Indiana Probate: An Overview
Probate and its alternatives in Indiana.
Probate is a court-supervised legal process that may be required after someone dies. Probate gives someone, usually the surviving spouse or other close family member, authority to gather the deceased person’s assets, pay debts and taxes, and eventually transfer assets to the people who inherit them.
Conducting a probate in Indiana commonly takes six months to a year, depending on the situation. It can take longer if there is a court fight over the will (which is rare) or unusual assets or debts that complicate matters.
When Probate Is Necessary
Only assets that the deceased person owned in his or her own name, alone, need to go through probate. All other assets pass to new owners without oversight from the probate court. Assets that go through probate make up what’s called the “probate estate.”
Here are common kinds of property that are NOT part of the probate estate:
- Property held in joint tenancy: A home, bank account, or other asset held in joint tenancy by more than one person. When one owner dies, the survivor automatically owns the property. Learn more about avoiding probate with Joint Ownership.
- Property held in tenancy by the entirety: If the deceased person owned real estate with his or her spouse in tenancy by the entirety, the surviving spouse is automatically the sole owner.
- Payable-on-death bank accounts: A payable-on-death account is a bank account that passes to the POD beneficiary, without probate, at the death of the account holder.
- Assets registered in transfer-on-death form: Indiana residents can name transfer-on-death (TOD) beneficiaries for securities and vehicles. Assets registered in TOD form pass directly to the named beneficiary without probate. Learn more about TOD registration for Securities and Vehicles.
- Real estate transferred by a transfer-on-death (beneficiary) deed: In Indiana, an owner of real estate can execute and record a TOD deed; this lets the property go directly to beneficiaries, without probate. Learn more about TOD Deeds for Real Estate.
- Life insurance proceeds: When life insurance policies or annuities specify a beneficiary, the proceeds do not go through probate.
- Retirement accounts. The funds in retirement accounts do not go through probate if the account holder designated a beneficiary. For more on this, see Retirement Plans and Estate Planning.
- Living trust assets: Assets held in the name of the trustee of a living trust.
Alternatives to Probate for Small Estates
If the probate assets are under a certain amount, Indiana provides two alternatives to probate:
A simplified probate process. If the total probate estate is worth no more than $50,000 plus reasonable funeral expenses, the personal representative can immediately distribute all the assets to the people entitled to inherit them. The PR then files a closing statement with the court.
An affidavit process. If the total probate estate is worth no more than $50.000, anyone who inherits personal property (anything but real estate) from the deceased person can prepare a simple affidavit (sworn statement) explaining why he or she is entitled to certain assets. When the inheritor presents the affidavit and a death certificate to an institution possessing the property (a bank, for example), the institution will turn it over.
Who’s in Charge
Probate court proceedings begin when the person named in the will to serve as executor files the will and a document called a “petition for probate” with the probate court, requesting to be officially appointed as executor. (Proceedings are conducted in the county where the deceased person lived or, if the deceased person wasn’t an Indiana resident, where he or she owned real estate.)
If the will is “self-proving,” no further proof of its validity is necessary unless someone challenges it. With a self-proving will, the witnesses who watched the will-maker sign also signed an affidavit (statement under oath), stating that the will-maker appeared to be of sound mind. If the witnesses merely signed their names to the will, then at least one of them must now provide a sworn statement or testimony about the will-signing.
The court issues the executor a document called “letters testamentary,” which shows the executor’s authority over estate assets. Or, if there’s no will, a family member can ask to be appointed as the administrator of the estate; in this case, the court issues “letters of general administration.”
The executor or administrator is referred to as the “personal representative” of the estate. The personal representative (PR) has the responsibility for gathering the deceased person’s assets and taking care of them, paying debts and taxes, and ultimately distributing the estate assets to the people who inherit them.
The personal representative has authority over any assets that go through probate. Usually, the personal representative opens a checking account for the estate, and uses it for amounts that come into the estate (for example, compensation earned by the deceased person, refunds, and other miscellaneous payments), and to pay estate expenses. A taxpayer identification number must be obtained from the IRS before an account can be opened.
The Indiana Probate Court Process
The personal representative can request either supervised or unsupervised administration of the estate. As the name implies, the difference is the level of court involvement. With the more common unsupervised administration, the personal representative can wrap up the estate largely free of any need to report into or get approval from the probate court.
If the deceased person owned real estate in another state, the personal representative may need to conduct a probate proceeding in that state. That’s called an ancillary probate.
Unsupervised administration is allowed if:
- the estate is solvent (has more assets than debts) and
- the will authorizes it (many do) or everyone who stands to inherit agrees to it.
Generally, unsupervised administration is appropriate when there are no disputes—over the will’s validity, for example—that need to be resolved by a court. Compared to supervised administration, fewer papers need be filed with the court, so it usually means lower lawyers’ bills. Anyone who will inherit under state law (if there’s no will) or under the will, however, can object to unsupervised administration if they want the court to keep an eye on the personal representative.
A personal representative who is using unsupervised administration can sell, mortgage, or lease real estate or other assets, and deal with inheritance and income taxes without getting the court’s approval. Usually, the PR is not required to post a bond.
The PR must prepare an inventory of estate assets, with an estimate of each asset’s fair market value. The inventory isn’t filed with the court, but any inheritor is entitled to a copy. Within a year, the personal representative must file a closing statement—or an explanation of why one isn’t ready—with the court.
Generally, a personal representative wouldn’t seek supervised administration unless there’s a good reason to want the probate court to weigh in. Attorneys’ fees are generally higher than with unsupervised administration, because more papers must be prepared and filed with the court. Court intervention can be a good idea if:
- Beneficiaries are fighting
- There’s no will, and the heirs are unknown
- The will is not clear, or
- The estate contains assets that are difficult to value or sell (collections, unusual real estate).
In supervised administration, the personal representative must file an inventory of estate assets with the court. The PR must also get court approval before selling real estate, vehicles, securities, or other estate assets. Getting that consent may require getting assets appraised or asking the beneficiaries’ permission as well. After the estate is complete, the personal representative must file a detailed accounting showing the estate’s income and expenditures (with supporting receipts and other documents).
Handling Debts and Taxes
Whether or not there is a probate court proceeding, the personal representative or whoever inherits the deceased person’s assets outside of the will must use those assets to pay debts and taxes. To find the names of creditors, the PR should go through the deceased person’s financial records (tax returns, checkbooks) and ask people who are likely to know what debts the person owed.
If there is a probate court proceeding (unsupervised or supervised), a notice of the proceeding is published in a local newspaper and mailed to all known heirs (people who inherit under state law in the absence of a will) and creditors listed in the petition for probate. The PR must also mail known creditors a copy of the notice within a month after it’s first published. Creditors have three months, after the date of first publication, to come forward to make claims against the estate.
It’s also the personal representative’s responsibility to file final state and federal income tax returns for the deceased person. These returns are generally due by April 15 of the year following the year of death. Income tax returns may also be required for the estate itself.
A federal estate tax return will be required only if the deceased person’s taxable estate is very large—for deaths in 2016, more than $5.45 million. More than 99.7% of all estates do not owe federal estate tax.
Until May 2013, Indiana had a state inheritance tax, which was imposed on certain people who inherit money from an Indiana resident. The tax was repealed, and the repeal was made effective retroactively for deaths as of January 1, 2013.