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Unfortunately, most of us have suffered through the pain of the loss of a loved one.  For many, moving ahead with life can be daunting.  Not only do you have to deal with the emotional trauma, but not knowing or understanding the legal aspects will compound the situation with feelings of fear and anxiety.  As attorneys, we advise that you should be prepared; and knowing what will happen, before it actually does, is very valuable preparation.

“Probate” is a word that some people equate with big taxes and expenses, invasion of privacy and general evil.  You have probably heard a neighbor or friend say “You have to avoid probate at all cost!  I have an aunt who died and it was horrendous!”  For many, hearing the word probate immediately instills fear.

So, what is probate and is it something that you can or should avoid?

Probate is the name for the court proceeding used when a person dies and court assistance is required to sell or distribute assets and/or resolve and pay bills and expenses.  A probate proceeding involves the appointment of a personal representative for the estate (also known as an Executor or Administrator).  The person who will be the personal representative contacts an attorney when someone dies.  The attorney decides if a probate proceeding is necessary, and if it is, will file a petition with the court stating that a person has died (referred to as a decedent) and indicating whether or not the person has a will.  If there is a will, the original will is provided to the court when the petition is filed.  This is commonly referred to as “opening an estate”.  The petition also identifies who is asking to be named as the personal representative; and if there is a will, this is normally the person who is named in the will.  The court then appoints the personal representative for the decedent’s estate, and the Clerk of the Court will provide “Letters Testamentary”, if there is a will, or “Letters of Administration” if there is not a will.  Letters Testamentary or Letters of Administration are the official piece of paper, with the Clerk’s seal, that can be used by the personal representative to show to banks, the BMV, title companies, etc. when a decedent’s property needs to be sold or liquidated.  Creditors, utility companies, or healthcare providers all may want to see a copy of the Letters before dealing with the personal representative to resolve a bill or disconnect utilities.  In order to have authority to act as a personal representative, a person must be appointed by a court and receive Letters Testamentary or Letters of Administration.  Providing a copy of a decedent’s will to a Bank or a creditor is not adequate.

Probate in Indiana is only required for Indiana residents who have more than $50,000 in total assets and property (non-residents who own real estate in Indiana may also need an estate to sell or transfer title to the real estate).  When figuring out if a person had more than $50,000 in assets and property, you do not include property held jointly by a husband and wife, property titled in a trust, property held jointly with another person with rights of survivorship, or property that has a beneficiary designation (for example, life insurance or an IRA that names a person or persons as the beneficiary).

It is not uncommon when a spouse dies, that the spouse who survives will not need to open an estate.  Property held jointly by a husband and wife can pass to the survivor without the need for a probate proceeding.  Typically, an original death certificate and/or an affidavit will suffice to remove the deceased spouse’s name from the account or house owned by the married couple.

Frankly, probate has been unfairly saddled with a bad reputation.  It is not dangerous or evil.  In fact, it is an organized and helpful proceeding to assist people in selling and liquidating assets and property, paying final bills and taxes and distributing property to a person’s heirs.  It is not to be feared.  In fact, over the past 15 years or so, probate in Indiana has become rather streamlined and efficient. 

Using trusts can be a way to avoid probate and provide some protection from federal estate tax for large estates.  Obviously, you should consult an attorney about your specific situation to determine if you should or may want to avoid probate.  Attorneys will tell you that you should have a will.  You should also ask whether having a trust, in addition to a will, would be appropriate for you.  Make sure your attorney explains to you what probate is and whether (and how) you should avoid it.  Most importantly, be informed.  Once you understand what it is, probate need not be feared.

Note that this post is only a brief summary of the probate process, it does not constitute legal advice nor does it establish an attorney/client relationship.  Should you have specific questions regarding the above, please contact Benjamin T. Ballou or Bonnie C. Coleman at Hodges and Davis.

Hodges and Davis, P.C. - January 2015