Citations Affected: IC 29-1; IC 30-2; IC 30-4; noncode.
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 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.) (The
introduced version of this bill was prepared by the probate code study
Effective: July 1, 2005 (retroactive); July 1, 2006.
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, passed. Yeas 47, nays 0. Technical corrections.
A BILL FOR AN ACT to amend the Indiana Code concerning
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 representation.
(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 equally.
(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:
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 without consideration.
(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 limited proxy.
(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 person,
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.
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 discharge liabilities;
(B) paying from income or principal, in the fiduciary's discretion:
(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.