Estate and Trust Beneficiary Expectations
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Hollywood must love the will opening “ceremony” because it has recycled the familiar scene repeatedly on the silver screen (Mommy Dearest, Brewster’s Millions, The Ultimate Gift, etc.). The plot usually either begins or climaxes when a lawyer announces that some unrelated person receives almost all the wealth, and the dead person’s disinherited family members sit bewildered. Most estates are much less dramatic and few estates actually include the formal ceremony that Hollywood portrays so often. So if Hollywood gets it wrong most of the time, what should a beneficiary really expect when a family member dies?
Indiana law provides that if a dead person (“decedent” sounds better) owned less than $50,000 worth of assets in his or her own name up to the time of death, the heirs may inherit the assets without much ceremony and with very few legal procedures. A decedent’s estate worth more than $50,000 requires more legal procedure.
Estate beneficiaries can expect that an Indiana estate’s personal representative will hold the estate assets for at least 3 months so that creditors can make claims in the estate for payment or resolution of an unresolved issue. Beneficiaries of large (more than $5.43 million in 2015) or complicated estates can expect administration well beyond the first 3 months to finalize federal estate tax return filing and tax payment or to wrap up business matters. Additionally, a dispute may extend the administration timeline indefinitely.
Trust administration and administration of assets for whom the decedent named beneficiaries in the asset ownership records follow a similar pattern to estate administration. (Attorneys often refer to trust assets, IRAs, joint accounts, and Transfer on Death (“TOD”) as “non-probate” assets.) Although there is no 3-month claim period for non-assets, a creditor may open an estate, file claims against the assets in rare circumstances, and drag those assets into estate administration up to 9 months after the decedent’s death. Therefore, non-probate assets often remain unavailable to beneficiaries for at least 9 months to make sure the assets remain available to deal with potential creditors and claimants.
Trustees and personal representatives keep working to organize assets and pay bills during these waiting periods. Their lawyers help sort out questions about asset ownership and distribution. Non-probate asset beneficiaries can expect this kind of administration to conclude several months faster than traditional estate administration if all the creditors are paid and beneficiaries get along with each other.
Estate and Trust administration runs most smoothly when everyone communicates regularly and respectfully with each other. If people remember these ideas while they plan their estates or while they are waiting on asset administration to conclude, a decedent’s wealth administration can proceed smoothly and quickly most of the time.
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Jeff R. Hawkins and Jennifer J. Hawkins are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers. Jeff is a Fellow of the American College of Trust and Estate Counsel and the 2014-15 Indiana State Bar Association President . © Copyright 2015 Hawkins Law PC. All rights reserved.
Is there a legal timeframe in which Beneficiaries, who are not exec. or trustees of will, are entitled to their inheritance
Ms. Byrd, you do not indicate whether you are an Indiana resident, but this response will presume that you reside in Indiana.
Indiana has no specific legal timeframe in which the trustee of a trust or the personal representative of an estate (“Fiduciary” is a term that includes both trustees and personal representatives) must distribute assets to beneficiaries. The Indiana Probate Code and the Indiana Trust Code require fiduciaries to conduct their work diligently and prudently. If a fiduciary is delaying a distribution unreasonably, it may be possible to ask a court to inquire about the matter and urge the fiduciary to pick up the pace.
Legitimate reasons exist in some cases that require a fiduciary to drag out the process for a very long time. For example, there is an ongoing dispute right now between the Office of Medicaid Policy and Planning (OMPP) of the Indiana Family & Social Services Administration (FSSA) and several Indiana trust and estate attorneys about the length of time in which the state may try to recover assets from a deceased person’s trust. The Indiana officials believe that they have no time limit, whereas the trust and estate attorneys believe that Indiana is limited to pursuing assets in a trust within the first 9 months after the decedent’s death. This firm is involved in negotiations with officials of the Indiana Department of Revenue, the office of the Indiana Attorney General, and the OMPP to establish a legislative solution in 2018. Until that solution takes effect, We are advising some of our trustee clients to continue administration until the proposed legislative solution takes effect on July 1, 2018.