Stautz Law

Tag: Real Estate

  • Do You Need the Deed?

    Do You Need a Physical Copy of a Real Estate Deed?

    Video

    Transcript

    (Auto-Generated)

    Hi folks, it’s Andy Stautz with Stautz Law. I am back today for another talk about Indiana probate and estate planning. Today’s topic is a little more real estate related too, but it comes up in probate all the time.  

    And that is: do you need the deed?  

    Scenario: People Think They Need the Deed

    So where does this talk come from? Well, A lot of times I’ll have a client or potential client explaining some real estate situation. Maybe it’s an inherited property, something that they’re going to sell. And they’ll tell me, Andy, I’m pretty sure it belongs to so-and-so, but I can’t find the deed. Or, oh, I’m sure it’s my house, but I don’t know where I put the deed.  

    And they get worked up about this. Okay?  

    And so I want to discuss, do you actually need a paper copy of the deed for most Indiana real estate, I don’t know, transactions? And the answer is not really, no, especially not if it’s been recorded.  

    Most Deeds are in the Indiana Property Records

    So in Indiana, we’ve got this system of property records. They’re managed by the recorder’s office, and it’s county by county. Okay, so every county has its own recorder’s office, and that’s usually closely related to the auditor’s office and the assessor’s office. And all of those 3 government agencies work together to keep track of who owns what.  

    That’s important for citizens, obviously, so that they can you know, live their lives, do stuff, buy and sell houses. It’s important for the government so they know who owes what property taxes.  

    But anyway, each county recorder these days has electronic records. So for modern land records, and by modern I mean probably anything back to 1900, I don’t know. Most of these have been digitized. They’re electronically available.  

    How to Find a Recorded Deed

    So if a potential client tells me, oh, I’m going to have to dig through a bunch of boxes to find the deed, a lot of times the answer is, hey, don’t bother. I can look it up. I can search the property records and find it and get a PDF copy or, you know, see a version of it. And sometimes that’s specialized search software, sometimes it’s freely available.  

    It depends, again, on how the county recorder works and what provider they use to keep track of the records. So from my perspective, as an attorney, do you need the deed? The answer is usually not. And if you’re just a citizen, just an ordinary person watching this and wondering, It’s like, if you lose your paper deed, you can usually go down to the recorder’s office, go down to the county courthouse and ask for a copy. So in Marion County here, they’ve got computer terminals. You just walk in and you’ve got free use of their property record search. And you know, you pay a little copy fee if you want to print something off.  

    And a lot of counties have that.  

    What if a Deed is not Recorded?

    Okay, that entire talk though, was premised on the idea that the deed in question had been recorded. Not all deeds get recorded, and some deeds can take effect even if they’re not recorded. 

    Not all deeds get recorded, and some deeds can take effect even if they’re not recorded.  
    And then you’re in the Wild West.

    And then you’re in the Wild West, okay? And that’s a whole other talk, because Indiana’s system of determining property rights is kind of based on the idea that things should be recorded. And I don’t want to go into the technicalities because we’re already nearing 5 minutes, but you might need a deed if it’s the only evidence of a conveyance, right? If it never got recorded, it’s not in those nice electronic records, okay?  

    But to answer the general question, do you need the deed, you know, As long as it’s been recorded, it’s in the property records and anyone who’s interested can go find it. It’s public, it’s online, you know, so you don’t need to go digging through shoeboxes. But the big asterisk, of course, is those weird scenarios where it’s not been recorded. Okay, so I hope that helps. 

    Want to talk more?

    Call for a free consultation about your estate planning or probate needs.

    Call (317) 597-4497 Now

  • Quitclaim Deeds vs. TOD Deeds

    Is a Quitclaim Deed the Same as a Transfer on Death Deed?

    Video

    Transcript

    (Auto-Generated)

    Good morning folks, it’s Andy Stautz with Stautz Law. I am back today for another topic on Indiana probate and estate planning. Today we’re answering a question I saw in a comment to one of my previous videos.

    The question is, Is a quitclaim deed the same as a transfer on death deed?

    Quitclaim Deeds Are Not the Same as TOD Deeds

    The answer is no, they are not the same. So I’ve talked in a bunch of places about transfer on death deeds, which I use pretty routinely as part of estate planning.  

    How Quitclaim Deeds Work

    Quitclaim deeds are different. So a quitclaim deed at its most basic is the owner, whoever makes the deed, saying, I quit, I quit, I give away my interest, It’s done. I make no claims on it. You’re quitting your claim.  

    That can be useful sometimes. I mean, if you’re just trying to just give everything away, just make sure it’s gone, you know, especially to “quiet” titles. If there’s a question about who owns what and one person says, I sign a quitclaim, I don’t own it, then that’s great because it’s final, it’s immediate 

    But that makes it kind of not a great, it doesn’t really make an estate planning tool because it is immediate, it’s irrevocable, no take backsies. Once you’ve signed a quit claim and given away your interest, it’s gone, right? It belongs to whoever you gave it to.  

    Quitclaim Deed Traps

    So sometimes I’ll see a quitclaim deed mistakenly used as part of a DIY estate plan, right? Someone will quitclaim a portion of their house to their heir or heirs. And what that does is splits up property ownership, right? It gives those other people immediate ownership of part or all of the house. That’s usually not something you’re trying to do because like I said, that means they actually own the house with you and they are jointly responsible for property taxes and other upkeep items. It also means they could conceivably sell their share or a creditor could come after their share. And if you change your mind, you can’t change, you can’t undo it without everybody’s cooperation, which might or might not be available. There are also tax consequences. Those get complicated really fast, but you’ve basically made a big gift.  

    So quitclaim deeds are powerful, but dangerous, right?  

    Comparing Transfer on Death Deeds

    Transfer on death deeds are less dangerous because all a transfer on death deed does is gives instructions to the county government on how to pass your property after you die. Okay, it’s instructions for later.  

    And even though you’re recording the deed now and naming a beneficiary now, that beneficiary doesn’t have any immediate right in your property. So if you move, you leave the transfer on death deed behind. If you change your mind, you can rewrite and re-record a new transfer on death deed. You don’t need the beneficiary’s permission to do that.  

    And the beneficiary can’t control anything in the present. Their creditors can’t reach their interest because they don’t have a present interest. They can’t sell their interest because they don’t have an interest, right?  

    Conclusion

    So a transfer on death deed, instructions for later. A quitclaim deed, washing your hands of it right away. So that’s kind of general differences. Is a quitclaim deed the same as a transfer on death deed? No, not at all. They both have conceivable uses though, as I’ve tried to just discuss.  

    To figure out which one you need in your scenario, that’s specific legal advice there. So you need to call an attorney. If you call me, talk to me, that’d be great. And we can discuss your project and how to accomplish your goals with the right type of deed for you. But as a general overview, I hope that answered the question and resolved some confusion. And like I said, for specific legal advice, reach out and we’ll work together. I hope that was an enjoyable talk and bye for now. 

    Want to talk more?

    Call for a free consultation about your estate planning or probate needs.

    Call (317) 597-4497 Now

  • Houses and Estate Income Taxes

    Video

    Transcript

    (Auto-Generated)

    Introduction

    Hi folks, it’s Andy Stautz at Stautz Law. I am back today for another talk about estate administration (in this case). We are talking about houses and their effect on estate income taxes. This is timely because it is tax season when I’m recording this, which is mid-February.  

    So one thing we’ll discuss if you do a probate administration with me (and just as a background talk about Indiana law for anyone who’s interested), a house is a common item of estate property. A lot of the times we’re opening a probate estate specifically because there’s a house to deal with, to be sold.  

    Estate Income Tax

    Also, estates, just like people, owe income taxes. [The return form for estate income taxes is IRS Form 1041.] So if an estate has income, it has to pay taxes on that income. This is separate from the federal estate tax. Okay, this is like, this is an income tax.  

    And so at this time of year, I’m advising probate clients and, you know, saying, okay, well, what do we do about estate income taxes? And if you had a house in the estate and you’ve sold it, It’s like, okay, well, what are the tax consequences of that?  

    Common Scenario: No Income on House Sale

    And the basic answer is, oftentimes it’s a wash. Because, as we’ve talked about in a previous video, probate assets get a step up in basis. So that means when the estate gets the house, the person dies, the house goes from that person to their estate, the house comes into the estate with a basis of whatever the date of death value was. Therefore, if you sell the house a couple months later as part of an estate administration, you basically have a 0 gain.  

    Let’s say a person dies with a house, it’s worth $200,000, you sell it a month later for $200,000, You’ve got a $200,000 basis and a $200,000 sale price and 0 capital gains and 0 income, which is nice.  

    So oftentimes I’m able to say, don’t worry about it. That’s kind of the point of this talk is you need to think, you know, when you’re doing an estate administration, you need to make sure that you’re keeping up with taxes. It’s part of the personal representative’s duty.  

    Conclusion: General Information vs. Specific Advice

    This is something if you’ve got an estate with me, we’ll definitely be talking about. But as a general informational talk about Indiana law, it’s okay, keep that in mind. Think about how your estate as an entity generates income or doesn’t on its own and make sure you pay the taxes that are owed because that’s part of the duty. So just a quick talk, quick note about that one. I’m not primarily a tax advisor. But this is just a little item of law that comes up over and over and was worth a general overview. If you need specific advice, you need to talk to me specifically, you need to talk to me and not just depend on informational videos. If you need legal advice, you’re on my website. Give me a call, give me an e-mail and we’ll talk about, you know, you in particular.  

    Hope you enjoyed it. Thanks and bye.

    Want to talk more?

    Call for a free consultation about your estate planning or probate needs.

    Call Now

  • What Happens to the Mortgage when Someone Dies?

    Video

    Transcript

    (Auto-Generated)

    Good morning, folks. It’s Andy Stautz at Stautz Law. I am back today with another talk about Indiana estate planning and probate law. Today is kind of a big topic, and it’s going to be maybe a disorganized talk, but we need to talk about mortgages, specifically mortgages of people who have died. because it’s probably the single like biggest source of difficulties in probate administration.  

    It’s definitely one of the top reasons potential clients call me needing help: is something goes wrong with a property specifically, usually a mortgage of someone who died, maybe a year ago, maybe two years ago, maybe five years ago. Okay.  

    Key Point: You Have to Do Something

    So I think the first like key point is you’ve got to do something. You’ve got to do something. When someone dies with a house, you know, the personal representative, the heirs, the family, Somebody’s got to step up and deal with the mortgage lender, assuming there is one. You can’t just carry on and hope it all works out, right?  

    The sooner you come up with a plan, the better it’s going to go, okay? So opening a probate estate is great, because we’ve got very formal rules, right? We’ve got this whole probate code that explains how to handle these things. The mortgage companies know how to work with that. Probate attorneys know how to work with that. You know, you’ll have clear direction, you know, as an heir and as a personal representative.  

    I think what gets a lot of people into trouble is usually in practice, you know, you can kind of like keep paying a mortgage in a decedent’s name for at least a while. And there’s actually law dictating that mortgage companies have to like let you, give you a grace period, right, to figure things out. But that grace period isn’t forever. And so the longer you wait, the more problems you’re going to have.  

    So if you’re a potential client, you’re calling me because there’s a mortgage foreclosure proceeding. It’s usually like, okay, well, we wish we could have fixed this sooner.  

    Mortgage as Secured Debt

    So the underlying concept, of course, is that unlike personal debts, like a credit card debt or a medical bill, a mortgage loan is secured on a house, right? And it attaches. So even though the homeowner has died, that mortgage debt doesn’t like go away automatically: because it’s not attached to the person, it’s attached to the house.  

    So usually, no matter the scenario, formal probate administration, informal resolution, whatever, you’re going to have to do something. The mortgage doesn’t just go away.  

    Win-Win Scenarios

    The nice thing is, like most banks don’t want to, don’t want to foreclose and repossess a house and sell it at auction, right? What they want to do is for the heirs, you know, somebody to assume the loan and keep paying it, or, you know, sell the house and pay off the mortgage balance.  

    So usually, usually, this is very general, lots of times, if you’re going to do that, it’s worth it to go, like, tell the lender, because they’ll be like, okay, great. Because that’s a good outcome for everybody, right? If you inherit a house and your intention is to sell it and pay off the mortgage balance, the mortgage lender is going to be happy with that. You’re going to be happy with that, right? So it’s just kind of a matter of communication.  

    There are provisions in the probate code to like pause a foreclosure action . . . Almost like a stay in bankruptcy. . . Like a pause button. Because a lot of people, if you inherit a house that has a mortgage, it could strain your cash flow, your personal finances, to keep paying the decedent’s mortgage while you, prepare to sell the house, sell the house.  

    Anyway, like I said, kind of an unfocused talk, but the point of the story is you got to deal with it. Sooner is better than later, and you’ve got lots of options. Um, on how to go about it and make, make everybody happy.  

    So hopefully if you see this and you’ve got a inherited mortgage on your mind or an inherited house on your mind, you’ll, you’ll say, oh, right. I need, I need to do something like talk, talk to a probate attorney, talk to someone and get specific legal advice for your situation. Cause, um, like a lot of my clients, I could, you know, The longer you wait, you get deeper in, it’s harder to fix. So kind of sooner the better there.  

    But that was all very general. Specific legal advice requires you to talk to a specific attorney for specific advice about your specific situation. You’re on my website. Give me a call. I’d love to talk. I hope you enjoyed that one. And bye for now. 

    Want to talk more?

    Call for a free consultation about your estate planning or probate needs.

    Call Now

  • Step Up in Basis Indiana Houses

    Video

    Transcript

    (Auto-Generated)

    Good morning, folks. It’s Andy Stautz at Stautz Law. I am back for another talk about an estate planning topic. And this topic is step-up in basis for houses. So this is a tax, this is kind of a tax planning topic.  

    Step-up in basis is an important concept to understand in your estate planning because it’s probably the biggest tax effect you’re going to feel, or your heirs are going to feel, really.  

    Other Estate Taxes Not Likely

    As you might know, and as I’ve talked about elsewhere, the current threshold for the federal estate tax is really high. It’s like $15 million under the new law, and that’s per person. So most people just don’t have to worry about a federal estate tax anymore. And Indiana abolished its inheritance tax, getting to be a long time ago now, you know.  

    Planning for Income Taxes

    So for most people, it’s kind of income taxes that they need to worry about, or income taxes for their beneficiaries. And so for a lot of people where the house is kind of one of the big assets in their estate, you’ve got to say, OK, well, what’s the tax consequences for my beneficiaries going to be if you use a transfer on death deed? You know, that’s probably the most common device, or pass it by will, or put it in a trust.  

    And the answer is usually there aren’t huge tax consequences for your heirs. And that’s because the step-up in basis adjusts your basis in the house or in the real property from your basis to whatever the value of the house is at the time of your death.  

    How Step-Up in Basis Works

    It helps to talk about an example. Let’s say you bought a house in 1990 for $100,000, and now it’s worth $400,000. If you were to sell the house right now, you would owe capital gains tax on the $300,000 in capital gains. That’s the $400,000 sale price minus the $100,000 of basis (the amount of money you put in to start with).  

    Now, there is an exemption from capital gains on the sale of primary residences, which is $250,000 per person or $500,000 for couples. So for most ordinary people, selling houses, they don’t actually have to worry about capital gains taxes.  

    But if you’ve held a property for a long time or it’s appreciated a lot, you know, maybe you’re getting kind of close to that, kind of close to that tax hitting. actually coming into play.  

    But the step-up in basis for the house would be if you have a transfer on death deed, you leave the same $400,000 house to your heirs, you die next year, sorry to hear it, your heirs have a $400,000 basis in the house. That means if your heirs inherit the house, it’s worth $400,000, their new basis is $400,000, and they sell it right away, they owe $0 in capital gains taxes, because there’s been no gain since that basis was stepped up, since it increased from your basis of $100,000 to the fair market value of date of death, $400,000.  

    So even if there were no capital gains exemption on the sale of a primary residence, your heirs usually don’t have to deal with capital gains taxes for an immediate sale.

    But the upshot of all of that is the step up in basis means inherited houses, inherited real estate is not going to be a huge tax problem for your heirs if they sell it right away.

    And that’s kind of good for heirs who aren’t planning to live in the house, because to get that exemption from capital gains taxes, they have to live there for at least two years. So for heirs who inherit a property and sell it right away, the step-up in basis means there’s $0 in capital gains taxes owed, and it doesn’t matter that they don’t get the exemption. If they don’t. (Obviously, they can move in and hold it, and that’s a new consideration.)  

    But the upshot of all of that is the step up in basis means inherited houses, inherited real estate is not going to be a huge tax problem for your heirs if they sell it right away.

    Step Up in Basis vs. Lifetime Gifts

    Obviously, if they hold it, different story, and, you know, This is one of the reasons, by the way —and this will be kind of my last topic, we’re coming up on five minutes— One of the reasons you need to think carefully before making a lifetime gift of your house or appreciated real property is because then you won’t get that step up in basis. So if you give the property away during your lifetime, the basis stays with it. But just a traditional transfer on death deed, will, trust you get the step up.  

    Okay, that’s all for today. It’s a complicated topic, obviously, but that specific question comes up enough. I wanted to answer it. I hope it’s been useful as an informational topic.  

    And if you are doing Indiana estate planning and probate, I’ve got offices in Indianapolis and Greenwood, and I’d love to help you out with your case. You’ve got my contact information on the website and here on the end screen, so goodbye for now. 

    Want to talk more?

    Book your initial planning meeting with Stautz Law and we’ll discuss your individual needs. No obligation.

    Book Now

  • Transfer on Death Deeds: Partial Interests

    Video

    Transcript

    (Auto-Generated)

    Good morning, folks. It’s Andy Stautz with Stautz Law. I’m back today with another talk about an Indiana estate planning and probate topic. Today we’re talking about transfer on death deeds of partial interests, by which I mean also joint tenancies.

    Overview of Transfer on Death Deeds

    So I’ve talked before about Indiana transfer on death deeds, You should go look at that video if you haven’t seen it yet. Basically, a transfer on death deed is an instrument, a deed that you record on top of your existing house deed or property deed, and it adds an automatic beneficiary to your deed. That way, on your passing, there’s a non-probate transfer: which means it’s automatic, it happens right away. You don’t need to go to probate court.  

    Automatic non-probate transfer of the property from you to whoever you named.  

    (But it doesn’t create any, you know, present ownership in your beneficiary, right? So they can’t do anything about it. You just put the name on there.)  

    Scenarios with Partial Ownership Interests

    Okay, so that fundamental instrument is great. The most common scenario is definitely people who own their house and are giving it to either their kids or a family member. And usually people own their real estate fee simple outright. They just, they own it, it’s theirs.  

    Sometimes though, you see properties, especially family properties that have been passed down, or business properties that were acquired as part of a group of investors, where you’ve got a partial interest, some sort of joint tenancy. And again, I’ve got a separate, more extensive discussion of how joint tenancies work.  

    Transfer on Death Deeds and Partial Interests

    But you know, if you’ve got a one quarter share in a property, you know, or you’ve got a joint tenancy with someone else, Can you still use a transfer on death deed?  

    The answer is yes, you can use a transfer on death deed for partial interests, just like you can for like a complete fee simple interest, and the rules for that are right in the transfer. on Death Property Act. So that’s Indiana Code 32-17-14-11(e), [edit: I misspoke, it’s subsection “e” not “a”] and then it’s a list of one, two, three, four, five, six of what happens in different situations. So you can go look at the law for yourself.  

    I think the interesting ones are a tenancy in common. That’s where you just own some fraction. If you put a transfer on death deed on your fraction, it’s just it operates as to your interest. I.C. 32-17-14-11(e)(4). So if you own a quarter of your property, you can put a transfer on death deed for your quarter of the property. Doesn’t affect anyone else.  

    With husbands and wives, spouses who have this special “tenants by the entirety,” you can’t do it unless both spouses join. I.C. 32-17-14-11(e)(1). So you can’t just decide one day to add a beneficiary designation for like you, the husband’s beneficiaries or whatever, both spouses have to agree.  

    But the rules is different for a joint tenancy that’s not spouses. It’s for a joint tenancy, which often includes this right of survivorship, pretty cool if you’re the survivor, I suppose, recording a transfer on death deed breaks the joint tenancy and turns it into a tenancy in common. I.C. 32-17-14-11(e)(2). So you lose the right of survivorship. That’s quite a little trick in the law there.  

    It’s never come up for me yet, but I’m young. Maybe it will someday. So be careful and look at it.  

    Conclusion: TOD Still an Option

    But just because you own some fractional interest in a property doesn’t mean transfer on death deeds are off the table. And that’s good because they’re a really flexible planning tool. I’ve talked elsewhere about how and when you might want to use them, but the type of tenancy you have doesn’t necessarily stand in your way.  

    So if you want to talk about this or any other Indiana estate planning and probate topic, give me a call or e-mail. You’re on my website. You’ve got my contact information and I serve, you know, central Indiana and especially points south, so Indianapolis, Marion County. Greenwood, Johnson County, Montgomery County, all of that, Shelbyville. So give me a call and we can talk more, but I hope this general information of Indiana law was useful to you. Bye now.

    Want to talk more?

    Book your initial planning meeting with Stautz Law and we’ll discuss your individual needs. No obligation.

    Book Now

  • Do You Actually Own the House?

    Video

    Transcript

    (Auto-Generated)

    House Title Issues in Probate

    Good morning, folks. It’s Andy Stautz at Stautz Law. I am a wills, trusts, and estates attorney, and today I’m talking about a common probate topic, which is, do you actually own the house?  

    It seems like it should be an easy one to answer, but this is probably the single most common problem I see that brings people in for a probate administration or that makes people realize they need to do something.  

    So, for real property, like houses, what matters is who has title, okay? And Title is a complicated system. It’s kept track of in these like property records, the land records of the county. So that’s the recorder’s office. And you’ll see it on property tax bills. And you’ll see it on, you know, a mortgage.  

    Property Title Isn’t Automatic

    What you need to realize is a lot of this isn’t automatic. So if someone passes away and leaves you a house, That’s great. But it doesn’t mean you own the house right away or just like right off the bat, right? You need to make sure that the title to the house catches up to you. [Edit: technically, I should clarify that it is automatic by law, in theory, see Indiana Code 29-1-7-23, but in practice you need the records to catch up.]  

    And there are lots of different ways to do that. I spend lots of time every day trying to figure out these puzzles and try to think of the best way to make sure that title has caught up to, you know, what my clients think is going on.

    Probate Scenarios: No Title Yet

    So a really common scenario is husband and wife own a house, one spouse dies, years later the other spouse dies, and now you’ve got children who are inheriting, but we still, and we’re maybe working on the will of the second spouse, you know, administering that. And it’s like, wait a minute, the first spouse is still on the title. We got to get that cleaned up.  

    Or two parties get divorced. Spouses own a house together, they get divorced, they go on their way, and then years later, one of the former spouses dies. And now we’re trying to do a probate and worrying about the house title. And we say, wait a minute, we’ve still got both names on the title, you know, got to fix that.  

    What are some other common problems? I mean, and just even at the most basic level, you know, you get heirs who are trying to sell a house, you know, an inherited house and they’re trying to sell it, but they haven’t done a probate yet, or they haven’t done any sort of title work.  

    And then the closing is hung up, right? Because the buyer and the seller, the realtors, the closing people, the title company all say, wait a minute, wait, you can’t sell a house you don’t own. So then we got to fix that.  

    Get Attorney Help With Your Title and Probate Problems

    So I guess the moral of the story is you’re going to have problems if you’re trying to do you know, if you’re relying on what you think the house ownership looks like without actually having, you know, caught up, you’re going to run into problems, right? The house sale won’t close or the mortgage company won’t deal with you and it’ll go into foreclosure, you know, or someone will come out of the woodwork with a claim against this house, you know, and they shouldn’t.  

    The answer to the click-baity title, like, are you sure you own the house is: you gotta look at the property records. You gotta figure out who actually owns it. And if necessary, you gotta do the legal work to catch everything up.  

    And sometimes that’s a full probate. Sometimes that’s a devolution affidavit or title passage affidavit. Sometimes that’s like other deed work, you know?  

    Just recently, I had to go look up an old, you know, like 1991, like really old divorce decree and figure out, you know, what happened all the way back then. So something to consider, you’re going to have hangups if you don’t clean it up beforehand.  

    We can do it in an emergency, but the sooner you do it, the better. And Like I said, there’s a problem-solving aspect to it, which I love to work with. So make sure you own your house before it causes problems.  

    If you don’t own your house, especially if it’s an inherited house, come talk to a probate attorney like me. We’ll get you fixed up. That’s been all for today, just kind of an overview of title problems and how they relate to probate. I hope you’ve enjoyed it. Call me or look around the site for more information. Thanks. Bye. 

    Want to talk more?

    Book your initial planning meeting with Stautz Law and we’ll discuss your individual needs. No obligation.

    Book Now

  • Indiana Devolution Affidavits Explained

    Video

    Transcript

    (Auto-Generated)

    Good morning, folks. It’s Andy Stautz at Stautz Law. I’m back for another Indiana probate administration topic. And this one has been a long time coming. We are talking today about devolution affidavits.  

    What is a Devolution Affidavit?

    Devolution affidavits are a tool that you can use in certain circumstances to record a transfer of property from a decedent (Someone who died) to their intestate heirs (it’s an important qualification) without a formal probate administration.  

    This topic is kind of a minefield because there’s a lot of gray area in terms of when and how and whether it’s the right thing to do. So we’re going to talk about what a devolution affidavit is supposed to do first and then we’ll kind of talk about some limitations. And then we’ll kind of talk about how you decide. Whether it’s it’s a good idea.  

    Basic Rule: Title to Property Passes at Death

    So at its most basic, a devolution affidavit is just giving effect to a provision in the probate code that says. “When a person dies, their stuff goes to their heirs.” Like that’s the basic rule, right? But to understand what happens next, you need a bunch of legal concepts.  

    Exceptions to Title Passage at Death

    Basically. There are a bunch of exceptions to the general rule, so the general rule is when you die, your stuff goes to your heirs. Except. The personal representative, if there is one. You know, is in charge of administration. You know, except a will doesn’t take effect unless it’s been admitted to probate. You know, creditor claims … title passes, except it’s subject to credit or claims until the nine month absolute claims bar. And so forth.  

    How a Devolution Affidavit Works

    Umm. So a devolution affidavit is basically supposed to say. “Here’s how that title passed. And here’s why none of those exceptions are going to be a problem for us now.” So we talked a few weeks ago or a few days ago about small estate affidavits. If the total estate’s less than $100,000, you can use this one pager to get personal property.  

    OK. Well, what about real property? The devolution affidavit is basically the answer to transferring real property without probate. It’s not subject to that $100,000 small estate limit.  

    What is in a Devolution Affidavit?

    But it’s subject to some other. Conditions. OK, so those conditions are set out in I.C. 29-1-7-23. Just pulled up that code citation for you. And that’s where it says, OK you can. You can record an affidavit. Just like a deed that says. “This property was owned by the decedent. These are the heirs. . . that can be one person or many people. You know, here’s how it descends.”  

    And you record that. And it’s effective as a transfer. And then if after the time limit for opening a probate estate comes and goes. And the creditor period comes and goes. Then it’s like, OK, nothing can disrupt this now. So it’s final.  

    So anyone else who wants to buy the property or whatever can do it without worrying that a personal representative’s suddenly going to open an estate or a creditor is going to come forward with the claim.  

    Finality of Devolution Affidavits; Title

    Some of the gray areas are of course like what? How final is that really? Because unlike probate, where there’s a formal procedure and the court is at least a little bit involved in granting the petition. [With a devolution affidavit] you’re pretty much just relying on whoever makes the affidavit to say so about who gets the property and why.  

    And as we’ve discussed in the past. You know, there’s this escape hatch in the probate code that says you can probate a will to prove passage of title of property that’s still titled in the name of a decedent. In theory, the devolution affidavit should defeat that because once it becomes effective, the property is no longer titled in the name of the decedent.  

    But in practice some title companies are a little leery of this. Some Realtors don’t know how to work with it.  

    How to Decide if a Devolution Affidavit Will Work for You

    To sum it all up, you know, what you kind of need to know is, is there a will? Because if there’s a will the rules say you have to probate it, so no devolution affidavit for you. Is there potential family conflict? If so, probably no devolution affidavit for you, right? You don’t want to be part owners with a bunch of people who don’t get along. You know, are there other assets that would make a formal administration a better idea? You know, what are your plans in terms of sale? Does it, you know, if you’re just staying in the house, then maybe yeah, you do devolution affidavit– you don’t need to get along with your seller.  

    So there are a lot of considerations, but it’s kind of this backdoor method to pass real estate down if there’s no will. You know, all you’re trying to do is move the property and you know it gains finality once the time limits pass for everything else.  

    Conclusion: Seek Legal Advice

    I hope that was. Some consideration of what’s out there. A full discussion of how the title passes and when it’s perfected is…. I think requires a legal background. But. That’s kind of the overview. Hope it was helpful and if you’ve got questions about this. I do them all the time. I, you know, decide whether probate is appropriate, decide whether a devolution affidavit is appropriate and you know, and charge accordingly. 

    So. Give me a call if you’ve got questions. This was an overview I can give you specific advice if you are my client. Thanks and bye. 

    Want to talk more?

    Book your initial planning meeting with Stautz Law and we’ll discuss your individual needs. No obligation.

    Book Now

  • All About Indiana Small Estate Affidavits

    Video

    Transcript

    (Auto-Generated)

    Good morning. It’s Andy Stautz at Stautz Law. I am back for another talk about probate administration, specifically Indiana probate administration. Today’s topic is the small estate affidavit.  

    What is a “Small Estate Affidavit”?

    So the small estate affidavit is a tool that you can use to collect the property of a decedent (That is, that is someone who has died: a decedent.) in certain circumstances, without having to go to a court for probate, without having to open a formal estate, without having to hire a lawyer, necessarily.  

    This is a really handy thing. You need to know about it because it’s often the right choice. For people who don’t have very much property when they die. So if client calls and they say oh. I’ve… You know, my dad died. My mom died. Oh. He didn’t have anything. It’s just $2000 in a bank account or, you know, it’s just his last Social Security check that he hadn’t deposited yet — you know whatever.  

    Indiana Law of Small Estates

    Where there’s not a lot of property, it doesn’t make sense to hire a lawyer and open an estate. Indiana has given us this nice law. It’s in the probate code, 29-1-8. Has all the rules on what the smallest estate affidavit is; when they use it.  

    What is the Indiana Small Estate Limit?

    The basic rule is the total value of the estate has to be less than $100,000. So that… I’ve referred to that in other videos, it’s an important number because that’s the “small estate limit.” For less than $100,000 in total property, you can use the affidavit procedure; if it’s above that, you have to open a probate estate.  

    How to Use the Small Estate Affidavit

    So how … then the next question, how is the small state affidavit easier? What is it?  

    Well, it’s just a paper. It’s just a document you fill out and you know, so and so, this is their name, birthday, date of death. You know, here’s who I am. I’m the son. I’m the daughter. Whatever.  

    You fill it out and then you take it to the bank and you say. “Give me give me the decedent’s bank account.” And. Or anyone else who’s holding. Personal property. Of the decedent, although bank accounts are by far the most common.  

    Other Rules on Small Estates

    There are a couple of other little rules: you know, you have to wait 45 days. You have to swear that you’ll distribute the property to the right people. (Oftentimes, that’s just whoever is holding the affidavit, but sometimes there are other heirs and you basically promise to divide it fairly.)  

    Can You Use a Small Estate Affidavit for Real Estate?

    And furthermore, and this is a big limitation, it applies by its terms to personal property. So, so things, money, moveable things, not real property. So not a house, not an apartment or condo, even if it’s less than $100,000. 

    The small estate affidavit is just to get people to hand you the personal property. Real property goes by its own special rules.  

    So that’s basically the overview. If you’re below $100,000, you’ve got personal property you need to gather. You should get this form, fill it out, take it to the people who are holding the property and get them to deliver it.  

    And it’s called “dispensing with administration” or small estate administration because you don’t need to go to court. For anything.  

    Small Estate Affidavit Forms and Resources

    If you think this is your situation, you know you look online. Indiana Legal Help has a form. If you just Google Indiana Small Estate affidavit, you’ll find a form.  

    You know you can hire me to put it together for you. And you know that that helps make sure it’s done right, but. It’s DIYable if you’re diligent. 

    And what else should I say? I suppose the other thing is the small state affidavit is also used in conjunction with the Trust administration. A lot of times. So if I’m doing a probate avoidance plan. And a person puts all their assets in a revocable trust, their probate assets–the things that aren’t in the trust–are below the small estate limit, so we can use the small estate affidavit just to kind of clean up whatever is left that’s not in the trust.  

    But that’s a deeper topic, so that’s the basics. Like I said, you could do it yourself. You can give me a call and do it for you, but you should know that it exists. And like I said, the code section is 29-1-8-1. If you want to read the law. Thanks and see you next time. Bye! 

    Want to talk more?

    Book your initial planning meeting with Stautz Law and we’ll discuss your individual needs. No obligation.

    Book Now

  • Fixing House Inheritances

    Video

    Transcript

    (Auto-Generated)

    Hi folks, it’s Andy Stautz at Stautz Law. I am back with another… I guess it’s an estate administration topic. This one’s kind of an oddball and it’s not going to be my most focused talk ever, but it comes up so much. And the question is: how do I get the house? How do I fix the house?  

    Scenarios: Houses Left in Old Title

    And the scenario that comes up over and over is, oh, my grandma, you know, owned the family farm and she died and so and so’s name is still on the title, but he’s gone. And you know my cousin’s living there.  

    All of these situations where there’s there’s some property (real estate always, you know we’re not talking about personal property here). There’s some real estate, there’s some house and it’s still titled in someone’s name who’s gone. And the question is OK. How do we how do we bring it up to date? What happens, you know?  

    A lot of times this happens when either there’s a mortgage or there are taxes, and something changes there. 

    In theory when someone dies the personal representative, if there’s an estate administration, or the beneficiary if there’s a transfer on death deed, maybe, needs to assume the mortgage and let the bank know that someone else is paying the mortgage. Same thing with taxes, right? Like in theory, you should get it passed down and make sure that the person who says they’re paying taxes, is the one actually paying taxes.  

    Obviously, that doesn’t always happen, right? So you’ve got people who are paying the mortgage in a dead person’s name or paying taxes in a dead person’s name. Which is not a huge deal as long as things are getting paid… Most people are usually willing to just kind of let it slide, but if there’s a change in circumstances, that’s when it comes up. Or someone stops paying the taxes and now there’s a foreclosure sale or a tax sale.  

    Solutions to Broken Inheritance

    So can can you fix it? Usually, yeah. Usually, yeah. It just kind of depends on different factors. 

    1. Probate a Will for Specific Asset

      For example, if there’s a will, that’s great. Usually the rule is you have to probate A will within three years of a death. Now sometimes these cases come to me a little way after. Fortunately, there’s an escape hatch in the Indiana Code that says, oh, by the way, though, you can probate a will specifically to clear title or pass titles of something that’s still titled in the decedent’s name… which is perfectly this situation, right? We’ve got a house. It’s still titled in someone’s name. They died five years ago. It’s like, OK, we’re past the three-year limit, but we can still introduce a will if there is one to say “here’s how it needs to go.”  

      [Edit: that code provision is IC 29-1-7-15.1(h)] 

      2. Survivorship Affidavits

      Sort of similar for survivorship affidavits. So if there’s a joint titling situation and you need to resolve who got the property by survivorship, you can file a survivorship affidavit. As far as I can tell, uh, you know, there’s not right in the statute a limitation on when you can do that.  

      And sometimes it happens years later, sometimes you need to do a survivorship affidavit to clear up a joint title situation. And then a probate.  

      You can kind of stack these methods.  

      3. Devolution Affidavits

      The other technique which probably deserves a whole talk of its own, is, uh, what’s called a devolution affidavit. And this is basically a deed that you can do without a probate administration. And it’s supposed to show the title to the real estate passed.  

      Problem is, if it passes by will there’s another clause in the probate code that says you can’t. You have to probate the will for it to be effective, [citation: IC 29-1-7-24] so arguably that means you need to do the probate of will for specific asset.  

      In intestacy, you don’t necessarily need to do that. You’re just still, you know, depending on your title company, some title companies take the position there’s still a cloud on the title because until there’s been an administration. The property is, you know, subject to possession of the of the personal representative. And again, that gets arguable, but it’s something to consider.  

      So that’s just a bunch of considerations. This is really a problem solving area, so if there’s a house and it’s titled in the wrong person’s name and you’re wondering who gets it or whether you can get it, it just depends on the facts and it depends on what intestacy rules say, what the will says, if there’s a will, you know, other heirs and it’s kind of… it’s problem solving. You know you use these different techniques to try to make sure it goes in the right place which can be really fun.  

      You just don’t know how it’s going to turn out until you get advice for your situation. So if you’re dealing with something like that, give me a call. Love working on these cases and I hope this talk has been helpful. It’s kind of a general overview of what’s possible. Thanks. Bye.

      Want to talk more?

      Book your initial planning meeting with Stautz Law and we’ll discuss your individual needs. No obligation.

      Book Now