A Brief Explanation of Probate in Indiana
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Probate is the court procedure by which a decedent’s property is administered for the purpose of passing
legal 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 requires a person to present the decedent’s will to the court. After the court determines that the decedent’s
will is valid, 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. A person may prepare a Small Estate Affidavit which states the
following:
A. 45 days have elapsed
since the decedent’s death;
B. The value of the gross probate estate does not exceed $50,000;
C. No application or petition for the appointment of a personal representative is pending or
has been granted in any jurisdiction; and
D. The claimant is entitled to payment or delivery
of the property.
The claimant 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 shall deliver the property to the claimant.
Lorenzo
Law Office has administered literally hundreds of estates in Jackson and surrounding counties and we have the
experience and ability to handle all types of estate matters and related litigation.
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.
The following is a brief summary of information your attorney will need to initiate a probate estate:
A. Name of Decedent
B. Decedent's
date of death
C. Decedent's last known address
D. Decedent's social
security number
E. Decedent's age at time of death
F. Decedent's
County and State of residence at time of death
G. Counties where the decedent owned real property
in other states
I. Name of Personal Representative (Executor)
J. Personal
Representative's (Executor's) address
K. Names, addresses and relationship of all estate
beneficiaries (provide age and birth date if the beneficiary is under 18 years of age)
L.
Nature and approximate value of each asset in the estate
M. Date of decedent's last Will
(and Codicil if applicable)
N. Witnesses of decedent's last Will (and Codicil if applicable)
O. Known creditors of the decedent
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Probate Procedure
1. 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.
2. 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.
Traditionally, this person has been referred to as a executor for a male and an executrix for a female if the person died
with a will.
3. 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.
4. 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. Once the debts and claims have been submitted, they are
paid unless they are disputed. 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.
5. 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.
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 his/her services as personal representative.
Inheritance Tax
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The Indiana inheritance tax is
not a tax on the property itself, but on the transferee’s (heir’s) right to receive or succeed to property. The
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. 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
shall grant 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 court, however, may not waive the entire interest.
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.
Transfers to a spouse are completely exempt from Indiana
inheritance tax (IC 6-4.1-3-7). Each heir 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.
Effective July 1, 1997, 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
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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