- Scott A. Hale
Lake Life Expert Edition 1: Probate Laws Create Surprises for Hoosiers
Indiana Probate Laws Can Create Surprises for Hoosiers
Recent studies found that only 33% of American adults have an estate plan in place, and these numbers are significantly higher for people under 55.
Do You Have a Current Will or Trust?
Hoosiers without estate plans often leave surviving family members with significant burdens. In Indiana, navigating probate and complicated intestacy laws can be more challenging than other states that have adopted the Uniform Probate Code.
Unintended Distributions and Complications for Surviving Family
Many Hoosiers assume that their spouse will receive the entirety of their estate if they pass without a will or trust. However, this is not the case in Indiana. Residents of Indiana are often unhappy with the outcome of a probate case due to Indiana’s laws of intestate succession.
One common scenario, that often has problematic outcomes, occurs when a married person dies intestate (without a trust, will, or other mechanism to transfer assets), leaving a surviving spouse and no children. In this scenario, the surviving spouse’s in-laws are entitled to a portion of the assets solely owned by the decedent. This situation is common with couples who own second homes and vacation properties that are not titled jointly. This often creates strained familial relationships while loved ones are trying to navigate the grieving process.
Additional problems may arise when a married person dies intestate, leaving a surviving spouse and children. In this scenario, assets are divided between the surviving spouse and the children. These cases often require resolution through agreed disclaimers or negotiated buyouts; however, the process becomes more complicated when the children are minors. When minors are involved, a guardian will typically need to be appointed to manage inherited assets until the children reach the age of majority.
Among other intestacy surprises, an individual’s estate can even escheat to the State of Indiana if their heirs are too remote.
There are a number of other surprises contained in the probate code and the best way to secure your financial legacy is to make sure you have estate planning tools in place to control the flow of your assets.
What Estate Planning Options are Best for Me?
Each individual’s estate planning needs are different so the importance of customized estate plans cannot be understated. You should speak with an estate planning attorney to determine what estate planning tools are right for you. Included below are a few common estate planning mechanisms. If your assets are not covered by any of these, your assets may be at risk of transference through intestate succession.
Common Estate Planning Instruments
Revocable Trusts - Revocable Trusts remain a favorite tool for estate planning attorneys, as they are versatile, flexible, and can allow grantors to use trust assets as they please. Use of a revocable trust also allows the administration of an estate to occur outside of probate and to remain private. Trusts are typically more expensive to create and maintain than other estate planning alternatives, but this cost is typically offset by future probate and attorney costs.
Irrevocable Trusts – These are similar to revocable trusts but grantors have significantly less control over the trust assets. Irrevocable trusts are commonly used to protect assets from potential creditors.
Last Will and Testament – Wills are helpful for assignment of guardians for minor children and controlling estate distribution; however, wills still require probate administration that can be costly and arduous.
Transfer on Death Designations- TODDs are available on almost all bank and investment accounts. TODDs allow an individual to transfer assets to designated beneficiaries outside of probate. Indiana allows TODDs on vehicles and homes. TODDs can be helpful estate planning tools when paired with wills for simple estates.
Joint Ownership- Jointly owned assets are typically not subject to probate.
Life Insurance- Life insurance proceeds are typically non-probate assets.
This article is for informational purposes only and does not provide legal advice. Please do not act, or refrain from acting, based on anything you read in this article. Using this article or communicating with Scott A. Hale Attorney at Law through this article does not form an attorney/client relationship.