While not frequently discussed, it is
generally understood that when you die, your estate will likely have to go
through “probate.” This article provides a brief explanation of which estates
have to go through probate, and how you may be able to avoid it. However, for
individualized advice, it is highly recommended that you see a lawyer.
A “probate court” is defined as a
“special court having jurisdiction of proceedings incident to the settlement of
a decedent’s estate,” and “probate” is the legal proceedings performed so that
the probate court may ensure that a person’s estate is handled properly (and
legally). The general goal of the probate court in these proceedings is to
oversee the administration of a decedent’s estate and to make sure the
beneficiaries (and the decedent’s creditors if he/she has them) all receive the
proper assets from the decedent’s estate.
In general, if an Indiana resident dies
with $50,000 or more in “probate assets”, the decedent’s estate must go through
the probate process. “Probate assets” are assets of a decedent which do not
have a defined beneficiary and are not owned jointly with another person. The
assets typically include: (1) tangible property such as real estate, cars, and
other personal property; (2) bank accounts (and retirement accounts) that don’t
have a beneficiary or joint owner; and (3) a business you own in your
individual name.
There are many reasons to desire that
your estate avoid probate. One frequently cited reason is that the probate
process can involve significant costs. The costs of probate include attorney’s
fees, court costs, advertising costs, and possibly the fee of a personal
representative (sometimes called an executor). Another frequently cited reason
is that probate filings are generally open to the public. This means that the
general public (including friends, neighbors, and relatives) can obtain copies
of the probate records, which include an inventory of your assets (and your
liabilities) at the time of your death.
General tips to make sure your estate
avoids probate include:
(1) Accounts. Identify beneficiaries (and
contingent beneficiaries) on all of your accounts. This includes not only your
checking and savings accounts, but also your investment and retirement
accounts.
(2) Real Estate. If you are the sole owner
(no spouse or somebody else) of real estate, consider executing a transfer on
death deed to the person you wish to receive the real estate. Another option is
to create a revocable trust, and place the real estate in the revocable trust.
(3) Business Assets. If you own a business,
that business is also an asset of the estate, and the value of your ownership
interest would be included in your estate. Possible options to transfer that
ownership include putting it in joint name with your spouse, or transferring
the business interest to a revocable trust.
(4) Talk with your lawyer.
If you haven’t signed your Will (surveys estimate that about 50 percent of
people reading this article have not), you should do so and ask your attorney
what can be done to avoid probate. If you have signed a Will, you should ask
for a review of your current estate plan. Review all of your assets, and ask
your attorney if your estate would be required to go through probate if you
died today. These reviews should occur after any significant life event such as
(1) the sale or purchase of a large asset (such as a business); (2) a birth (or
death) in the immediate family; or (3) a change in your (or your business’s)
financial situation.
This article was written by Paul
C. Rudolph, an attorney with Rudolph, Fine, Porter &
Johnson, LLP (www.rfpj.com) in Evansville, Indiana. For additional
information, you may contact him at (812) 422-9444 (e-mail: pcr@rfpj.com).
His practice areas include corporate and business law, elder law, estate
planning, tax law, and bankruptcy.
This article is intended solely as an information source and its
contents should not be construed as legal advice. Readers should not act
upon the information presented without professional counsel.
