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Assets Exempt From Probate

The probate process can be complex and time-consuming, which often creates difficulties for beneficiaries of an estate. The complex probate rules can make it difficult for a beneficiary to determine how much they will receive. Also, if a beneficiary is having financial difficulties any probate delay could mean that the estate proceeds arrive too late to help. However, there are some common assets exempt from probate and are able to pass directly to a beneficiary or joint owner. An experienced Indianapolis probate attorney can help you to identify which estate assets must go through the probate process and which assets can be transferred directly.

Jointly Owned Real Estate

One of the most common assets that are exempt from probate is real estate that is owned jointly. If the property is owned by more than one person in a way that provides for survivorship, then the property passes to the survivors without going through the probate process. There are two principal ways to own real estate in Indiana that provide for survivorship and would make the property exempt from probate.

  • Joint Tenancy with Right of Survivorship – In this instance, a deed establishes ownership of the real estate by two or more owners and grants the right of survivorship to each. When one of the owners dies their interest passes to the other owners.
  • Tenancy by the Entireties – Indiana also provides for the right of survivorship to be established if a husband and wife purchase real estate together. Under Indiana law, their purchase creates a tenancy by the entireties, where the death of one leads to the other spouse holding all of the rights to the property.

While jointly owned real estate passes to the survivor without going through the probate process, there are still recording requirements for documenting the change in ownership. This is generally done by filing an affidavit and death certificate in the county where the property is located stating one of the owners has died and their interest has passed to the other property owners.

Transfer on Death Assets

The probate process can also be avoided for assets that are designated to be conveyed upon the owner’s death. Depending on the type of asset, it can be designated as either a transfer on death asset or as being payable on death. The most common payable on death asset would be a bank account. If the owner sets up the account with a payable on death beneficiary, then the proceeds in the bank account at the time of the owner’s death would pass directly to the payable on death beneficiary and would be exempt from probate.

The transfer on death process works much the same way, but is utilized for various types of property instead of bank accounts. Real estate, motor vehicles, and retirement accounts are examples of large assets that can be set up with transfer on death beneficiaries who would obtain ownership of the designated property upon the original owner’s death. But the transfer on death designation is not limited to large assets, Indiana law allows most types of property to be set up with a transfer on death beneficiary.

Living Trusts

Living trusts work to make large amounts of property exempt from probate without having to go through the process of individually designating items as transfer on death assets. Because the creator of the trust often has the option to make changes to the trust during their lifetime this type of trust can also be referred to as a revocable living trust.

In order to utilize a living trust, a property owner creates the trust designating themselves as trustee and then places their assets into the trust. The living trust then also declares a successor trustee and sets forth how the trust’s assets are to be distributed upon the owner’s death. By setting up such a living trust the assets in the trust are free to be used by the owner for their benefit during their lifetime.

Once the property owner dies, the successor trustee is then able to distribute all of the assets according to the owner’s wishes as spelled out in the trust. The distributions from the living trust are exempt from the probate process, accomplishing a distribution of assets similar to a will without the complications and delays of probate.

Life Insurance

One of the most substantial distributions upon the death of an individual can be the proceeds from a decedent’s life insurance policy. However, the death benefits payable from a life insurance policy do not have to go through the probate process. Life insurance benefits are similar to transfer on death assets, as a life insurance policy has a designated beneficiary and upon the death of the policyholder the proceeds are free to be distributed to the beneficiary outside of probate.

How an Indianapolis Probate Attorney Can Help

When a person sets up their estate utilizing assets designed to be exempt from probate it is often done with the intention of bypassing the delays created by the probate process. But even if the estate is set up with assets exempt from probate there can still be difficulties in obtaining the assets or properly recording the change in ownership. A knowledgeable Indianapolis probate attorney can help you to determine which assets are exempt and the steps that need to be taken to make sure the designated assets are distributed quickly and correctly.

Attorney Sean Hessler is an Indianapolis probate lawyer who understands the processes necessary for the distribution of assets both through probate and outside of probate. Call Hessler Law at (317) 886-8800 today for a free and confidential consultation if you have questions about estate distributions.