Formal Estates in Indiana

What is the difference between informal and formal estates?  Or here in Indiana, we call them supervised or unsupervised estates.  The difference is the court's interaction or supervision.

A person's estate or probate assets are only assets that are in his or her name alone that will be subject to estate administration.

 Unsupervised

 In unsupervised estates, the will is probated or the estate is opened and a personal representative is appointed by the court.  After the appointment, the personal representative is able to act without filing pleadings for the court's authority to sell real estate, personal property, cars, stock, and deal with inheritance and income taxes.  An Inventory must be prepared.  After the estate is complete, the personal representative files a closing statement to close the estate after ninety (90) days, if no objections are filed.  This does not mean that the personal representative does not have a duty to administer the estate properly.

Advantages of unsupervised estates:

• Privacy

• Keeps legal costs down

• Avoids a detailed formal accounting with check copies, but does require one to be prepared

When would you use unsupervised estates:

• When the will directs that the estate be administered as unsupervised

• Consents can be obtained from all of the heirs or legatees under the will, which consents can be incorporated into the petition for probate or petition for issuance of letters, if the will does not direct it

• Generally when there is only one beneficiary or the family is very close and they can work together, then no court interaction would be needed.

à Note.  All interested parties in an unsupervised estate, still have the opportunity to ask the court to convert it to a supervised administration should there be cause or suspicion to do so.

à This does not mean that the personal representative does not have a duty to get the most value for all assets and properly administer the estate.

Supervised

In supervised estates, the will is probated or the estate is opened and a personal representative is appointed by the court.  After the appointment, the personal representative must seek court approval to sell real estate, personal property, cars, stock, or any other asset of the estate.  This usually entails the need for appraisals and consents from the beneficiaries or the requirement of a hearing on the majority of the aspects of the estate.  An Inventory must be prepared and filed with the court.   After the estate is complete, the personal representative must file a detailed accounting showing all income with  receipts for all expenditures made during the administration of the estate.  The legal fees are generally higher because there is more interaction with the attorney and the court. 

Advantages of a supervised estate:

• Can get court approval to sell property or real estate

• Can file a Petition for Instructions or a Petition to Construe the Will if language is unclear

• Is generally used when there is no will and the heirs are unknown

• A court can determine the legal heirs by decree

• A court can approve sales by public or private sale

• A court can hear any claim or settle any matter

When would you use supervised estate:

• When the decedent died without a will and the heirs are unknown

• When the estate has controversies within the family

• When there are several parcels of real estate or major repair problems

• When you must sell unique collections and personal property

• When you want detailed inventories, appraisals and a final account

• When there are tax issues not set out in the will.

• When you need the court to issue an order.

Because most estates are different, it is best to have an attorney review the assets and liabilities of the particular estate to properly advise you what administration best fits.  This often depends on how the beneficiaries interact with each other, the size of the estate, type of assets, whether there is an on-going business, tax issues or if any problems are anticipated.   Finding the right attorney is important. 

Attorneys who are not experienced with probate law can cause unnecessary delays, charge you for learning the procedure, or miss valuable tax savings or advantages to the estates.  The personal representative has responsibility for the estate – so starting with the right attorney is a step in the right direction.  Please feel free to call or email me for a free initial consultation.  If I can not help you or if you are better served by an attorney closer in proximity, I would be happy to recommend someone to assist you or act as a co-counsel with me, if your estate will need to be litigated.  Most pleadings can be done by mailing, so call me if you have a question or I can help.

Small Estates

Not all Wills have to be probated or estate have to be administered with court involvement.   If the assets are under $50,000, Indiana law provides a small estate procedure to administer the estate.     I recommend a Petition to Spread the Will of Record be prepared and file with the court to give notice.