Losing someone you love can be one of the most difficult experiences of your life. The loss tends to come with pain, shock, and overwhelming grief. The last thing that one would like to think, but eventually has to is, “What do I do now?”
Death isn’t exactly a cheery topic for common conversation. In fact, it is usually the last topic anyone wants to talk about or think about. But alas, regardless of our social disdain for considering death, it happens to the best of us. At one point or another, we lose people. And while loss is universal, our collective avoidance of the subject leaves many at a loss for what to do next when it does happen. What exactly is one supposed to do amid the sudden death of a loved one? There isn’t really a handbook or New York Times bestseller that we all turn to. Of course, there are legal and logistical actions that must and will be taken after someone dies. After all, when people die, they leave behind a life that must be closed out. The question for many, however, is “What is in that life?”
At the end of the day, we want to grieve for and appreciate the life of our lost loved ones—not drown in complicated and confusing legal matters. Ultimately, a simple and detailed checklist could be very helpful, so I’ve created one for you here! Our team at CCSK Law wants to remove this unnecessary burden from the already trying times of loss. Therefore, we present to you the handbook you may or may not have been looking for: What To Do (And What Not To Do) When Someone Dies
The post-death process can be incredibly stressful, chaotic, and complicated. Losing a loved one is difficult enough; the process thereafter should make things easier, not more difficult, for you and your family. You’ll have many people telling you all kinds of things that you should do or that you need to do. They’re likely right on most of it, but they’re often wrong on the timing. Most of the things you must do can’t happen yet, so take a breath and read below what needs to be done in what order.
Step 1: Do very little.
Hopefully, by now, you’ve gotten through the funeral, a few days have passed, and you’re starting to see which way is up. But this is still a disorienting time. We want to try to make sure we keep things in the right order. So do very little. Don’t get caught up in worrying about the logistics they will be taken care of when we need to take care of them.
Get through the funeral. Honor. Celebrate. Take your time through this process. We’ll hit a point where we have to hit deadlines, and we’ll know what they are and when they are. That will be down the road. For now, do very little.
Step 2: Don’t claim authority.
The second step in this process is don’t claim authority. Now, that may seem like a strange thing to say, but as I’ve mentioned a few times, when we’re going through this process, we kind of have a checklist in our mind, of the things we want to do or need to do or should do. We want to feel like we’re doing something useful. So one of the things that people will do is call credit card companies and stop credit cards. They may call a mortgage company, may call a bank, and freeze the bank account. Those are all fine things to do. They absolutely are. However, make sure you keep your conversation very short. And this is where this claim comes from, claim of authority.
You can call the bank and say, “We want to put a freeze on this account. The person has died. Is there something we need to provide for you?” As proof, a lot of people will need a copy of a death certificate. It’s important to ask these questions: “Do you need an original copy of the death certificate? Can you take a scanned faxed copy?”
A bank account, depending on how it was owned, is going to be something that we’ll focus on in later steps. But at least right now, activity will be frozen on that account and that’s important. Going back to step one, remember to still do very little. Don’t make a run to the bank and take all the money out. You can actually put yourself in a position where you can be personally liable for something that breaks bad by taking that money out. So don’t do it… DON’T DO IT!
Freeze the account, and give the bank the information they need in order to do that. You can call credit card companies and just say, “The person has passed. Is there something we can fax, scan, or mail to you to let you know that?” They will ask questions such as, “Is the estate probated? Where’s the probate? Who’s the executor?” You don’t know the answer to any of those questions. You just don’t know yet. You can’t know until we get to a determination about whether we even need probate and appoint an executor. A lot of times we don’t need that. But the creditor wants to be paid and that’s going to kind of roll into the third point in just a moment.
Just give the information that we talk about: the person’s name, date of death, and then ask what they might need after that. Don’t claim to be the executor.
If you had a power of attorney, you no longer have the function of a power of attorney. There’s some caveat in there with the health care power of attorney, if you had to do an autopsy or something like that. But it is important to understand that the power of attorney dies with the person. Social Security numbers die with the person. The ability to use credit cards and such in that person’s name are done as well.
An executor is appointed by the court. We haven’t gotten that far yet. We may not ever need to go to court, so don’t claim to be the executor. The reason a creditor wants to know if you’re the executor or who the executor is is because they want to be able to call somebody to get paid. They want to make sure that they can get in line or try to jump the line to get paid ahead of everybody else. So keep your conversations to just information at this point. No claim of authority.
You may be a trustee on a trust. But we don’t know what assets are in the trust at this point. We don’t know what authority that person’s going to have and different things along those lines. So, again, just provide the information, and let them know that we’ll let them know when we know.
Step 3: Don’t pay creditors.
Step three is don’t pay creditors. There will be a lot of pressure to pay creditors. You’re going to call the credit card company. They’re going to say something like, “Oh, they personally owe X amount of dollars. You can go ahead and pay that now and then you can get paid back by the estate later.” They just want to be paid. They are not a high-priority person to be paid. There is a very specific order of the way people would get paid. If we go through an estate process – probate or trust or something along those lines – there is an order of who gets paid first.
> Secured Creditors
If you have a loan on a house, they’re very, very high. But they get paid when that house is sold.
> Administrative fees.
The court is going to get paid. If you have to go through probate attorneys, they’re going to get paid. You may have a PR for the state of Indiana. If you live in Indiana (and this content is really geared towards people in Indiana) and you are 55 years of age or older, when you die, the state must be notified. They are a very high priority payee, much higher than creditors. They’re behind a sliver of funeral, and then the funeral comes back in. There’s an order, so don’t pay creditors at this time.
I have been involved in too many estates where it looked like, “Oh, we’ve got plenty of money.” But then when we find out how many loans, judgments, and other things are out there. An insolvent estate means it’s a bankrupt estate. If someone paid money to a credit card and there’s no money by the time we get down to where credit cards are supposed to be paid, that person can’t be paid back. The credit card company doesn’t care because they got paid. They’re not giving that money back. So don’t pay creditors. Tell them the information that you can tell them, but don’t pay anything.
Also, be careful about making mingling money for any purpose. The one sort of asterisk in this circumstance is a funeral. There are a lot of funeral homes that won’t go through the process unless somebody pays. That’s tricky. I can’t tell you to do it. I can’t tell you not to do it. But understand the exposure; if there’s no real money in the estate, you may not get paid back. So be wary of what funeral costs are. Be aware of the fact that some may want you to pay on the front side and we may not be able to get to money for a couple of months to pay them.
Step 4: Talk to an attorney.
Next, you’re going to need to talk to an attorney. There are circumstances where you have to engage an attorney and there are circumstances where you don’t necessarily have to engage an attorney, and then there are some areas where you would be better served to work with one. That said, at some point, you may want to talk through the process with an attorney. So you better understand what the circumstances are. There are a lot of attorneys, myself included, who will sit down and walk you through a process and not charge you for it.
From my perspective, I don’t know what your needs are. Why would I charge until we have a better feel for what your needs are and your circumstances? In Indiana, if you have to go through a probate process, you do need to hire an attorney. As you saw from the pricing options and fees expectations above, there is a vast array of differences between what attorneys charge for their services. That should have given you the basic makeup of how pricing is determined and how you can ask the question, maybe even before the first meeting, of how that works.
But an attorney in general might be able to help you understand whether there is a need for probate, whether there’s a need to do any other legal documentation outside of probate, to transfer assets to beneficiaries or to another account or something along those lines. So it’s not a bad idea at some point to sit down and talk with an attorney and just ask them, “What do you think about this circumstance, and what would be your recommendation?”
The first attorney you meet with does not have to be the attorney you hire. You need to be able to connect with this attorney and feel like the questions that you have are being answered. You want to feel like you understand what the process is going to look like. For example, timeframes, and expectations for providing material, who has to sign off on what, and things of that nature. It’s important that you feel like you can communicate with the attorney and that you are getting more understanding of the process as you go.
We actually have a free download on our website called “How to Hire an Attorney” and it is appropriate here. This download walks you through the steps to go through and prepare yourself for the process of working with an attorney. In the process, we tell you to contact an office and ask a few questions. And one of the things you’re going to ask is, “What’s the charge for X (in this case probate)?” There are a lot of attorneys who won’t quote fees over the phone and that’s fine, but at least understand what their fee structure is based on.
How do you start the search? How do you even determine who you’re going to talk to? Attorneys use these things called practice areas to kind of dictate what a person focuses on. Be careful though, there are a lot of attorneys that will say they do probate, but they also do family law and they do bankruptcy and they do a whole variety of other things… sometimes you need someone that has maybe a higher level of understanding or higher level of focus on the probate process.
Different courts do probate in different ways. That’s to say different counties do probate in different ways. So sometimes it’s important to have an attorney that understands Lake County versus Porter County versus LaPorte County versus Pulaski County.
When I quote people an uncontested, unsupervised probate, my fee is $3,200 all up and in. There are some limitations to that. If it starts to get out of control, if we start to get people arguing and fighting and want to drag it into court, then we have to change the fee structure. But if we stay within the fence lines of unsupervised uncontested, not a ton of creditor issues that we have to deal with that $3,200 is, from my perspective, an amount that is an appropriately reasonable fee for the services rendered. Probate’s going to take you some time. As we talk about in the probate video, it’s going to be a six-month process at minimum to work through the process, and more often than not, it leans closer to a year. So just be aware of that as well. It’s important that expectations are set for everybody and that you understand the timelines. So if you become the person that’s in charge, or if you’re just a beneficiary, you kind of know what to expect.
Questions to ask before you hire an attorney
- Would you be willing to meet with more than one person?
Would the attorney be willing to meet with more than one person, the whole family, and kind of talk through it? I don’t mind that, and actually, I think it’s a good idea for everybody to get on the same page. Maybe some people are there physically, and other people may be there through a video call or a telephone call, but at least everybody’s hearing the initial message from the beginning. And we can try to at least start with everybody on the same page. I promise you not everybody will stay there over the course of time, but at least we can say we all started in the same place and everybody understood kind of what to expect going forward.
- How is your fee determined?
Above, we talked about several ways that attorneys set their fees (Percentage Based, Maximum Allowed, Hourly, Flat Rate). I want to caution you about the fact that some attorneys will tell you they charge a Flat Rate, but it’s not flat across all probates, because what they’re actually charging is the Maximum Allowed but they pass it off as a “flat rate” because the maximum you can charge is a flat percentage, but not a flat dollar amount. This “flat rate” is based on the value of the estate and the state of Indiana is not necessarily fond of this fee structure. A lot of different counties have, in their ethics references that the probate shouldn’t be set on a value. Sadly, oftentimes what I’ve heard people quoted by attorneys that charge this way is the max value for a supervised estate formula. So if someone starts saying to you, “Well, I can charge 6% on the first hundred thousand, 4% on the next two hundred thousand, and 2% on…” They’re rattling off this formula “6, 4, 2, 1” – which in most of the local rules that I’ve read in the counties that I’ve done work in, this is the max value for a supervised estate. Which basically means that it is the maximum that can be charged for a supervised estate. It’s not really a flat rate and it’s not really ethical.
Remember, a supervised estate means you’re going to court for virtually every decision that you have to make. It’s going to be a much more drawn-out process because the court isn’t just waiting for you to show up one day, the court is going to require filing for a hearing and then waiting for the calendar to have an open spot, notice to be sent to everybody. There’s some built-in delay in that automatically. So I’m not a fan of supervised unless we have to do it, or it makes the most sense to do it, or someone requires it (yes, some people can require a supervised probate). But even with that, the court has to approve the fees. The reality is oftentimes courts don’t quibble with attorneys, but again, I’ll go back to the fact that that formula that I hear referenced out there is not necessarily appropriately being applied.
So ask, “How is your fee determined?” If the attorney says they charge a flat rate, ask “Is it a flat dollar amount, or is it based on the value of the estate?” And “Do you have a formula to calculate that?” Understand that you’re not asking for the actual fee, you’re asking how the fee would be determined and that gives you some way to determine if that’s an attorney you want to meet with. You may be fine with someone doing that in your estate, but I would tell you that in an estate that has a relatively simple estate that has a house worth a few hundred thousand dollars and maybe some money in the bank and some vehicles, the cost is going to be substantially different in that situation where you apply a formula versus a flat rate. But the work’s the same. So just be aware of that. The work for the most part is the same. Let me say that again. The work for the most part is the same, no matter how much or how little you pay for it!
Another thing an attorney should be able to tell you fairly early in the process is whether this looks like it’s lining up for probate or whether it’s not. Married couples in Indiana rarely need to go through probate when the first person passes because of the way assets are owned. We talk about how assets are owned and what’s in an estate here, but there’s a trigger that requires probate. If we don’t get there, there are some other documents you may need to do. And then having an understanding of what a small estate expense might be with an attorney or the series of small estate documents that might need to be completed. For example, an affidavit of survivorship, which is a legal document that removes the name of a deceased person from title on real property.
I would suggest downloading the “How to Hire an Attorney” brochure, penciling down some things that are pertinent to your circumstance, and then chatting with a couple of attorneys and seeing how that works for you.
Attorneys can be very helpful through this process. Many of them like myself have gone through it. Many times. We know what the different nuances of the different courts are and we can kind of set some expectations, even in a very preliminary talk before we know if we have to go through probate.
Step 5: Don’t distribute anything (yet).
Trust me, I know this is going to be hard to do, but don’t distribute anything (yet). There is a very strict order of how assets are to be distributed. The reason the court wants to be involved in a probate process in Indiana when a person has $50,000 or more in their name after they die is because the state really wants to make sure that the assets of that person are properly allocated in the right priority. At the very top of the list are secure creditors, right behind that are administrative fees, which might include filing for probate, hiring an attorney, and paying the attorney, personal representative. It could also mean administrating and maintaining property within the estate. So it’s safe paying for insurance and making sure taxes are paid. If we’ve got a house, making sure the utilities are kept up. So those are very high priorities.
Funeral expenses (reasonable funeral expenses) are right behind that. Then there is the state and the federal government that want to put their priority stamp in there. Then we have unsecured creditors, which could mean credit cards, uncollateralized loans, and a variety of different things that might be out there that need to get in there. This is where it gets rigorous; those people will try to move themselves to the front because they know they’re not a priority. So remember, no matter what kind of threats or sob stories someone gives you, don’t claim authority, and don’t distribute anything (yet). You can call the credit card company out of courtesy to let them know that this person passed and to freeze the account. They’ll tell you what they need from a logistics standpoint, a copy of the death certificate, and some other information.
But there have been instances where I’ve had credit card companies say, “You know what, while I got you on the phone, why don’t you just go ahead and pay this? And then you can get paid back by the estate later?” Well, the reality is we don’t know if there’s going to be money in the estate. I’ve seen estates with multiple properties and what looked on paper to be a half million dollars worth of real estate that because of mortgages, judgments, all sorts of other things, and other debts that are out there tied to the properties, we actually ended up insolvent in the estate and we ended up with families fighting over nothing. But if a creditor had been paid early in that process by somebody out of pocket, there’s no money to pay that person back.
The state of Indiana, by law, has made itself a known creditor to anyone who dies in Indiana after the age of 55. And the reason they did that is because they want to be reimbursed for Medicaid or other agency expenses that they’ve paid out during that person’s lifetime. They can only start billing when the person turns 55, and they assume that they’ve given everybody a dollar or more. So you have to let the state know if in fact a person’s died and then they get in line right behind the funeral. In fact, what the state has said (through a series of statutes) is the funeral can only be $2,200 if you’ve received Medicaid or money from the state.
So there’s $2,200, roughly that gets paid towards a funeral. Then the state gets in and gets paid. Additionally, if someone was in a nursing home for four or five years, that could be tens of thousands of dollars. So then they get paid. Then the funeral comes back in, or the federal government, if you owe taxes. So the funeral comes in ahead of the unsecured creditors to get the balance paid, but we may never get that far. We may never get past paying back the state. We may not even have enough money to pay back the state. We may not owe the state anything, but we don’t know until we go through the process, we invite them to submit their claim and we wait to see what their bill is.
The state of Indiana has gotten much more aggressive in the last 18 months or so making sure that they are taking care of in the right way, at the right time. So if someone were to pay money out to an inappropriate person, (for instance, you pay $8,000 to a funeral when only a chunk of that should have been paid before Medicaid was paid), there’s a liability that someone’s going to have to answer to. That’s why it’s so important to not distribute or pay out before it’s time. It’s pretty straightforward.
Step 6: Don’t let people spend money, take things, or use things (yet).
The bigger issue that we have is this next step: self-distribution, if you will. When people have a house and there are things in the house, it’s amazing how many of those things start to “walk off” or “wander off” – can’t be found when somebody goes to do an inventory. This person, if we are in a probate circumstance, is appointed by the court and is called a Personal Representative. That’s the generic term for Executor if there’s a will, Administrator if there’s not. The Personal Representative (PR) is the person the court appoints to take care of the estate. The PR, once appointed is responsible for doing an inventory of all the assets of the estate, so we can get a value on the estate. Houses, vehicles, personal property, bank accounts, and all the different things that might go into the estate that is then available to be filed. In some cases, the court wants that filed. In some cases, beneficiaries or heirs can ask for that inventory to know what was in at the beginning. Then as we go through the process of paying things, and going through the process of probate, there’ll be expenses that will be debited against that.
Now the stuff in and around the house is really easy for someone to walk through and say, “I loaned this to him, so I wanna make sure I take it back.” or “He said, I could have that, so I’m going to go ahead and take it.” Maybe they don’t say anything, and they just take it. You hear stories like, “They knew there was money in the house so they dug around, they found it, and they took it.” Then it wasn’t there when the PR went to look for it. That’s not legal. It’s really not legal for someone to do that. And it causes some consternation (feelings of anxiety or dismay, typically at something unexpected) for the PR who has to gather the information about the inventory, and then at some point pay, pay bills in the proper order.
Someone says, “Well, the car’s just sitting there not being used and this person needs a car.” So they take it. That’s not legal. That’s not how it works. If that car was wrecked, we possibly, probably don’t have insurance on it. So now there’s a liability issue there. So there are a lot of really simple things that would seem that can happen, but they shouldn’t. This is not an easy thing to stay in control of because things just wander off. You may not even know by the time you go to do inventory, what was there or what was supposed to be there. For example, I was in a client’s house a few weeks ago, and they’ve got this gorgeous collection of ships, big model ships. A very, very valuable collection. But if I hadn’t been in the house recently to know what was there, it would be difficult to know what had already been given away, sold, or taken. Or if the PR walks in for the first time and it seems everything is gone. You don’t necessarily know what was there. So this is not easy, but it’s important.
It’s one of the reasons why I would prefer to have everybody have that initial conversation, so they know what they need to know about distribution. Don’t just take things. There’s a plan. There’s an order that has to be followed.
So, don’t let people spend money, take things or use things (yet). As the PR, you run the risk of being liable for something if someone just takes things. This is actually what is called conversion (knowingly or intentionally exerting unauthorized control over the property of another person), which is against the law and it could cause that person a big issue. Again, somebody goes and borrows a car and gets in an accident. That’s not insured. That’s going to be a problem for everybody involved, including the estate, the PR, and the person driving the vehicle. So as hard as it is, don’t distribute, don’t spend, use, or take until it’s time.
To break it down in an easy-to-see order, this is the priority of paying out but don’t distribute anything, until the time comes.
- Secure Creditors
- Administrative Fees, such as filing for probate, hiring & paying an attorney, personal representative, administrating and maintaining property, such as insurance, taxes, utilities
- Funeral Expenses
- State and Federal Government, such as Medicare, Medicaid
- Unsecured Creditors, such as credit cards, uncollateralized loans
Step 7: Understand what is in an estate and what triggers probate.
The next two steps are going to be integrated with each other. You can really do one or the other in either order or do them both together. It’s very, very important to understand what is in an estate and what triggers probate. It is uncountable the number of times that someone has said to me, “Well, he had a will and the will said X, so I should get this.” or “This is how it should be done, or here’s who’s in charge.” The reality is a lot of people don’t go through probate, so the will has very little effect. There are a whole lot of ways you can own property or put beneficiaries on property that would move property the moment after you die before so that you don’t have $50,000 or more to your name when you die.
Picture this: there’s this legal magic moment after you die and there are things called non-probate transfers that will move that property out of your name. You could have $1,000,000 in your name before you die, and in this magic moment, it all moves out of your name. Then, when we go to count, there’s actually nothing in your name or very limited amounts of assets in your name. If after that process, we get to a point where there’s $50,000 or more, then we need to evaluate whether we should or probably need to go through probate.
How could we possibly have a $1,000,000 estate that doesn’t need to go through probate?
Let’s break it down. I own a house valued at over $300,000 house jointly with my wife. I own it jointly; when I die, my interest dies. The house is now in my wife’s name. That’s not countable. I have a $250,000 life insurance policy. It has beneficiaries. Those beneficiaries are going to receive the proceeds of that life insurance policy. And so it will go without needing to go through probate. That puts me at $550,000. Let’s say I have $50,000 worth of vehicles held jointly, that those vehicles are going to go to the survivor and my interest dies with me. So they’re not countable. That leaves me $400,000 and I’m going to have $400,000 in my IRA that has beneficiaries. So it’s going to go to the beneficiaries without going through probate. There’s an example of a $1,000,000 estate that now needs no probate because we did non-probate transfers.
Can I avoid probate?
Yes! If done properly, we can avoid probate altogether. Some people have trusts and the trust holds the ownership of that asset, so it’s not counted. In Indiana, we have transfer-on-death and payable-on-death options, which is kind of like putting a beneficiary on an asset that doesn’t otherwise have beneficiary provision. There are a number of factors that go into the planning process.
Before we pass, we do a plan to avoid probate and put assets where we want them to be after we’re gone, which is called a non-probate transfer – a transfer, effective at death, by a transferor domiciled in Indiana and who immediately before death had unrestricted power over the property and its use, as defined in Indiana Code § 32-17-13-1(a).
I had this happen a couple of times this year: Someone did not have proper beneficiaries on their life insurance or annuity, so the company says, “There’s no one named. We can’t distribute it out to someone. We’re going to pay it back into the estate.” Now in both of those situations, (one was $200,000 and the other was $95,000) it was greater than the threshold necessary for probate. Therefore, we ended up going through probate for a single asset. We wouldn’t have had to have done it all if the beneficiaries would have been named properly in the first place. We had to go through the entire probate process to move that asset to eventually beneficiaries of the estate. This is one of those things where people think “He had a will. I was in the will; it said I was in charge.”
However, if we don’t have assets in probate, then we don’t need to probate the assets. A will is your instructions to the court to say, “Here’s who I want to be in charge, and here’s how I want things distributed after everybody else is taken care of.” We’re not in probate, so we don’t necessarily need the will. But if we don’t have enough assets to trigger probate, we may not have probate.
This is a big misconception out there today that you need a will. In many cases, you actually need a trust, not a will. The trust is what helps keep your family out of probate after you pass. You set that up while you’re still around and it generally makes life easier for everyone involved. There are a few circumstances where we might leverage the will in smaller estates to make sure it’s distributed properly, but it’s not going through the court. We’re just leveraging the will to represent what the person’s wishes were.
What does it mean to “spread the will of record?”
You can sometimes submit a will to the court, it’s called “spread the will of record” to put it out there so people knew the person died. I think the people who appreciate that most are genealogists, so we’ve got names and relationships in the public record. It also does some of the things to ‘start a clock’ and ‘end a clock’ and things of that nature.
What does it mean to be disinherited?
I had a conversation with a young lady who called me because her father had passed away. He had a second marriage and he had said for years that he had taken care of her in a will. And the reality was in the second marriage, everything was owned jointly and all of those assets went to his second wife. There was no probate. There was no requirement for her to share those assets with the daughter. And she didn’t. So basically, the father who may have thought he had done the right thing to take care of his daughter, accidentally disinherited her. That is why planning is so important and why reviewing your plan regularly is crucial to not miss any updates that should be done.
It’s important to understand, just because someone had a will doesn’t mean the will is going to have any effect on the distribution of assets. If everybody’s on the same page from this foundational starting point, it eliminates some confusion down the road when people will say, “Well, I was supposed to get that.” or “I was supposed to be in charge.” A proper plan keeps this out of probate, and that’s not a bad thing. The assets may go to people in a different way, but if you set up a proper plan before you pass, you can ensure things get to who you want them to go to. For instance, sometimes people don’t understand the fact that if they put a child on a bank account, that bank account goes to that one child, and it doesn’t go to all the children. There’s no legal requirement for that child to share it with anybody else. So sometimes that convenience thing of owning a bank account jointly becomes a detriment to the equal distribution of an estate to all children. Unfortunately, that’s not always explained to the person when they’re doing that sort of planning.
There is a process of moving assets out of a person’s name if there is an action of law or non-probate transfer on that device, then when we begin counting, if we don’t get over that $50,000 threshold, then we may not even need to get involved with the court. There are some other things called a small estate affidavit, and that leads right to step number eight.
What is a small estate affidavit?
An Indiana small estate affidavit (or a small estate claim) is used to gather the assets of a person who has died and left behind an estate worth less than $100,000. The affidavit cannot be filed earlier than forty-five (45) days after the date of death and must be signed in front of a notary public. So, we’re going present a document to the financial institution or whoever holds that property to say, “This person died and did not need probate. Here are the rightful heirs. This person represents them or all four of them should be equally represented in the distribution of that asset to them. But we don’t need court.”
Step 8: Determine the process and move forward.
Once we determine what is in the person’s name, that allows us to determine how we’re going to proceed. If you have property in another state, you may need to do ancillary probate, a whole separate probate, usually a little slimmer, a little thinner, and quicker.
What is ancillary probate?
Ancillary probate is a secondary proceeding required in another state than the original probate proceeding. This secondary proceeding is required where the deceased left property or assets in more than one state, and because each state has different property laws, a probate proceeding must be made in each state where property is located. To manage the asset in that estate, you’ve got to make sure that you know where those properties are and what the process is to go through the ancillary process. I’ve had to open estates in Indiana that didn’t have any assets in them, but we had to open the probate in Indiana because that’s where the person lived in order to manage a property in Michigan or Florida or Texas. So there’s the time and cost associated with going through that probate process. And then you have to open another probate and there’s time and expense associated with that, too.
Ancillary probate, small estates, affidavits of heirship, and devolution deeds are all fairly new vehicles in Indiana. But basically, there may be something that was owned jointly that we need to now update the world as to how that’s going to be transferred. So an affidavit of heirship, a spouse may file with the county to say, “We owned this when we were married and living, and when this person passed, we were still married.”
What is tenancy by entirety?
In Indiana, there’s a thing called ‘tenancy by entirety’ that the survivor now has that property outright. It’s updated in the record to reflect that. Tenancy by entirety is a way for married couples to hold an equal interest in a property as well as survivorship rights, which keep their property out of probate.
What is a devolution deed?
A devolution deed is used if we had a person that owned real estate and we didn’t need probate, but we have to go through a process of showing that the person owned it and who the rightful owners are and how we get it transferred. Devolution is when property is automatically transferred from one party to another by operation of law, without any act required of either past or present owner. The most common example is the passing of title to the natural heir of a person upon his death, a devolution deed. So that’s fairly new, still being worked through in some counties.
Some combination of the above will allow us to move assets, and sometimes that’s what happens when I do a plan. We may not have everything in a trust or transferred to somebody. We may have a few things out there, but they’re less than $50,000. So we have to find the tool to move those things.
What is a trust?
Trust is another thing, and sometimes people will do and have a need for trust administration. A trust administration is a legal process of working through closing out a person’s affairs and then distributing the estate. A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. It’s very similar in structuring and flow to probate, except it’s outside of court and it should be quicker and nimbler if everything goes right. You don’t have the same clock that you work under. Trusts usually avoid probate, so your beneficiaries may gain access to these assets more quickly than they might to assets that are transferred using a will. There are still some responsibilities the trustee has to the beneficiaries named in the trust. There are a lot of intricacies associated with those things, but it’s another process that needs to be followed.
It’s possible that you need both probate and trust administration because something was left out of trust, so we have to go through probate. That’s why step number seven (understand what’s in the estate and what’s not) is so important. I had somebody who had a coop jag convertible, a $100,000 car. That was only in his name. He passes. He had everything else in his trust. Well, now we have a trust administration and we have a probate for the vehicle. So that is the kind of information we would need to determine in the step before this. What we find out in step seven dictates what we do in step eight.
Step 9: Stay on schedule and communicate the process.
Once we determine what it is that we’re going to do, there is a schedule to follow. There are rules that we have to follow. There are things that we have to do. There’s communication that’s important. One of the biggest things that we bump into is when feelings start getting hurt, people start getting antsy. Expectations aren’t set right. Timelines aren’t set right. Communication starts to falter. So the best thing you can do is to keep people abreast of what’s going on as often as possible. Some people may set up a private Facebook thing or a website where you can communicate things that are not open to the public, but a way to communicate just kind of what’s going on through the process. This allows you to have a place to set timelines and let people know, “Hey, I’m going to mail you something, I need you to sign it, and mail it back so we can move this thing forward.”
You may not get the bulk of an estate or a trust distributed to the individual beneficiaries or heirs for several months, because we’ve got to work through some of these other processes. I should add, just because you have a trust doesn’t mean that Medicaid’s not going to make a claim. You still have to tell Medicaid that the person’s died and if they have a claim, they need to make it. Determine what the path is. Stay on schedule. Understand what that schedule is. Communicate with everybody. Just try to stay above board.
Now, that is also very simple to say, because people will start to get antsy and can’t understand why they’re not getting their money. But there’s a process you have to follow. As long as the person in charge is doing what he or she is supposed to do when he or she is supposed to do it, people complaining can complain. It makes it kind of a headache, but that doesn’t change the process. So it’s important to do what you’re supposed to do when you’re supposed to do it and then work to get things concluded.
Step 10: Stay on track with the process and finish strong.
There’s a lot of energy at the beginning, but sometimes these probates can drag out for nine months, a year, or beyond. I’ve got some right now that are a couple of years old because of real estate or some other challenge. It’s really easy to lose focus and not finish, but it’s important to finish strong. I’ve got a couple of probates where I’ve just lost track of the PR. I can no longer get in touch with the person who needs to sign for things to finish. We’re ready to close; we’ve been ready to close for months, but the papers have kind of wandered off. So, I can’t stress this enough – stay on track, get it done, and button it up.
We’ll know what the schedule is. We’ll know what the benchmarks and milestones are. Finish strong! We don’t need this to linger. We don’t need to drag it out. Let’s get it done in the fashion and in the time that it needs to be done.
I hope you found this content to be valuable and a good resource to help you prioritize things and understand when you have to do things, and when you don’t have to (or shouldn’t) do things. If there’s anything that I can do to help address your specific circumstances, reserve your call and we can chat on the phone. We can set up a family meeting or a small group meeting however you want to do it and really work through your specific circumstances and understand how we need to get started and determine the timeframe of what it would take to get that rolling.
I do appreciate the fact that this is an emotional period of time. I was very heavy on that at the beginning and then I got super logistical. But understand, I believe, and know that emotions are going to play a very important role in this. That’s why I said in the finish strong part, you’re going to have some people that are getting very, very antsy and start taking it personally because they’re expecting money. Maybe they need it more than someone else. Maybe they feel like they’re getting short-changed. So we want to do as much as we can to understand that there are emotions. But we don’t need to foster and fuel any extra emotions.
Let’s work through the process and know that it is, in fact, a process, with things to do at particular times and things that we don’t have to do right now. So I would love to talk to you about your circumstances just to help you set a good foundation on how to move forward. I don’t charge for that meeting. Yes, really! We may not even charge for a second meeting if we have to still figure out what we need to do. But in the end, what we want to have is a good understanding of what the process is, what needs to happen when, and what doesn’t need to happen, and make sure that everybody has the same story and that we stay focused and work through it.
You can schedule that free call with me by calling my office at (219) 230-3600 and speaking to our receptionist or you can add yourself directly to my calendar by going to www.MeetWithRG.com. I look forward to the opportunity to serve you in this capacity, and I wish you well through this process.
If you still have more questions about probate or would like to do further research before calling to talk about your situation, I encourage you to take a look at the All About Probate guide here.