Probate is a legal court process that allows for the transfer of estates from a person who has died to their heirs or beneficiaries. Depending on the estate's circumstances or the terms of the will, Indiana probate can be supervised or unsupervised. Estates with assets totaling $50,000 or less can go through a simplified probate process or avoid it altogether with the completion of a Small Estate Claim Form.
If a person didn't leave a will, their assets are subject to the state's intestacy laws. Probate court takes place in the county where the decedent lived, or if they weren't a resident, where they owned real estate.
Probating Under Indiana State Laws
Probate gives a family member or another trusted person or entity the authority over a decedent's estate. This person is known as the personal representative (PR) and is typically responsible for:
- Making a list (inventory) of all the decedent's property and value within two months of being appointed the personal representative of the estate.
- Protecting and maintaining the assets of the estate throughout the duration of the probate process.
- Liquidating assets as necessary and managing claims against the estate.
- Giving notice to creditors.
- Filing and paying the decedent's state and federal tax returns.
- Ensuring the decedent's assets get appropriately distributed to the beneficiaries.
- Closing the estate after distributing the gifts, settling claims and providing an accounting of every action taken on behalf of the estate.
Items Passing Outside of Probate
Indiana probate takes six months to a year to complete and can take longer if someone contests the will. The only assets that go through an estate are assets that the decedent owned solely in their name. All others pass outside of probate to beneficiaries named by the decedent. These include:
- Property the decedent transferred to a living trust.
- Proceeds from life insurance policies to named beneficiaries.
- IRA, 401(k) or other retirement account funds.
- Securities in a transfer-on-death (TOD) account.
- Real property with a TOD deed.
- Vehicles with TOD registration.
- Payable-on-death (POD) bank accounts.
- Property a decedent owned with another person in joint tenancy or tenancy by the entirety.
Probate Court in Indiana
Probate begins when a person named in the decedent's will petitions the court to serve as an executor of their estate. According to Indiana probate court rules, they file the will and a petition for probate with the court, asking for official appointment as executor. If the court approves the executor's request, they issue "letters testamentary," showing the executor's authority.
If there is no will, the court issues "letters of general administration." Both give personal representatives of an estate the same level of power.
Paying the Deceased Person's Debts
When the PR takes control of the deceased's assets, they must use them to pay the decedent's debts and taxes. The PR can go through the decedent's financial records and ask people who knew them to locate creditors.
The PR will publish a notice of the probate proceeding in a local newspaper and also send it to all known heirs and creditors listed in the probate petition. They must mail a copy to creditors within a month after publication; creditors then have three months from the date of the first publication to make claims against the estate.
Filing the Decedent's Taxes
The PR must file the decedent's final state and federal income tax returns. These are due by April 15 of the year following the year of death. The IRS will require a federal estate tax return only if the decedent left a large estate – in 2022, that's more than $12.06 million. However, most estates will not owe federal estate tax. If the estate assets earned income prior to being distributed, the PR must file estate income tax returns.
Indiana had a state inheritance tax until May 2013, imposed on people who inherited assets from an Indiana resident. The state inheritance tax repeal was made effective retroactive as of January 1, 2013.
Supervised Probate Administration in Indiana
The difference between unsupervised and supervised estate administration is the extent of the probate court's involvement. The PR won't typically seek supervised administration unless they have a specific reason for needing the court's guidance. It can be a good idea if:
- The estate's beneficiaries are fighting with each other.
- The decedent left no will and their heirs are unknown.
- The will is unclear.
- The estate has assets that are difficult to value or sell.
Under supervised administration, the PR must file an inventory of assets with the court and get its approval before selling estate property. This may require obtaining asset appraisals or asking the beneficiaries' permission. After the estate is finalized, the PR then must create a detailed accounting with the estate's income and expenses and include supporting receipts and other related documents.
Unsupervised Administration in Indiana
Indiana probate law also allows unsupervised administration of the decedent's estate if it has more assets than debts, the will allows it, or the inheritors agree to it. This type of administration works well when there are no disputes. Unsupervised administration is also less expensive – attorney's fees are lower as fewer papers need to be filed with the court. However, inheritors can raise objections to unsupervised administration if they want the court to monitor the PR during the probate process.
Under unsupervised administration, a PR can sell, mortgage or lease real estate assets without the court's approval. The PR must prepare an inventory of the decedent's assets within 60 days of their appointment with an estimate of the fair market value of each asset. This is not filed with the court, but inheritors will receive a copy. The PR must file an estate closing statement with the court within a year or explain to the court why one isn't ready at that time.
Probate Alternatives in Indiana
If an estate is $50,000 or less (in addition to reasonable funeral expenses and estate administration), there is a simplified probate process in Indiana in which the PR can distribute assets to the inheritors immediately. Afterward, the PR will file a closing statement with the court.
Also, if an estate is worth less than $50,000, anyone who is set to inherit certain assets from an estate can prepare a sworn statement or Small Estate Affidavit explaining why they are entitled to those particular assets. When they present a Small Estate Claim Form with a death certificate stating the person died at least 45 days before to the institution in possession of the property, that institution will turn over the asset.
Dying Without a Will in Indiana
When someone dies without leaving a valid will in Indiana, they are subject to the state's intestacy laws. This means the estate will be divided between the surviving next of kin. Who gets a share of the estate depends on whether the deceased has a surviving spouse, children, parents or siblings.
- If the decedent has children but no spouse, the children get everything.
- If the decedent has a spouse but no children, grandchildren or parents, the spouse gets everything.
- If the decedent has a spouse and descendants, the spouse inherits half the estate, and the descendants inherit the other half.
- If the decedent has a spouse and at least one descendant from a previous marriage, the spouse gets 1/2 of the decedent's personal property and 1/4 of the real estate's fair market value (minus any liens or encumbrances), and the descendants get everything else.
- If the decedent has a spouse and parents, the spouse gets 3/4 of the estate assets and the parents get 1/4.
- If the decedent has no spouse or descendants, the parents get all estate assets.
- If the decedent has siblings but no spouse, descendants, or parents, the siblings inherit everything equally.
- If the decedent has siblings and parents, the siblings get an equal share, but their parents share must be at least 1/4 of the estate.
Indiana Intestate Succession for Descendants
For children to inherit assets from an estate under the intestacy laws, Indiana must consider them the decedent's legal children. For example, children legally adopted by the decedent receive an estate share just as their biological children would, but foster and stepchildren do not automatically inherit assets. If the decedent placed their children up for adoption and they were legally adopted into another family, those children will not inherit from the estate.
However, if the decedent's spouse adopts their children before death, it won't affect their inheritance. Children conceived by a decedent but not born before their death will receive an estate share.
If a decedent has grandchildren, they will receive shares of the estate only if their parent — the deceased's son or daughter – is no longer alive to receive their estate share. If the deceased was not married to their children's mother when she gave birth to them, the children would receive an estate share under the following circumstances:
- The decedent later married their mother and acknowledged the children as his own.
- The decedent signed an affidavit confirming paternity.
- The child is at least 20 years old and has established the decedent's paternity through the court during his lifetime.
- The child is under 20 years old and has established the decedent's paternity through the court during his lifetime or within five months of death.
- The child was born after their parent passed away and has established paternity through the court within 11 months after death.
Other Indiana Intestacy Laws
The property of a person who dies without a will and has no family members goes into the state's coffers. If the decedent leaves behind any relatives – a spouse, parents, siblings, children, grandchildren, cousins, nieces or nephews – assets from the estate will go to those family members. Step-relatives, for example, will also inherit from the estate as if they were full relatives.
Those conceived before, but born after, the male parent passes away will inherit assets as if they had been born while the decedent was alive. If a relative was not legally in the U.S. or was not an American citizen, that does not stand in their way of receiving an inheritance.
A parent will not receive an intestate share of a minor or adult child if they were convicted of the death of the other parent through murder, voluntary manslaughter, or another criminal act. If a parent is separated from their spouse and "living in adultery" at the time of their spouse's death, or they have otherwise abandoned that spouse without just cause, they will not receive a share of the spouse's estate.
Michelle Nati is an associate editor and writer who has reported on legal, criminal and government news for PasadenaNow.com and Complex Media. She holds a B.A. in Communications and English from Niagara University.