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The Indiana General Assembly is working to make various changes to probate law that attorneys say will simplify their work.
“It is a cleanup procedure and a few things that are going to make probate administration more smooth,” attorney Annette Brogden said.
House Bill 1088 came out of recommendations from an interim summer study committee. The Indiana State Bar Association gave 12 recommendations, but the bill takes on only a few of those.
“We took four, very technical in nature,” the bill’s author Rep. Chris Jeter, R-Fishers, said of the bill before its passage on third reading.
Here’s a look at the major things the bill would do.
Provide notice to creditors: The first changes how a creditor is notified. The bill clarifies that a personal representative or the personal representative’s agent shall serve a written or electronic copy of the notice of the estate administration on a creditor or the decedent within one month of the notice being published.
It requires the personal representative or personal representative’s agent to file and serve a new proposed notice with the clerk for a creditor that is served more than one month after the notice is published.
“If a creditor is discovered more than a month after the first publication of notice, the attorney for the personal representative can send a separate type of notice with slightly different content to that creditor, said Jeff Dible, counsel at Frost Brown Todd. “That second notice will tell the creditor exactly how much time the creditor has to file a claim against the estate and have its timeline.”
Create new powers: The bill says the personal representative of an unsupervised estate or trustee of a trust can distribute all or part of a decedent’s interest in a retirement plan or retirement account without a court order.
“Sometimes people die with IRAs in place that don’t have any named beneficiaries at all, or all living beneficiaries are dead,” Dible said.
He added that often the IRA becomes a state asset. Under federal law, the personal representative of an estate can assign or distribute an IRA to a beneficiary of the state.
Postmortem transfer & testamentary trust: The bill defines a “direct postmortem transfer” as a transfer of an asset to a testamentary trust established in a will admitted to probate that meets certain conditions. The bill specifies that a direct postmortem transfer is a transfer of an asset or property to a trust established by a will for all purposes of the Social Security Act.
“You could have a person who dies with a will that creates a trust inside that will, and that trust might be funded with assets that don’t actually pass through the estate,” Dible said. “They might pass directly to the trust because the trust has been named as a designated beneficiary.”
Dible explained that this is used a lot in elder law planning where it could be important for each spouse to have a trust inside their will. He gave the example that if the healthy spouse dies first and the spouse who has health problems survives, you can have a testamentary trust for the surviving spouse who is disabled and the assets that are paid to that trust are not countable assets for Medicaid.
“It’ll be helpful, because, I mean, there was no real controversy. All these changes will be beneficial,” Dible said.
The Indiana House voted unanimously for the bill.. It is expected to be heard by the Senate Judiciary Committee in March. Sens. Liz Brown, R-Fort Wayne, and Eric Koch, R-Bedford, are sponsoring the bill.
Dale & Eke Partner Geff Rainbolt said the changes will be something probate attorneys will have to adjust to.
He said one part of the bill that stood out to him was the part on notice to creditors.
“The way that that was structured in the new bill, it didn’t point out that they had to be known creditors, reasonably, ascertainable creditors,” Rainbolt said.
The other thing that jumped out to him was the actions an attorney might be able to take after someone passes.
“Because usually, for the most part, when someone passes away, the power of attorney goes away. There are certain things you can do, like funeral planning and stuff like that,” Rainbolt said. “I’ll be interested to see what an attorney is going to be able to do after someone passes away until there’s an appointment of a personal representative.”
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