Everyone needs to have a will. This is the single most important tool you can use to make sure the property you own goes to the family members, charities, or others that you intend at the time of your death.
The statutes are clear that if the property procedures are not followed in executing a will that it will likely not be effective and the property will be transferred based on Indiana law if you are a resident of Indiana. In Indiana, this usually results in family members receiving a property that was not intended to go to them. For example, if you are married with children and you die your children and spouse receive part of your property. This may or may not have been your intention.
Indiana has probate and non-probate property. Non-probate property is a property that is transferred at the time of your death generally without court intervention. It is usually transferred by a contract you had with some entity before you died such as between you and an insurance company where you named a specific beneficiary to receive the funds. It is usually a good idea to have a contingent beneficiary also as one who will receive the funds if your primary beneficiary dies before you do. That way the money will not come back to your estate and be subject to your creditors in most instances.
Similarly, if the decedent has designated a beneficiary of their retirement plan, then the proceeds will be paid to that beneficiary based on the contract between the decedent and the trustee of the retirement plan.
These insurance and retirement proceeds will be payable to the designated beneficiaries no matter what your will indicates. The exception is where the beneficiaries of the insurance or retirement plan have predeceased you.
However, if there is not enough money in your estate to pay your debts then creditors can still come back on this property. For example, the state of Indiana might put a lien on such property for payment of nursing home expenses that the state reimbursed you to pay for such expenses.
It is possible in some situations to protect property from creditors such as the state of Indiana and other creditors is you set up the proper estate planning strategies well before you go into the nursing home which is recently 5 years but which use to be 3 years.
In addition, to designating where your property goes when you dies you will also indicate who the executor of your estate shall be. The executor is the person who gathers all your property together when you die, pays your debts, and then distributes the property according to your will. Of course, certain legal requirements have to be met such as giving notice to your creditors with publication in the paper, etc. but the executor’s attorney will take care of those matters and the attorney’s fees are reimbursable by the estate.
Currently, if the estate is under $50,000 then an informal distribution of property can in most instances be followed after 45 days from the date of death. There are still usually legal documents that need to be prepared and executed but the executor does not have to go through formal probate of the will.
Executors should never pay any money or distribute any property to heirs without talking to an attorney first. An executor must follow the law in paying debts and making the distribution. If not, this might result in the executor becoming personally liable for the decedent’s debt. If the executor follows his legal duties, he does not have any legal responsibilities for the decedent’s debts and neither does the beneficiaries.
There are many other specific legal issues that may be involved in your estate and there is no room here to discuss them. It is extremely important that you contact an attorney soon after a loved one’s death to make sure that the settling of the estate is proper.