The probate process can be time-consuming, extending to several months or sometimes years. Additionally, it can be a costly due to court, attorney and executor fees. Plus, probate is a public process, meaning the deceased person’s estate details, beneficiaries and will, become part of the public record. These concerns drive many individuals to seek other estate planning solutions. Here’s what you need to know about avoiding probate in the state of Indiana.
A financial advisor can help you create an estate plan for your specific needs.
Importance of Avoiding Probate
Avoiding probate can be an important estate planning step for several reasons. First and foremost, probate is a legal process through which a deceased person’s assets are distributed to heirs and beneficiaries. And this process is not only time-consuming but also expensive, as legal and administrative fees could significantly reduce the overall value of your estate. Therefore it’s in the interest of your heirs and beneficiaries to avoid probate so that they can inherit assets faster and cost-effectively.
Second, probate proceedings are public record. So details about the deceased person’s estate, including its value and the beneficiaries, will be available to everyone. And this lack of privacy may be a top concern for those who prefer to keep financial matters private.
Avoiding probate often involves setting up trusts, joint ownership arrangements, or using beneficiary designations on assets such as life insurance policies and retirement accounts. These alternatives can help streamline the transfer of assets without the need for court involvement.
Ways to Avoid Probate in Indiana
Like many other states, Indiana’s probate laws require the admission of the will to a court and the appointment of a personal representative to manage the decedent’s assets. However, Indiana has a few unique tools to simplify the process. These include:
The Small Estate’s Affidavit in Indiana
In Indiana, a simplified procedure known as small estate probate is available for estates valued below a certain threshold. It offers individuals a quicker, less costly avenue for settling estates, making it a vital aspect to consider when dealing with estate planning and administration in Indiana. To qualify for small estate probate in Indiana, an estate must meet specific criteria:
- The value of the decedent’s personal property must be less than $50,000, excluding real estate, which is smaller than other states that allow up to $100,000.
- At least 45 days must have passed since the decedent’s death.
- The person petitioning the court for small estate probate must provide a verified statement detailing the value of the property, the decedent’s outstanding debts, and the names of the successors.
Living Trust
A living trust is a legal document created during an individual’s lifetime that appoints a trustee who is responsible for managing the individual’s assets for the benefit of a future beneficiary.
Living trusts offer several advantages. They can help avoid probate, saving time and reducing stress for beneficiaries. They also ensure privacy as they are not part of the public record, unlike a will. Moreover, they can provide a practical solution for managing assets should the trustor become incapacitated.
Joint Ownership
Consider a situation where you and your spouse own a house together. If one of you were to pass away, the house would automatically become the sole property of the surviving spouse, thereby avoiding probate. This is the concept of joint ownership.
In Indiana, joint ownership can take two forms: Joint tenancy or tenancy by entirety. Joint tenancy includes the right of survivorship, meaning that upon the death of one tenant, their interest in the property passes to the surviving tenants. On the other hand, tenancy by entirety, exclusively for married couples, also includes the right of survivorship.
However, it’s crucial to remember one thing: To establish joint ownership with rights of survivorship in Indiana, you must include a statement of joint ownership in the deed. Failing to do so could result in the property not passing to the surviving owner upon the death of the co-owner.
Transfer or Payable on Death
Transfer/Payable on Death (TOD/POD) designations are types of account registrations that allow the account holder’s assets to pass directly to the designated beneficiaries when the account holder dies, bypassing probate. It’s a simple, changeable process that, despite its simplicity, may not cover all types of property, depending on state laws.
For instance, in Indiana, some assets like bank accounts or securities can be covered by TOD/POD designations, while others like real estate or vehicles may not.
Other Estate Planning Tips
One of the main objectives of estate planning is to ensure that your assets are inherited by your chosen beneficiaries, instead of being distributed under state intestacy laws or reduced by administrative fees and taxes.
A comprehensive estate plan not only plays a crucial role in avoiding probate, but it could also help protect against creditors and lawsuits, and provide a greater sense of control and peace of mind.
Here are three tips to help you improve your overall estate planning process:
- Create a will or trust: Having a will or trust is a key part of estate planning. These documents outline the distribution of your assets upon your death. Without a will or trust, the state determines asset distribution, which may not align with your intentions.
- Choose a trustee: An executor or trustee will carry the responsibility of ensuring that your assets are distributed according to your wishes. When choosing an executor or trustee, key factors to consider are their trustworthiness, organizational skills and financial literacy.
- Review your estate plan: Regular reviews and updates of your estate plan are important to maintain relevance for your current circumstances and wishes. You can adjust some plans as circumstances change.
Bottom Line
Avoiding probate in Indiana can be in the the interest of your heirs and beneficiaries. There are different estate planning strategies available to help you accomplish this goal. For smaller, less complex estates, joint ownership or payable-on-death designations may suffice. However, for larger or more complex estates, or for individuals with specific concerns about potential incapacity or disputes among heirs, establishing a living trust could be a solution.
Tips for Estate Planning
- A financial advisor can help you prepare for retirement and protect your assets in your estate. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- If you’re trying to complete your estate plan on your own, a checklist could help you prioritize what you need. But, take note of the potential dangers of DIY estate planning.
Photo credit: ©iStock.com/Jokic, ©iStock.com/FG Trade, ©iStock.com/RealPeopleGroup