Probate is the court procedure by which a decedent’s property is administered for the purpose of passing ownership of assets remaining in the decedent’s name at his/her death. Whether a person dies with or without a will, any assets in the decedent’s name alone are probate assets and must go through the probate process.
Probate law requires a person to present the decedent’s will to the court. The court appoints a personal representative to administer the assets of the estate. The personal representative is responsible for collecting the decedent’s assets for his/her heirs.
Indiana law allows an estate with less than $50,000 of assets to bypass the probate process by preparing a Small Estate Affidavit which states:
- 45 days have elapsed since the decedent’s death;
- The value of the gross probate estate does not exceed $50,000;
- No application or petition for the appointment of a personal representative is pending or has been granted; and
- The claimant is entitled to payment or delivery of the property.
You may present this notarized affidavit to any institution (i.e., bank or insurance company) or person holding property of the decedent, and that institution or person is required to deliver the property it holds to the claimant.
Our firm can help in the gathering of a decedent's assets, selling assets when desired, setting up estate bank accounts, obtaining a personal representative's performance bond (when required), clearing title to real estate, filing of estate tax returns and disposing of estate creditors. Of course, there are many other duties of a personal representative, and it is our job to help our clients with as many of these duties as possible. We are experienced and prompt.
The following is a brief summary of information we will need to initiate a probate estate:
- Name of decedent;
- Decedent's date of death;
- Decedent's last known address;
- Decedent's social security number;
- Decedent's age at time of death;
- Decedent's County and State of residence at time of death;
- Counties where the decedent owned real property in other states;
- Name of Personal Representative (Executor);
- Personal Representative's (Executor's) address;
- Names, addresses and relationship of all estate beneficiaries (provide age and birth date if the beneficiary is under 18 years of age);
- Nature and approximate value of each asset in the estate;
- Date of decedent's last Will (and Codicil if applicable);
- Witnesses of decedent's last Will (and Codicil if applicable); and
- Known creditors of the decedent.
Typical Probate Procedures
- Admitting the will to probate. To begin the probate process, a formal or informal petition, with an attached original will (if there is one), is filed with the Court.
- The appointment of the Personal Representative. The Court will appoint either the named personal representative in the will or will appoint a person with priority according to state statute. The Personal Representative is responsible for handling the affairs of the estate and is usually assisted by an attorney.
- Inventory and appraise assets. Within sixty (60) days after the appointment of the Personal Representative, an inventory of the assets of the estate must be filed with the Court.
- Payment of debts, claims and taxes. The Personal Representative is required to publish notice to creditors. Creditors are notified directly by mail if they are known and unknown creditors are notified by publication in a local newspaper. Once the debts and claims have been submitted, they are paid unless they are disputed. Most creditors have three (3) months from the date of first publication to file claims against the estate. The personal representative is also required to notify known creditors of the decedent within one (1) month from the date of first publication.
- Final distribution and closing of the estate. After the statutory waiting period for keeping the estate open has expired, and all debts and claims have been paid, the Indiana Inheritance return must be prepared and the tax paid. The remainder of the estate is distributed to the beneficiaries named in the will. If there is no will, the estate will be distributed according to the intestate succession statute. After the estate is distributed, the estate can be closed.
Attorney's Fees: Traditionally, attorney's fees were calculated as a percentage of the gross estate. Fees are determined by what is reasonable and lawyers have the option of charging either a fixed fee or charging an hourly rate for services rendered. We normally charge an hourly fee, not a percentage.
Personal Representative Fees: The personal representative is also entitled to receive compensation. However, many times the personal representative is a family member and chooses not to take a fee for services as personal representative.
The inheritance tax is imposed at progressive rates with exemptions decreasing and the rates rising the more distant the relationship of the decedent to the recipient of the property. Transfers to a surviving husband or wife are exempted from this tax. Inheritance taxes are determined by the probate court for resident Indiana decedents and by the Indiana Department of Revenue, Inheritance Tax Division, for nonresidents decedents who have assets in Indiana.
The inheritance tax applies to real estate (the physical land and everything permanently attached to it) and tangible property (the combination of Real Property and Personal Property) located within Indiana which belonged to a deceased resident and the decedent’s intangible personal property (incorporeal property, such as money, deposits, credits, shares of stock, bonds, notes, other evidences of indebtedness, and other evidences of property interests) regardless of where it is located. It also applies to property interests of a non-resident decedent, for real and tangible personal property.
Indiana law requires each estate to file an Indiana Inheritance Tax Return, Form IH-6, on behalf of all of the beneficiaries, if the exemptions due not exceed the gross estate. Form IH-6 is due one year from the date of the death of the decedent and filed with the probate court of the county in which the decedent resided. Form IH-6 may be obtained from the county Assessor’s Office in which the decedent resided.
The inheritance tax is due 12 months from the date of death. If the payment is made within nine (9) months from the decedent’s death, the county treasurer gives a 5% discount on the tax due. Interest on late-filed returns begins to accrue at the rate of 10% per annum from the date of death to the date of payment. The court may reduce the rate of interest from 10% to 6% if the estate shows unavoidable delay.
The Indiana Estate tax is a tax imposed upon a recipient or nonresident decedent’s estate. The tax is the difference between the Indiana portion of the federal state death tax credit allowed on the Federal Estate Tax return (Form 706), and the amount of inheritance tax actually paid.
Under the Internal Revenue Code, the value of a decedent's gross estate is determined by including the value, at the time of death, of all real and personal property, including tangible and intangible property, wherever situated. It includes the value of all property to the extent of the decedent's interest in it at the time of death. The taxable estate consists of the gross estate minus certain deductions for expenses, debt taxes, losses, charitable gifts, and bequests to the surviving spouse.
Each heir non-spouse or beneficiary of a decedent's estate is divided into three classes; each class is entitled to a specific exemption (IC 6-4.1-1-3; 6-4.1-3-10 to 12).
Class A: Spouse, Children, Grandchildren, and Parents.
Currently the first $100,000.00 of an estate going to an heir in Class A is exempt from inheritance tax. Estates over the first $100,000.00, the tax is as follows:
$25,000 or less 1% of net taxable value
$25,000 to $50,000 2% of net over the first $25,000 plus $250.00
$50,000 to $200,000 3% of net over the first $50,000 plus $750.00
$200,000 to $300,000 4% of net over the first $200,000 plus $5,250.00
$300,000 to $500,000 5% of net over the first $300,000 plus $9,250.00
$500,000 to $700,000 6% of net over the first $500,000 plus $19,250.00
$700,000 to $ 1 million 7% of net over the first $700,000 plus $31,250.00
$1 million to $1.5 million 8% of net over the first $1 million plus $52,250.00
Over $1.5 million 10% of net over the first $1,500,000 plus $92,250.00
Class B: Brother, Sister, Niece, Nephew, Daughters-in-law, Sons-in-law.
First $500 is exempt from tax. The estate over the first $500 is taxed at the following rate:
$100,000 or less 7% of net taxable value
$100,000 to $500,000 $7,000 plus 10% of net over the first $100,000
$500,000 to $1 million $47,000 plus 12% of net over the first $500,000
Over $1 million $107,000 plus 15% of net over the first million
Class C: No blood relation, Cousin, Aunt, Uncle, Step Children, Brothers-in-law, Sisters-in-law.
The first $100 is exempt. Estates over the first $100 are taxed at the following rate:
$100,000 or less 10% of net taxable value
$100,000 or $1 million $10,000 plus 15% of net over the first $100,000
Over $1 million $145,000 plus 20% of net over the first million