Synopsis: Probate and trust matters. Provides that a surviving
subsequent childless spouse who takes against the will of the decedent
is entitled to take one-third of the net personal estate and an additional
amount equal to 25% of the fair market value of the decedent's real
property minus liens and encumbrances. (Current law bases the
additional amount on the value of the decedent's lands.) Makes
conforming changes to the intestate succession law. Specifies
additional powers that a personal representative may exercise without
order of the court in the administration of an unsupervised estate.
Provides that income earned by a trust becomes a part of the principal
and is not distributed to the beneficiaries of specific property. Removes
references to estates to conform Indiana's version of the uniform
principal and income act with current probate law. Specifies that
a trustee may exercise a power that conflicts with an individual
interest of the trustee if the trustee receives written
February 17, 2006
SENATE BILL No. 114
DIGEST OF SB 114
(Updated February 13, 2006 11:45 am - DI 107)
Citations Affected: IC 29-1; IC 30-2; IC 30-4; noncode.
(Continued next page)
Effective: July 1, 2005 (retroactive); July 1, 2006.
(HOUSE SPONSORS _ FOLEY, THOMAS)
January 9, 2006, read first time and referred to Committee on Judiciary.
January 19, 2006, amended, reported favorably _ Do Pass.
January 23, 2006, read second time, ordered engrossed. Engrossed.
January 24, 2006, read third time, technical corrections, passed. Yeas 47, nays 0.
January 25, 2006, re-engrossed.
February 2, 2006, read first time and referred to Committee on Judiciary.
February 16, 2006, amended, reported _ Do Pass.
authorization from all interested persons to exercise the power or if the
exercise of the power is specifically authorized by the terms of the
trust. (Current law permits the exercise of the power only with court
authorization.) Provides that a claimant seeking payment of a debt
owed to a decedent or seeking to obtain personal property or an
instrument evidencing a debt, an obligation, a stock, or a chose in
action belonging to the decedent must include in the affidavit that the
claimant submits to the debtor or person possessing the personal
property or instrument: (1) the name and address of each other person
entitled to a share of the property; (2) a statement that the claimant has
notified each other person identified in the affidavit of the claimant's
intention to present the affidavit; and (3) that the value of the gross
probate estate does not exceed $50,000. (The introduced version of this
bill was prepared by the probate code study commission.)
February 17, 2006
Second Regular Session 114th General Assembly (2006)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type
, and deletions will appear in
this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in this style type
. Also, the
will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type
this style type
between statutes enacted by the 2005 Regular Session of the General Assembly.
SENATE BILL No. 114
A BILL FOR AN ACT to amend the Indiana Code concerning
Be it enacted by the General Assembly of the State of Indiana:
SOURCE: IC 29-1-2-1; (06)ES0114.1.1. -->
SECTION 1. IC 29-1-2-1, AS AMENDED BY P.L.238-2005,
SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2005 (RETROACTIVE)]: Sec. 1. (a) The estate of a person
dying intestate shall descend and be distributed as provided in this
(b) Except as otherwise provided in subsection (c), the surviving
spouse shall receive the following share:
(1) One-half (1/2) of the net estate if the intestate is survived by
at least one (1) child or by the issue of at least one (1) deceased
(2) Three-fourths (3/4) of the net estate, if there is no surviving
issue, but the intestate is survived by one (1) or both of the
(3) All of the net estate, if there is no surviving issue or parent.
(c) If the surviving spouse is a second or other subsequent spouse
who did not at any time have children by the decedent, and the
decedent left surviving the decedent a child or children or the
descendants of a child or children by a previous spouse,
surviving second or subsequent childless spouse shall take only an
amount equal to twenty-five percent (25%) of the remainder of:
(1) the fair market value as of the date of death of the real
property of the deceased spouse;
(2) the value of the liens and encumbrances on the real property
of the deceased spouse.
and The fee shall, at the decedent's death, vest at once in such the
decedent's surviving child or children, or the descendants of such as
the decedent's child or children who may be dead. Such A second or
subsequent childless spouse described in this subsection shall,
however, receive the same share of the personal property of the
decedent as is provided in subsection (b) with respect to surviving
(d) The share of the net estate not distributable to the surviving
spouse, or the entire net estate if there is no surviving spouse, shall
descend and be distributed as follows:
(1) To the issue of the intestate, if they are all of the same degree
of kinship to the intestate, they shall take equally, or if of unequal
degree, then those of more remote degrees shall take by
(2) If there is a surviving spouse but no surviving issue of the
intestate, then to the surviving parents of the intestate.
(3) If there is no surviving spouse or issue of the intestate, then to
the surviving parents, brothers, and sisters, and the issue of
deceased brothers and sisters of the intestate. Each living parent
of the intestate shall be treated as of the same degree as a brother
or sister and shall be entitled to the same share as a brother or
sister. However, the share of each parent shall be not less than
one-fourth (1/4) of
such the decedent's net estate. Issue of
deceased brothers and sisters shall take by representation.
(4) If there is no surviving parent or brother or sister of the
intestate, then to the issue of brothers and sisters. If
distributees described in this subdivision are all in the same
degree of kinship to the intestate, they shall take equally or, if of
unequal degree, then those of more remote degrees shall take by
(5) If there is no surviving issue or parent of the intestate or issue
of a parent, then to the surviving grandparents of the intestate
(6) If there is no surviving issue or parent or issue of a parent, or
grandparent of the intestate, then the estate of the decedent shall
be divided into that number of shares equal to the sum of:
(A) the number of brothers and sisters of the decedent's
parents surviving the decedent; plus
(B) the number of deceased brothers and sisters of the
decedent's parents leaving issue surviving both them and the
and one (1) of the shares shall pass to each of the brothers and
sisters of the decedent's parents or their respective issue per
(7) If interests in real estate go to a husband and wife under this
subsection, the aggregate interests so descending shall be owned
by them as tenants by the entireties. Interests in personal property
so descending shall be owned as tenants in common.
(8) If there is no person mentioned in subdivisions (1) through
(7), then to the state.
SOURCE: IC 29-1-3-1; (06)ES0114.1.2. -->
SECTION 2. IC 29-1-3-1 IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2005 (RETROACTIVE)]: Sec. 1. (a) When a
married individual dies testate as to any part of the individual's estate,
the surviving spouse is entitled to take against the will under the
limitations and conditions stated in this chapter. The surviving spouse,
upon electing to take against the will, is entitled to one-half (1/2) of the
net personal and real estate of the testator. However, if the surviving
spouse is a second or other subsequent spouse who did not at any time
have children by the decedent and the decedent left surviving a child
or children or the descendants of a child or children by a previous
spouse, the surviving second or subsequent childless spouse shall upon
such election take one-third (1/3) of the net personal estate of the
testator plus an amount equal to twenty-five percent (25%) of the
(1) the fair market value as of the date of death of the
property of the testator; minus
(2) the value of the liens and encumbrances on the real
property of the testator.
In determining the net estate of a deceased spouse for the purpose of
computing the amount due the surviving spouse electing to take against
the will, the court shall consider only such property as would have
passed under the laws of descent and distribution.
(b) When the value of the property given the surviving spouse under
the will is less than the amount the surviving spouse would receive by
electing to take against the will, the surviving spouse may elect to
retain any or all specific bequests or devises given to the surviving
spouse in the will at their fair market value as of the time of the
decedent's death and receive the balance due in cash or property.
(c) Except as provided in subsection (b), in electing to take against
the will, the surviving spouse is deemed to renounce all rights and
interest of every kind and character in the personal and real property of
the deceased spouse, and to accept the elected award in lieu thereof.
(d) When a surviving spouse elects to take against the will, the
surviving spouse shall be deemed to take by descent, as a modified
share, the part of the net estate as does not come to the surviving
spouse by the terms of the will. Where by virtue of an election pursuant
to this chapter it is determined that the surviving spouse has renounced
the surviving spouse's rights in any devise, either in trust or otherwise,
the will shall be construed with respect to the property so devised to the
surviving spouse as if the surviving spouse had predeceased the
SOURCE: IC 29-1-7.5-3; (06)ES0114.1.3. -->
SECTION 3. IC 29-1-7.5-3 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 3. (a)
Subject to section
2(d) of this chapter, a personal representative who administers an estate
under this chapter may do the following without order of the court:
(1) Retain assets owned by the decedent pending distribution or
liquidation including those in which the representative is
personally interested or which are otherwise improper for trust
(2) Receive assets from fiduciaries or other sources.
(3) Perform, compromise, or refuse performance of the decedent's
contracts that continue as obligations of the estate, as
may determine under the circumstances.
In performing enforceable contracts by the decedent to convey or
lease land, the personal representative, among other possible
courses of action, may:
execute and deliver a deed of conveyance for cash
payment of all sums remaining due or the purchaser's note for
the sum remaining due secured by a mortgage or deed of trust
on the land; or
deliver a deed in escrow with directions that the
proceeds, when paid in accordance with the escrow agreement,
be paid to the successors of the decedent, as designated in the
(4) Satisfy written charitable pledges of the decedent irrespective
of whether the pledges constituted binding obligations of the
decedent or were properly presented as claims, if in the judgment
of the personal representative the decedent would have wanted
the pledges completed under the circumstances.
(5) If funds are not needed to meet debts and expenses currently
payable and are not immediately distributable, deposit or invest
liquid assets of the estate, including moneys received from the
sale of other assets, in federally insured interest-bearing accounts,
readily marketable secured loan arrangements or other prudent
investments which would be reasonable for use by trustees
(6) Acquire or dispose of an asset, including land in this or
another state, for cash or on credit, at public or private sale; and
manage, develop, improve, exchange, partition, change the
character of, or abandon an estate asset.
(7) Make ordinary or extraordinary repairs or alterations in
buildings or other structures, demolish any improvements, raze
existing or erect new party walls or buildings.
(8) Subdivide, develop, or dedicate land to public use; make or
obtain the vacation of plats and adjust boundaries; or adjust
differences in valuation on exchange or partition by giving or
receiving considerations; or dedicate easements to public use
(9) Enter for any purpose into a lease as lessor or lessee, with or
without option to purchase or renew, for a term within or
extending beyond the period of administration.
(10) Enter into a lease or arrangement for exploration and
removal of minerals or other natural resources or enter into a
pooling or unitization agreement.
(11) Abandon property when, in the opinion of the personal
representatives, it is valueless, or is so encumbered, or is in
condition that it is of no benefit to the estate.
(12) Vote stocks or other securities in person or by general or
(13) Pay calls, assessments, and other sums chargeable or
accruing against or on account of securities, unless barred by the
provisions relating to claims.
(14) Hold a security in the name of a nominee or in other form
without disclosure of the interest of the estate but the personal
representative is liable for any act of the nominee in connection
with the security so held.
(15) Hold, manage, safeguard, and control the estate's real
and personal property, insure the assets of the estate against
damage, loss, and liability, and
himself insure the personal
representative personally against liability as to third persons.
(16) Borrow money with or without security to be repaid from the
estate assets or otherwise and advance money for the protection
of the estate.
(17) Effect a fair and reasonable compromise with any debtor or
obligor, or extend, renew, or in any manner modify the terms of
any obligation owing to the estate. If the personal representative
holds a mortgage, pledge, or other lien upon property of another
he the personal representative may, in lieu of
foreclosure, accept a conveyance or transfer of encumbered assets
from the owner thereof in satisfaction of the indebtedness secured
(18) Pay taxes, assessments, compensation of the personal
representative, and other expenses incident to the administration
of the estate.
(19) sell or exercise stock subscription or conversion rights and
consent, directly or through a committee or other agent, to the
reorganization, consolidation, merger, dissolution, or liquidation
of a corporation or other business enterprise;
(19) Hold an interest in a proprietorship, partnership, limited
liability company, business trust, corporation, or another
domestic or foreign form of business or enterprise.
(20) Continue a business.
(21) Take any action that may be taken by shareholders,
partners, members, or property owners, including
contributing additional capital to or merging, consolidating,
reorganizing, recapitalizing, dissolving, or otherwise changing
the form of the business organization.
(20) (22) Allocate items of income or expense to either estate
income or principal, as permitted or provided by IC 30-2-14.
(21) (23) Employ persons, including attorneys, auditors,
investment advisors, or agents, even if they are associated with
the personal representative, to advise or assist the personal
representative in the performance of his the personal
representative's administrative duties; act without independent
investigation upon their recommendations; and instead of acting
personally, employ one (1) or more agents to perform any act of
administration, whether or not discretionary.
(22) (24) prosecute or defend claims or proceedings in any
jurisdiction Do any of the following concerning a claim or
demand made in favor of or against the estate for the
protection of the estate and of the personal representative in the
performance of his the personal representative's duties:
(A) Release, assign, settle, compromise, or contest the
claim or demand.
(B) Participate in mediation or submit to arbitration to
resolve any dispute concerning the claim or demand.
(C) Extend the time for payment of the claim or demand.
(D) Abandon the claim or demand.
(23) (25) Sell, mortgage, or lease any real or personal property of
the estate or any interest therein for cash, credit, or for part cash
and part credit, and with or without security for unpaid balances.
(24) continue any unincorporated business or venture in which the
decedent was engaged at the time of his death:
(i) in the same business form for a period of not more than five
(5) months from the date of appointment of a general personal
representative if continuation is a reasonable means of
preserving the value of the business including good will;
(ii) in the same business form for any additional period of time
that may be approved by order of the court in a formal
proceeding to which the persons interested in the estate are
(iii) throughout the period of administration if the business is
incorporated by the personal representative and if none of the
probable distributees of the business who are competent adults
object to its incorporations and retention in the estate;
(26) Select a settlement option under any qualified or
nonqualified benefit or retirement plan, annuity, or life
insurance payable to the estate, and take appropriate action
to collect the proceeds.
(25) incorporate any business or venture in which the decedent
was engaged at the time of his death;
(26) satisfy and settle claims;
(27) Inspect and investigate property held, directly or
indirectly, by the personal representative for the purpose of:
(A) determining the application of environmental law with
respect to the property; and
(B) doing the following:
(i) Take action to prevent, abate, or remedy an actual or
a potential violation of an environmental law affecting
the property, whether taken before or after the assertion
of a claim or the initiation of governmental enforcement
by federal, state, or local authorities.
(ii) Compromise claims against the estate that may be
asserted for an alleged violation of environmental law.
(iii) Pay the expense of inspection, review, abatement, or
remedial action to comply with the environmental law.
Distribute assets of the estate upon such terms as
and To the extent
practicable, taking into account the decedent's probable
intention, the power to distribute assets includes the power to:
(A) pay an amount to a distributee who is under a legal
disability or whom the personal representative reasonably
believes to be incapacitated by:
(i) paying the amount directly to the distributee or
applying the amount for the distributee's use and
(ii) paying the amount to the guardian appointed for the
(iii) paying the amount to a custodian under the Indiana
Uniform Transfers to Minors Act (IC 30-2-8.5) or a
custodial trustee under the Uniform Custodial Trust Act
(IC 30-2-8.6); or
(iv) paying the amount to the trustee of a trust
established by the decedent or by the personal
representative under subsection (b); and
(B) make distributions of estate income and principal in
kind, in cash, or partly in each, in shares of differing
Perform any other act necessary or appropriate to
administer the estate.
(b) A personal representative who administers an estate under
this chapter may, without court order, establish a trust to make
distributions to a distributee who is under a legal disability or
whom the personal representative reasonably believes is
incapacitated. In establishing a trust under this subsection, a
personal representative may exercise:
(1) the authority given to custodians under the Indiana
Uniform Transfers to Minors Act (IC 30-2-8.5) to create a
trust that satisfies the requirements of Section 2503 of the
Internal Revenue Code and the regulations adopted under
that Section; or
(2) the authority given to an attorney in fact under
IC 30-5-5-15(a)(3) to establish a revocable trust for the benefit
of a principal.
SOURCE: IC 29-1-8-1; (06)ES0114.1.4. -->
SECTION 4. IC 29-1-8-1 IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2006]: Sec. 1. (a) Forty-five (45) days after the
death of a decedent and upon being presented an affidavit that complies
with subsection (b), a person:
(1) indebted to the decedent; or
(2) having possession of personal property or an instrument
evidencing a debt, an obligation, a stock, or a chose in action
belonging to the decedent;
shall make payment of the indebtedness or deliver the personal
instrument evidencing a debt, an obligation, a stock,
or a chose in action to a person claiming to be entitled to payment or
delivery of property of the decedent.
(b) The affidavit required by subsection (a) must be an affidavit
made by or on behalf of the claimant
stating that: and must state the
the value of the gross probate estate, wherever located
(less liens and encumbrances), does not exceed
forty-five (45) days have elapsed since the death of the
no application or petition for the appointment of a
personal representative is pending or has been granted in any
(4) The name and address of each other person that is entitled
to a share of the property and the part of the property to
which each person is entitled.
(5) That the claimant has notified each person identified in the
affidavit of the claimant's intention to present an affidavit
under this section.
(4) (6) That
the claimant is entitled to payment or delivery of the
property on behalf of each person identified in the affidavit.
(c) If a motor vehicle or watercraft (as defined in IC 9-13-2-198.5)
is part of the estate, nothing in this section shall prohibit a transfer of
the certificate of title to the motor vehicle if five (5) days have elapsed
since the death of the decedent and no appointment of a personal
representative is contemplated. A transfer under this subsection shall
be made by the bureau of motor vehicles upon receipt of an affidavit
containing a statement of the conditions required by subsection (b)(1)
The affidavit must be duly executed by the
distributees of the estate.
(d) A transfer agent of a security shall change the registered
ownership on the books of a corporation from the decedent to a
claimant upon the presentation of an affidavit as provided in subsection
(e) For the purposes of subsection (a), an insurance company that,
by reason of the death of the decedent, becomes obligated to pay a
death benefit to the estate of the decedent is considered a person
indebted to the decedent.
(f) For purposes of subsection (a), property in a safe deposit box
rented by a decedent from a financial institution organized or
reorganized under the law of any state (as defined in IC 28-2-17-19) or
the United States is considered personal property belonging to the
decedent in the possession of the financial institution.
SOURCE: IC 29-1-8-4.5; (06)ES0114.1.5. -->
SECTION 5. IC 29-1-8-4.5 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 4.5. The person
claiming to be entitled to payment or delivery of the property belonging
to the decedent may present to the court having jurisdiction over the
decedent's estate an affidavit containing a statement of the conditions
subdivisions (1) through (4) of section 1(a) section
(1)(b) of this chapter. Upon receipt of the affidavit, the court may,
without notice and hearing, enter an order that the claimant is entitled
to payment or delivery of the property.
SOURCE: IC 30-2-14-18; (06)ES0114.1.6. -->
SECTION 6. IC 30-2-14-18 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2006]: Sec. 18. After
dies, in the case of an estate, or after
an income interest in a trust ends,
the following rules apply:
(1) A fiduciary
of an estate or
of a terminating income interest
shall determine the amount of net income and net principal
receipts received from property specifically given to a beneficiary
under the rules in sections 20 through 43 of this chapter that apply
to trustees and the rules in subdivision (5). The fiduciary shall
distribute the net income and net principal receipts to the
beneficiary who is to receive the specific property.
(2) A fiduciary shall determine the remaining net income of
decedent's estate or
a terminating income interest under the rules
in sections 20 through 43 of this chapter that apply to trustees and
(A) including in net income all income from property used to
(B) paying from income or principal, in the fiduciary's
(i) fees of attorneys, accountants, and fiduciaries;
(ii) court costs and other expenses of administration; and
(iii) interest on death taxes;
but the fiduciary may pay those expenses from income of
property passing to a trust for which the fiduciary claims an
estate tax marital or charitable deduction only to the extent
that the payment of those expenses from income will not cause
the reduction or loss of the deduction; and
(C) paying from principal all other disbursements made or
incurred in connection with the
settlement of a decedent's
estate or the winding up of a terminating income interest,
including debts; funeral expenses; disposition of remains;
family allowances; and death taxes and related penalties that
are apportioned to the estate or terminating income interest by
the will, the terms of the trust or applicable law.
A fiduciary shall distribute to a beneficiary who receives a
pecuniary amount outright the interest or any other amount
provided by the will, the terms of the trust, or applicable law from
net income determined under subdivision (2) or from principal to
the extent that net income is insufficient. If a beneficiary is to
receive a pecuniary amount outright from a trust after an income
interest ends and no interest or other amount is provided for by
the terms of the trust or applicable law, the fiduciary shall
distribute the interest or other amount to which the beneficiary
would be entitled under applicable law if the pecuniary amount
were required to be paid under a will.
(4) A fiduciary shall distribute the net income remaining after
distributions required by subdivision (3) in the manner described
in section 19 of this chapter to all
other residuary beneficiaries,
including a beneficiary who receives a pecuniary amount in trust,
even if the beneficiary holds an unqualified power to withdraw
assets from the trust or other presently exercisable general power
of appointment over the trust.
(5) A fiduciary may not reduce principal or income receipts from
property described in subdivision (1) because of a payment
described in section 38 or 39 of this chapter to the extent that the
will, the terms of the trust, or applicable law requires the fiduciary
to make the payment from assets other than the property or to the
extent that the fiduciary recovers or expects to recover the
payment from a third party. The net income and principal receipts
from the property are determined by:
(A) including all of the amounts the fiduciary receives or pays
with respect to the property, whether those amounts:
(i) accrued or became due before, on, or after the date of an
individual's death; or
(ii) an income interest's terminating event; and
(B) making a reasonable provision for amounts that the
fiduciary believes the
estate or terminating income interest
may become obligated to pay after the property is distributed.
SOURCE: IC 30-4-3-5; (06)ES0114.1.7. -->
SECTION 7. IC 30-4-3-5 IS AMENDED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2006]: Sec. 5.
(Conflict of Interest in Exercise
of Powers) (a) If the duty of the trustee in the exercise of any power
conflicts with his the trustee's individual interest or his the trustee's
interest as trustee of another trust, the power may be exercised only
with under one (1) of the following circumstances:
(1) The trustee receives court authorization to exercise the
power with notice to interested persons as the court may
(2) The trustee gives notice of the proposed action in
accordance with IC 30-2-14-16 and:
(A) the trustee receives the written authorization of all
interested persons to the proposed action within the period
specified in the notice of the proposed action; or
(B) a beneficiary objects to the proposed action within the
period specified in the notice of the proposed action, but
the trustee receives court authorization to exercise the
(3) The exercise of the power is specifically authorized by the
terms of the trust.
the purposes of subsection (a) of this section, the interest of
an affiliate of the trustee will be deemed to be the interest of the
SOURCE: ; (06)ES0114.1.8. -->
SECTION 8. [EFFECTIVE JULY 1, 2005 (RETROACTIVE)]
IC 29-1-2-1 and IC 29-1-3-1, both as amended by this act, apply to
the estate of an individual who dies after June 30, 2005.
SOURCE: ; (06)ES0114.1.9. -->
SECTION 9. [EFFECTIVE JULY 1, 2006] IC 29-1-8-1 and
IC 29-1-8-4.5, both as amended by this act, apply to the estate of an
individual who dies after June 30, 2006.
SOURCE: ; (06)ES0114.1.10. -->
SECTION 10. An emergency is declared for this act.