When a family member or close friend passes away it is usually difficult for surviving loved ones to see past their grief. Someone, however, must focus on the practical and legal ramifications that accompany death. If you recently lost someone close to you and you find yourself contemplating those practical and legal ramifications, one of the first of them will undoubtedly involve the potential need to probate the estate. More specifically, you will need to know if probate is necessary in Indiana and if the estate qualifies for any available small estate alternatives to formal probate.
What Is Probate
Probate is the name given to the legal process that routinely takes place after a person’s death. One of the primary functions of probate is to provide judicial oversight to ensure that the assets owned by the decedent at the time of death are identified, located, and eventually transferred to the beneficiaries and/or heirs of the estate. Probate also protects creditors of the estate by requiring that they are notified of the decedent’s death and allowing time to file claims against the estate. Any challenges to the decedent’s Last Will and Testament are also litigated during the probate of the estate and all gift and estate taxes owed to the state and/or federal government must be paid before the conclusion of the probate process.
Why Should I Try to Avoid Probate?
If you are in charge of handling the estate of a recently deceased loved one, it is in everyone’s best interest to try and avoid probate if possible for several reasons. Among the most important of those reasons is the fact that probate can be expensive. Everyone involved, including attorneys, accountants, appraisers, and even you (as the Executor) is entitled to a fee for their services. After you add in the other costs associated with the probate process the combined total can significantly diminish the value of the estate assets that are left. Furthermore, probate can be a lengthy process because probate cannot terminate until creditors have been given an opportunity to file their claims. In Indiana, creditors potentially have up to nine months to file a claim which then must be reviewed. Consequently, probating even a relatively modest estate will usually take a minimum of ten months and more complex estates commonly take a year or more to probate. Keep in mind that probate assets cannot be distributed to the intended beneficiaries until the end of the probate process.
Is Probate Always Required?
In most cases, some type of probate is required before assets left behind by a decedent can be transferred to loved ones; however, if the estate is modest and/or the decedent planned ahead, formal probate may be avoidable. Most states, including Indiana, offer some type of alternative to formal probate for small estates that meet certain qualifications. In Indiana, there are two small estate options, including:
- Small estate affidavit – if the estate is valued at less than $50,000, anyone inheriting personal property from the estate may prepare a small estate affidavit to facilitate the legal transfer of the assets. There is a 45 day waiting period before the affidavit may be used for all assets except motor vehicles and watercraft in which case a five day waiting period applies.
- Simplified probate – simplified, or summary, probate also applies to estates valued at less than $50,000; however, real property can be included. As the Executor of the estate, you can use this small estate alternative to distribute the estate assets to beneficiaries and/or heirs. There is no need to go through the formal probate process but you must file a closing statement with the court.
The other important factor to consider is the type of assets that make of the decedent’s estate. Not all assets are required to go through probate. Therefore, one of your first tasks, as Executor, should be to classify all estate assets as probate or non-probate assets. Non-probate assets bypass probate altogether and can be distributed immediately following the death of the decedent. Common examples of non-probate assets include assets held by a trust, certain types of jointly held property, financial accounts designated as POD or TOD, and proceeds of a life insurance policy.
Contact Indianapolis Probate Attorneys
For more information, please join us for one of our a FREE seminars. If you have specific questions or concerns related to the probate process in Indiana, contact the experienced Indianapolis probate attorneys at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
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