferred under the Trust. The Trustee will then invest or distribute the assets based on the terms you have put in your Will.
A "living" or "intervivos" trust is a Trust that you set up while you are still alive. With this type of Trust, you will typically transfer all of your assets to the ownership of the Trust at the time it is first set up. Often with a Living Trust, you and/or your spouse will be the initial Trustees so that you are still in control over your assets while you’re able to manage them. It will also allow for a plan to place a loved one in charge of the Trust when you are no able to manage those, or after you have died.
A "revocable trust" is a Trust Agreement that you can change during your lifetime. With this type of Trust, you can even "revoke" or get rid of it completely. In contrast, an "irrevocable trust" is one that cannot be changed. Once you place assets into an irrevocable trust, they have to stay there, and they can only be used, managed, sold, or distribute under the specific terms in the Trust Agreement.
These are just a few of the main types of Trusts, but there are many others, including special needs trusts, credit shelter trusts, and asset protection trusts. You should always talk with a lawyer BEFORE you create or put any assets into a trust, so that they can help you to know which type of Trust will be best for you and your needs.
A Power of Attorney ("POA") is a document that allows someone else to manage your affairs while you’re still living. A general “Durable” Power of Attorney can give authority to a friend or family member to allow them to make both medical and financial decisions for you. It allows them to buy and sell assets, pay bills, make gifts, decide about your medical care or long term care plans, and many other things. There are also “Limited” powers of attorney that can give someone specific authority over some of your affairs but not all of them.
It is often wise for you to have a POA, and we do encourage them in many situations. We encourage couples who are committed to each other to hold power of attorney for one another. There are some decisions that spouses can automatically make for each other, even without power of attorney, but those are more limited than most people realize. We have, unfortunately, worked with many people who had to obtain legal guardianship over their spouse in order to care for them. While guardianship is a good process, it is more costly and more complex than making decisions under a POA.
While we do encourage people to have a POA, we would also warn you that a POA gives a great deal of power to someone else, and it should only be granted to someone who has your complete trust. This is always something to discuss carefully with your attorney before it is signed.
A Living Will is a document that is important if you suffer from an injury or a medical condition that is likely to be terminal. If you have such an injury or condition, your doctors may determine that there is no hope that you would have meaningful recovery from that condition. In that circumstance, the Living Will tells your doctors and your family what your wishes are regarding life support.
Living Wills are not for everyone. It is a very personal decision and something you should discuss with your loved ones, your doctor and your attorney. We are always happy to prepare a Living Will for you as part of your estate plan package, and then you can review it and decide if it is something you want to sign.
Also, you should know that a decision to end life support can be made even without a Living Will. In cases where your family and your doctors are all in agreement about end of life care, those decisions can be made and life support removed whether you have a Living Will or not. Where the Living Will is most important is in those cases where there is conflict in your family or where your doctors and your family are not in agreement.
A funeral planning declaration is a document that allows you to plan for your burial, internment, or cremation. It gives your family information on what you’d like to have happen on services or viewings. You can use it to designate the funeral home, or cemetery that you prefer, and to make other similar arrangements. Finally, a funeral planning declaration can allow you to name the person that you want to make any other decisions about your body and memorials when you are gone.