The ability to decide what happens to your estate assets after your death was likely a primary motivation for creating your estate plan. If all goes as planned, all your estate assets are eventually transferred to the intended beneficiaries during probate, the legal process that follows your death. What happens though if assets remain unclaimed at the end of probate? The Indianapolis estate planning attorneys at Frank & Kraft explain what happens to an unclaimed inheritance in Indiana.
Understanding Probate
Before discussing what happens to an unclaimed inheritance, it helps to understand the legal process that follows a death. When someone dies, that individual leaves behind an estate made up of tangible and intangible assets owned by the decedent at the time of death. To ensure that those assets are transferred correctly, the decedent’s estate goes through the legal process known as “probate.” If the decedent left behind a Will, the terms of that Will are used to determine what happens to the assets included in the Will. Anyone who inherits through a Will is referred to as a “beneficiary.” If the decedent died without a Will, the decedent is said to have died “intestate.” Assets left out of a Will are also considered intestate assets. Intestate assets are distributed according to the state’s intestate succession laws and anyone who inherits intestate assets is referred to as an “heir.”
How Can an Inheritance End Up Unclaimed?
There are two ways in which assets can end up unclaimed. The first is when a beneficiary or heir to the estate has been identified but cannot be located or fails to claim the inheritance. The second way occurs when no beneficiaries/heirs exist in which case assets “escheat” to the state.
During the probate process, beneficiaries and/or heirs are identified and notified that the estate is being probated and that they are potentially entitled to an inheritance. The beneficiary/heir must then follow proper procedures to claim the inheritance or to disclaim the inheritance if they do not want it for any reason. If a beneficiary predeceased the decedent, a properly drafted Will should make it clear who inherits the beneficiary’s share of the estate. Likewise, if close family heirs do not exist, the state intestate laws dictate that the inheritance be passed on to more distant relatives. In short, probate laws are designed with the goal of passing on all a decedent’s assets to someone related to the decedent if a Will fails to distribute all assets.
What Happens to Assets Left Unclaimed?
If all efforts have failed to identify, locate, and distribute estate assets to an heir of the decedent, those assets will escheat to the State of Indiana. State laws compel financial institutions and holders of property to report and relinquish unclaimed assets to the state when those assets go unclaimed for the applicable dormancy period (which differs depending on the type of asset but is typically five to ten years in Indiana). The asset may be held by the State or liquidated, again depending on the type of asset and the circumstances.
A rightful beneficiary or heir, however, may attempt to claim an unclaimed inheritance even after it has been relinquished to the State of Indiana. To file a claim for an unclaimed inheritance you first need to search the Indiana Unclaimed website operated by the Indiana Attorney General’s Office. You can also check for an unclaimed inheritance in another state by navigating to the National Association of Unclaimed Property Administrators website where you will find information and links to searchable databases in all 50 states.
Contact Indianapolis Estate Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns regarding your estate plan, contact the experienced Indianapolis estate planning attorneys at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
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