Small Estate Administration

• • What is probate?

• • Most people leave behind an estate when they die that consists of all assets, both tangible and intangible, owned by the decedent at the time of death. Probate is the legal process by which those assets are identified, located, and valued, and that eventually serves to distribute assets to beneficiaries and/or legal heirs of the estate.

• • Who oversees the probate of an estate?

• • If the decedent left behind a valid Last Will and Testament, the individual named as the Executor is responsible for overseeing the probate process and the terms of the Will are used to determine how the estate assets are distributed. If the decedent died intestate (without a Will), someone typically volunteers to oversee the probate of the estate. In that case, the state intestate succession laws dictate how estate assets are distributed.

• • What does the Executor do during probate?

• • Although the probate process is unique for every estate, common steps in the process include:

    • Identifying, locating, and valuing all estate assets.
    • Categorizing assets as probate or non-probate assets.
    • Opening the probate of the estate.
    • Notifying creditors of the estate that probate is underway.
    • Reviewing and approving or denying creditor claims.
    • Prioritizing and paying approved claims.
    • Defending any challenges to the Will or litigating any claims.
    • Calculating any paying federal (and state, if applicable) gift and estate taxes.
    • Transferring any remaining assets to the named beneficiaries and/or legal heirs of the estate.

• • Why is avoiding formal probate important?

• • Some estates cannot avoid formal probate; however, when it can be avoided, it should be. A complex estate can take months, even years, to get through the formal probate process. Creditors have three months from receipt of the notice, or within nine months from the death of the decedent, whichever is earliest to file a claim in Indiana. For this reason, even a relatively small estate can take a year or longer to probate. If the estate becomes involved in litigation, formal probate can drag on for years. Along with the time it takes to get through formal probate, it can also be very expensive because everyone involved in the probate of the estate (Executor, lawyers, appraisers, accountants) is entitled to a fee. This can dramatically diminish the value of the estate that is ultimately passed down to loved ones.

• • Can I use a small estate alternative if the decedent left a Will?

• • In some states, small estate alternatives to formal probate are not available if the decedent left behind a valid Will. In Indiana, however, the existence of a Last Will and testament does not preclude the use of a small estate alternative as long as the Will does not require supervised probate.

• • How do I determine the value of the estate?

• • To determine if the estate qualifies for a small estate alternative, you must determine the value of the estate. Assets are classified as probate or non-probate at the beginning of the probate process. Assets that are considered non-probate assets bypass probate altogether and can be distributed directly to the named beneficiaries, meaning they are not part of the probate process. Common examples of non-probate assets include:

    • Assets held in a trust
    • Proceeds of a life insurance policy
    • Certain types of jointly held property
    • Assets held in an account with a “payable on death (POD)” or a “transfer on death (TOD)” designation
    • Certain retirement, pension accounts

• • What is Administration Without Supervision in Indiana?

• • Indiana offers an alternative to formal probate known as “Administration Without Court Supervision” for estates valued at less than $50,000 and that meet all the following qualifications:

    • If there is a Will, it must not have required supervised probate.
    • The estate must be solvent (meaning it cannot owe more money than it has), and
    • All beneficiaries (if there is a Will) or heirs (if there is no Will) must consent in writing to the unsupervised administration OR the Will must specifically authorize unsupervised administration.

• • Are there any other alternatives to formal probate in Indiana?

• • Yes. Indiana also offers the option to use a Small Estate Affidavit to transfer property (other than real property) if the estate is valued at less than $50,000 and at least 45 days have elapsed since the death of the decedent.

 

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If you have additional questions, contact an experienced Indianapolis, Indiana estate planning attorney at Frank & Kraft. by calling (317) 684-1100 to schedule your appointment today.