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Indiana Probate and Estate Tax Laws

Probate court is where the financial affairs and property of a person who has passed on (the "decedent") are legally settled. The items owned by the decedent are called the estate. Marion County, where Indianapolis is located, has a separate probate court, in other Indiana counties, probate matters are handled at the local county district or superior court. In Indiana, there are several ways that estate administration can be handled, depending on the level of supervision required and the amount of assets in the estate.

Estate Tax

Indiana repealed the estate or inheritance tax for all those who die after December 31, 2012. Therefore, no inheritance tax returns must be filed at this time.

Details on the Indiana probate and estate tax laws are outline in the table below.

Code Sections

Indiana Code - Title 29, Article 1: Probate Code

Types of Estate Administration

There are three types of estate administration in Indiana. These are:

  • Supervised - A personal representative is appointed and property can't be sold or distributed without court approval. Useful for property or will disputes, required if estate is bankrupt.
  • Unsupervised - A simpler and cheaper administration, when the court doesn't need to supervise administration because the estate is solvent, the personal representative is qualified, the heirs consent to it, and the will doesn't request supervision or does request unsupervised.
  • Small Estates - For estates with $50,000 or less, no administration is required. The family can transfer the assets by an affidavit or written statement. The small estates process involves providing the court an affidavit (45 days or more after the death) showing the decedent's debts and property (less than $50,000), and with the names and address of all heirs entitled to the decedent's property. Vehicles owned by the decedent can be transferred through the Bureau of Motor Vehicles using the transferring title without administration form.

Family Allowances

Either the surviving spouse or the decedent's minor children are entitled to $25,000 to help after the decedent’s death, called an "allowance." If there’s more than one child under 18, the children share the $25,000 equally. This $25,000 is in addition to other shares of the estate, meaning for example, it can't be taken out of the half of the estate the surviving spouse is entitled to.

If the personal property in the estate is worth less than $25,000, but there's real property that it could be paid from, then a lien will be placed on the real estate. However, the property generally can't be sold to pay the allowance, unless agreed to by all interested parties.

What Assets Go Through Probate?

Property that a person has or has the right to when he or she dies need to go through probate, unless that property qualifies to skip probate. Some of the assets that require probate are:

  • Bank and credit union accounts in the decedent's name alone with no payable-on-death beneficiary officially designated
  • Homes or land either owned in the decedent's name alone or co-owned as tenants in common with other(s) where the "right of survivorship" doesn't apply
  • Investments, including stocks and bonds, owned by the decedent alone
  • Tangible possessions such as clothing, jewelry, household furniture, and vehicles that are registered in the decedent's name only

What Assets Skip Probate Entirely?

Many assets avoid probate and go straight to the co-owner of the property or designated beneficiary. Assets that skip probate include:

  • Bank and credit union accounts that have designated a beneficiary using a Payable on Death (POD) or Transfer on Death (TOD) document
  • Homes or land owned as joint tenants with right of survivorship or, for married couples, tenancy by the entirety - both of these designations will cause the property to be owned entirely by the remaining joint tenant(s)
  • Life insurance policies and retirement accounts with a designated beneficiary
  • Property in a revocable trust

Estate Taxes

Indiana abolished the inheritance tax in 2013.

What Other Taxes Must be Paid?

The personal representative of an estate in Indiana must continue to pay the taxes owed by the decedent and his or her estate. These taxes may include:

  • The final income tax return of the decedent
  • Estate income tax through the fiduciary income tax return, if more than $600 was made by the estate
  • Property taxes owed by the decedent

Related Resources

Talk to an Attorney to Better Understand Indiana's Probate and Estate Tax Laws

Planning an estate or understanding the probate laws in Indiana can be confusing, especially when taxes are involved. If you have questions about Indiana's probate and estate tax laws, it's best to contact an experienced tax attorney in Indiana.

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