If you’ve finally reached the point in life where you’re starting to think about estate planning, there’s a good chance that you feel a little bit out of your depth. Proper estate planning often involves much more than just the creation of a simple will – especially when you want to ensure that you’ve taken steps to deal with future incapacity, plan for Medicaid eligibility, and leave behind a legacy for your loved ones. You may be worried about estate tax implications, asset transfers, and a whole host of complex issues that can make the process of creating an estate plan a truly daunting challenge. For residents in the state of Indiana, this overview of Indiana inheritance laws can help address some of the most common concerns.
The Probate Process
If you’ve ever had to deal with the processing of a will after a family member dies, then chances are that you are at least somewhat familiar with probate. As in other states, probate in Indiana is a court-supervised process by which estates get settled. The process is there to prevent any type of fraud and ensure that your estate goes to the right people. As a result, assets are essentially frozen so that the court can assess the validity of the will, acknowledge the estate’s executor, and then move forward to settle your affairs.
This process mandates that both creditors and beneficiaries be notified. Assets are catalogued and appraised, debts are settled – including taxes, and the court authorizes distribution of the assets in accordance with the directives in your will. Once all of that is accomplished and a final accounting is provided to the court, the judge officially closes the estate.
It is important to recognize that a will is not enough to keep your estate out of probate. That goal can only be accomplished by ensuring that your assets have a way of being automatically transferred to another owner when you die, using things like living trusts or certain account transfer options.
In Indiana, as in every other state, creditor rights supersede the rights of beneficiaries. As a result, debts must all be paid prior to asset distribution to beneficiaries. Basically, executors have three primary tasks that must be performed:
- Take stock of all estate assets and their worth
- Ensure that all estate debts are paid
- Provide for the orderly distribution of assets to beneficiaries.
Those three things must all be done in that order, to protect not only the creditors but the beneficiaries as well. After all, no beneficiary wants to receive an inheritance only to find that a creditor is pursuing those assets because he didn’t get paid! To prevent that, the executor has a responsibility to make reasonable attempts to notify creditors so that they can pursue any legitimate claim.
In the state of Indiana, your estate can be settled using just an Affidavit whenever the total gross value of the estate is below $50,000. There is also a 45-day waiting period from the time the decedent passes away. In determining the value of the estate, certain assets are excluded. These include any assets with joint tenancy, accounts that are payable on death, property that transfers on death, and life insurance policies with named beneficiaries.
Passing on Wealth to Minor Children
Another question that is often raised focuses on the best way to pass wealth to minor children. Like many other jurisdictions, Indiana does not allow minors to inherit any property directly. As a result, if you want to leave property to your minor children, you need to do it in a way that involves an adult managing it until the child reaches the age of eighteen. Trusts can help to simplify this process, since there will be a Trustee to manage the child’s inheritance. There are other options as well, and you should discuss them with an estate planning attorney to determine which is right for you.
Inheriting Life Insurance
In most instances, determining who gets the benefits from a decedent’s life insurance policy has nothing to do with things like trusts or wills. That’s because life insurance policies are designed so that the policyholder names beneficiaries. In Indiana, life insurance payouts go to named beneficiaries on the policy. There are exceptions, of course – such as might occur in instances where the policyholder named his estate as the beneficiary.
Joint Tenancy Property
In Indiana, any property that is considered to be held in what is known as “join tenancy” automatically goes to the surviving tenant under the rules of survivorship. This type of joint ownership is commonly seen with property owned by married couples, but can also be used by parents and their children or even partners who have no relation to one another.
Taxes owed by the estate have to be paid after the decedent’s passing, of course. In fact, there are several tax returns that have to be filed, including a state income tax return and any of three federal returns. Possible capital gains tax issues and exposure to federal estate tax liability will also need to be addressed. Indiana has no estate or inheritance tax.
Dying Without a Will
If you fail to provide a will, then Indiana’s intestacy laws determine where your assets go. Those laws prioritize heirs beginning with your closest family members such as a spouse and children, and then broaden to include everyone from parents and grandparents to cousins, nephews, nieces, and so on. It is important to understand this so that you can take affirmative action to plan your estate in a way that reflects your wishes.
Get the Help You Need
At Frank & Kraft Attorneys at Law, our legal team can help you to develop the estate plan you need to give you and your loved ones the peace of mind you deserve. We can handle even the most complex estate planning concerns and assist you in your efforts to secure your legacy and provide for your family when you’re gone. Contact us online today or call us at (317) 684-1100 to learn more about how we can help you prepare for the future.
- Updated Federal Gift and Estate Tax Figures for 2023 - January 26, 2023
- Why Estate Planning Is Important for Multi-National Couples - January 24, 2023
- When Do I Need to Update a Trust Agreement? - January 19, 2023