During the Probate Code Study Committee meeting held on October 1, 2024, at 10 AM, several important topics were discussed:
Key Topics
- PD 3142: Direct Post Mortem Transfers
- PD 3142 introduces the concept of “direct post mortem transfers” to replace the narrow definition of “non-probate transfers” currently used in Indiana law. This aims to allow more flexibility for transferring assets directly to a testamentary trust without opening an estate.
- The new term includes retirement accounts, life insurance proceeds, and tenancy by the entirety real property, which the previous definition excluded.
- PD 3174: Retirement Plan Distribution
- PD 3174 allows the personal representative of an unsupervised estate or a trustee to distribute or assign retirement plan funds without court approval. This addresses the gap in current law where plan administrators require a court order to disburse such funds if the deceased did not name a beneficiary.
- PD 3175: Notice of Probate Administration
- PD 3175 clarifies procedures for serving notice to creditors, addressing issues highlighted in the Estate of Tolley case. It introduces a secondary notice form for creditors notified after one month of the first publication, providing a clearer deadline for claims.
- PD 3266: Power of Attorney Duties
- PD 3266 extends the authority of an attorney-in-fact (under a power of attorney) to handle tax matters for the deceased, such as filing tax returns and defending appeals, until a personal representative is appointed. This is particularly useful for dealing with the IRS without requiring a court-appointed executor.
Committee Actions and Votes
- PD 3142 (Direct Post Mortem Transfers): Motion to adopt PD 3142 passed unanimously (10-0).
- PD 3174 (Retirement Plan Distribution): Motion to adopt PD 3174 passed unanimously (10-0).
- PD 3175 (Notice of Probate Administration): Motion to adopt PD 3175 passed unanimously (10-0).
- PD 3266 (Power of Attorney Duties): Motion to adopt PD 3266 passed unanimously (10-0).
Additional Notes
- Discussions highlighted the potential overlap and confusion between non-probate transfers and direct post mortem transfers. The committee emphasized making terms as distinct as possible to avoid misinterpretation.
- Concerns were raised about the deadlines for creditor claims and the practicality of serving accurate notice to creditors. The committee discussed potential amendments to improve clarity for practitioners and creditors.
- Clear Explanation of Non-Probate vs. Direct Post Mortem Transfers
- Jeff Deibel provided an insightful explanation of why creating a new term was necessary rather than broadening the existing non-probate definition, which would have unintended consequences for creditor rights.
- Broadening Access to Retirement Accounts
- PD 3174 aims to make it easier for beneficiaries to access retirement funds without burdensome legal procedures, addressing practical inconveniences faced by heirs.
- Fixing Estate of Tolley Issues
- The introduction of the “Tolley notice” to serve creditors after a month of first publication is a significant step toward reducing litigation risk for personal representatives.
- Extended Power of Attorney Authority
- Extending the authority of an attorney-in-fact to deal with tax matters post-death under PD 3266 is a practical solution to deal with unresolved tax obligations without the hassle of court procedures.
Testing, one, two. Testing, testing, testing, one, two. Testing. Podium testing. It, it. On any of these topics. If you could come up or just fill out a paper request form, that would be helpful. We’re not showing anybody online, so thank you. See it, it. All right. Good morning. We’re going to go ahead and get started on the 2024 meeting of the probate commission. Want to thank everybody for coming. We’ve got four preliminary drafts to discuss today. I think it’ll. Relatively quickly. But what I would like to do is have the members of the commission introduce themselves. We’ll start over with Representative Meltzer there on the corner. Representative Jennifer Meltzer. District 73, Shelby Decatur Bartholomew, in Jennings County. Kip White. Covington, Indiana. Jim Carlberg, attorney, Indianapolis, Indiana. Sarah Shade Hamilton, attorney from Delaware County. Eric Cook, attorney in private practice and state senator serving Senate District 44, which is Orange County, Lawrence County, Jackson County, Brown county, and parts of Monroe County. Liz Brown, Senate District 15, Allen County. Chris Jeter, House District 88, portions of Hamilton, Hancock, Madison, Marion counties. Nikki Gray, staff attorney for the committee. Sarah Elser, staff attorney Jeff Cobb, lawyer, Vincennes. Jim Martin, trust and estate attorney, Maryville, Indiana. Okay, thank you, everybody. We’re going to go numerical order. So we’re going to start with PD 3142, which has to do with direct post mortem transfers. Nikki, do you want to give a summary? So, preliminary JAF 3142 sets out in the code what is a direct post mortem transfer for the purposes of funding a testamentary trust. Currently in code, this is referred to as a non probate transfer, which is defined in IC 32 1713 one. So direct post mortem transfer is a new term that is only used in this section. Great. That’s kind of a good intro. Jeff, you want to come on up? You’re the only one we have signed up, so you’re going to be the star of the show today. So do you want to go ahead and give us your testimony on this one, mister chairman? Thank you. And members of the committee, my name is Jeff Deibel. I’m with Frost Brown Todd. I’m the current chairperson of the ISBAS Probate review committee, which is part of the probate Trust and real property section. And I was involved in drafting all the proposals, or at least editing the proposals that the review committee put forward. That’s now on this morning’s agenda regarding PD 3142, we have this existing Probate code, section 29 1810, which was designed originally to make it clear that if you have a decedent who dies with a will that gets probated, and if that decedent has made other property not passing under the will payable directly to the testamentary trust that’s stated inside the will, then the trust is treated as directly receiving those assets outside the estate. You don’t have to open an estate, you just probate the will, and then the trustee of the trust basically collects these assets. The problem that we had in the original statute, first of all, there was a place where the word no was inserted, where it really shouldn’t have been. Secondly, it borrowed a very narrow definition of non probate transfer from 30 217 13, which was designed to allow creditors of estates and also surviving spouses and children to collect survivor allowances and creditor claims from non probate assets if the probate estate was insolvent. But intentionally, when that was added to the code 15 years or so ago, the definition that was used for non probate transfer was very narrow. It excluded life insurance proceeds, it excluded annuity proceeds, it excluded retirement account proceeds, and because of that, it also excluded tenancy by the entirety’s real property. So relying on that definition meant that we were going to try to use 29 1810 to say, hey, we’re funding a testamentary trust under a will with non probate assets. If we use that definition, we’re missing out on being able to use iras, other retirement accounts, life insurance, annuities. So the main purpose of this proposal was to basically correct the definition. And the way that LSA has done this is to invent a new term which is intentionally dissimilar from non probate transfer, and we’re calling it a direct post mortem transfer. And that, in a nutshell, is what this PD does. Thank you, Jeff. And when we were working on this, I think a lot of us that maybe practice some in this area, it felt like this transaction should be kind of a standard non probate transfer. But when you look at the definition of non probate transfer in 30 217 13, as you mentioned, it really did not cover or covered this transaction in a way think it probably was not intended to be covered. And we looked at maybe amending the definition of non probate transfer, but as you know, it’s cross referenced so many times in the code, we thought maybe wiser to just come up with this new definition of direct post mortem transfer. So are there any questions from any of the commission members on that? Yes, sir. Go ahead, both of you. One of you and then the other one. Go ahead. So the term non probate assets, you turn your mic on, sir. You push the button there till it’s red. There you go. Jim Carlberg, the term non probate assets had a purpose to define when creditors or assets that could be reached by creditors or spouses. In setting up this new term, are we creating a subset of those assets which will no longer be subject to those claims? No, we’re not. We’re actually creating a broader category. So the broader category still includes the things that are non probate transfers, like transfer on death transfers and assets in a revocable trust, for example. But that is not going to affect the ability of a creditor to make a claim against a non probate transfer. So if you’ve got something that’s in a larger category of, of a direct post mortem transfer, if it also happens to fit the definition of a non probate transfer under 3217 13, the creditor can still make a, can still make a claim against it if there’s no estate open, or they’d have to open an estate first, file a claim against it, and then proceed under that statute in title 32. So we’re not monkeying, we’re not messing up the ability of creditors to use the narrower definition in 30 217 13, we’re creating a broader category of non probate transfers that can be used to fund testamentary trusts under wills without opening an estate and without having the assets being treated as estate assets. I think you just said that non probate assets is a smaller set of assets than post mortem assets. Well, non probate transfers is a smaller scope defined terminal. Why not just expand that term? If you expanded that term because of the number of places it’s used in the code, the main problem is that you would be expanding the ability of creditors to reach assets that they actually can’t reach under state and federal law, for example, retirement accounts, for example, life insurance proceeds. There are restrictions on when creditors can reach those. So to avoid creating problems under Indiana codes 30 217 13, we’re just creating a new term of art that doesn’t say anything about non probate transfer that says direct post mortem transfers. We made it as dissimilar in wording as possible from the definition. That’s in 30 217 13. So you say they’re mutually exclusive. They’re mutually exclusive, except that suppose that you have somebody who has some real estate and they record a tod deed, and the Tod deed says, I’m the owner, and upon my death, this real estate passes to trust x under my will or under somebody else’s will. That would be a direct post mortem transfer to that testamentary trust for purposes of creditor claims. And 3200 1713. It would also be a non probate transfer, and if there was an estate open that was insolvent, the creditor could still reach that TOD real estate before the balance of it would get put into the testamentary trust. So we’re intentionally not changing the enforceability of creditor claims against non probate transfers if those non probate transfers also happen to be direct post mortem transfers. Thank you. Can you explain to me the disclaimer? Isn’t that something that has traditionally been within the probate estate? I assume you’re talking about a disclaimer of gift under the will. Well, disclaimers can occur in a variety of settings, and our current disclaimer statute, which is in Indiana code 30 217.5, it’s got a number of different chapters that deal with all kinds of transfers. So you can have a transfer of an interest in a retirement account, you could have a transfer of interest in a new life insurance policy, you could have a transfer, a disclaimer of an interest in TOD property that passes under the TOD Property act. You could have an interest in a trust, and you could have an interest in an estate. And the disclaimer statute has different procedures that you have to use to make a valid disclaimer in terms of who do you submit it to? Who, if anybody, do you file it with in order to make the disclaimer effective? And many times in estate planning, individuals will name a surviving spouse, for example, as the primary beneficiary on an account or on a TOD asset. And then they will say, but the secondary beneficiary is a trust under my will. Classic example, married person with a spouse and minor children. And the individual would say, I’m going to name my spouse as the beneficiary on my IRA because she’s going to have the most flexibility, income tax wise and otherwise, if I die first. But if she is not alive, or if she disclaims, I want that IRa to go down to, not to my kids, but to a trust for my kids, and I could put that trust inside my will. So that particular provision on line 18 dovetails with the kind of planning that we see done with secondary or contingent beneficiary designations. Where you name a testamentary trust as the secondary or contingent beneficiary, does the ability to disclaim an interest under the will, which I assume this applies to, does that take it out of the creditor’s reach, then, since it becomes a transfer outside the estate? It depends on which creditor you’re talking about. If you’re talking about a non governmental ordinary creditor, a disclaimer is treated as though the disclaimer never got the asset. So if the disclaimer, for example, owed a money judgment to somebody, if that person made a valid and timely disclaimer, the asset or the interest goes around that person, they don’t have it. They never had it. And it goes instead of to the person who gets it as a result of the disclaimer. So that’s not the case with certain kinds of federal government debts. It’s not the case. For example, I think sometimes in terms of Medicaid estate recovery. So the federal government might be able to argue in some settings, especially if there’s a bankruptcy, that the person who tried to disclaim didn’t make a valid disclaimer. But ordinary creditors cannot say that this disclaimer did something wrong by disclaiming any of. Go ahead, keep going. One more question, then I’ll shut up. Can you have a bequest to an individual in the will? He disclaims, it goes into the testamentary trust, and he is the primary beneficiary for the trust, which has a spendthrift provision. You could do that. It’s clearer in the case of a spouse who happens to be a disclaimer than somebody who’s a non spouse. And there could always be arguments that as a result of the disclaimer, is the spendthrift trust actually effective against that person’s creditors because they actually caused the trust to be funded, and therefore we’re not going to enforce the spendthrift clause against the creditor. So I’ve seen it done, I’ve not seen it challenged, but it’s not out of the realm of possibility, none of which is really particularly on point to what this statute’s going to do if it gets enacted. Yes, go ahead. With the high federal exemption, it’s not unusual to give everything to the spouse, but give the spouse the disclaimer power to disclaim to a bypass trust. So it’s common estate planning practice to do the disclaimer to the testamentary trust. It absolutely is. And another setting in which we use these quite frequently is in Medicaid planning because we have a section, it’s in the big, big long section that deals with transfer penalties for Medicaid purposes. 42 USC 1396, little P. And basically what it says is if you have a trust that gets funded and it fits certain criteria, if the trust was funded other than by will, then the assets are going to be counted by the Medicaid agency. But if it’s funded by will, then it won’t be funded, then it won’t be counted. And so it is very common for married couples when one of them is sicker than the other and one of them is moving into a nursing facility, they will each sign a will that will basically contain a testamentary trust for the surviving spouse, and you can make assets payable to that testamentary trust, and that trust is not going to be counted for Medicaid eligibility purposes. So we’re trying to avoid upsetting the apple cart so far as that kind of planning goes as well. Thank you for that. Other questions for Jeff and I should have mentioned at the beginning, Several questions. Go ahead and ask them all. I mean, this kind of discussion, I think is helpful for the committee. Anybody else? Okay, thank you. Thank you, Jeff. So on PD 3142, we don’t have anybody else sign up to testify. Did I miss anybody on this one that came in? Okay. Is there any committee discussion on the PD? Chairman, would you like a motion? Yes, I would. Please move to adopt PDE 3142. Second. And the motion is? Second. Should we. Yeah, let’s call the roll chair. Jeter. Yes. Senator Brown. Yes. Senator Cook? Aye. Representative Meltzer? Yes. Representative Vorach? Senator Pol. Mister Karlberg. Yes. Judge Cody. Miss Hamilton. Yes. Mister Hopper. Mister Kolb. Yes. Mister Martin. Yes. Mister White? Yes. Bill passes ten to zero. Okay, the recommendation is adopted. Ten to zero. Thank you for the committee’s attention on that one. We’re going to move on to PD 3174, which is retirement plan distribution. Nikki, you want to give us the summary on this one? So, PD 3174 allows for funds or retirement plan or retirement account to be disbursed without a court order in two different scenarios. One is for personal representative of an unsupervised estate, and the second is a trustee of a trust. All right, Mister Dibel, you’re the only show in town here. Give us your testimony on 3174. Thank you, mister chairman. There are. There’s currently a gap in the probate code, and in the trust code it’s. Both of them are silent on whether or not a personal representative of an estate or a trustee of a trust has the power to make an in kind distribution or assignment of a retirement account of a deceased person to a beneficiary of that retirement account owner’s estate, or to a beneficiary of a trust where the retirement account owner had a trust. And this kind of problem arises most frequently when the deceased individual is not terribly up to date in maintaining beneficiary designations. They may be a multimillionaire and they may die with an interest in a 401K plan that they’re the only participant in, and they didn’t have a beneficiary form on file. Or maybe they’ve got a large IRA or a small IRA and they didn’t make a beneficiary designation. And so you have to look at the fine print in the IRA agreement or in the retirement plan to find out. Well, who do you treat as the beneficiary when there isn’t one? And many times the answer is the estate of the person. Or you might have a situation where they did some planning and they have a trust. But they named the trust in general instead of a sub trust for son or daughter or spouse under the trust agreement as the beneficiary. And when you go to a retirement plan administrator or an IRA custodian or trustee and say, hey, we want to transfer this IRA to the people who are actually entitled at the end of the line to the asset, most of them are going to say, no, we need to have a court order because we don’t find anything in the probate code or the trust code that says that you explicitly have the ability as a fiduciary to make a distribution in kind of that retirement account. You might have heard, you might be aware that for many purposes, retirement account interests are treated as non alienable. You’re not supposed to be able to assign them, and that’s a way of protecting them against creditors. But it’s clear from legislative history and from IR’s rulings, that idea doesn’t apply when you’re trying to distribute assets to the people who are supposed to get them ultimately from the estate of the trust. So the fact that there are restrictions on assignment isn’t the problem. The problem is that the dead person didn’t do a complete or good job in naming a beneficiary, and you’re trying to get the asset into the ultimate beneficiary’s hands. If you had an estate treated as the beneficiary on an IRA, that is not a, quote, designated beneficiary under federal law, and that means that you’d have to, you have the ability to pay out the IRA under a five year rule. You have to pay out everything in the IRA, out of the, out of the IRA by the end of the, the year that contains the fifth anniversary of the deceased person’s death. Well, if it’s a million dollar IRa, you’re going to have a lot of bunching of taxable income. Whereas if you had managed to. Get the right people say it’s an adult son or daughter named. You could use the ten year payout, stretch it over a ten year period if you had a surviving spouse or a minor child. It could be better with a person’s life expectancy. So it makes a big difference income tax wise. And also, it can be inconvenient to leave an estate open for up to five years just and file tax returns just so you can collect the IRA money in drips and drafts of. So there are practical consequences to not being able to easily do an in kind distribution or assignment. There are many, many, many IR’s letter rulings that you can find that indicate that the IR’s will, in fact, approve this. Of course, most folks don’t want to spend several thousand dollars or more to get an IR’s private letter ruling. And so the path of least resistance, really, has always been to add specific provisions to the probate code. And the trust code, on the one hand, would say that the personal rep of an estate without a court order can make a direct, in kind distribution of an IRA to the person ultimately entitled to it if it’s an estate, as the beneficiary, and if you’ve got a trust in general as the beneficiary, the trustee of the trust can make the same in kind distribution or assignment. Now, the proposal that the bar association originally submitted, it actually had an extra section that was designed to deal with supervised estates because we have 29 117 is the chapter of the probate code that deals with supervised estates and distributions. And so we had submitted language that would also allow the personal rep of a supervised estate to do the same thing that a pr of an unsupervised estate could do. You know, you might quibble and say, well, you really should ask the court for an order. Maybe that’s why it’s not in this proposal. But we’ve got one proposal that basically says you can distribute part or all of the retirement plan interest, and that appears in a new subdivision toward the end of 29 one, 7.53 a. And then in the trust code, we use the same kind of language in the very, very long section that contains the presumptive powers of a trustee of a trust, all of which are exercisable without court approval, unless the court, unless the trust instrument itself says otherwise. So in a nutshell, we’re just making it easier for prs of estates and trustees of trust to do these distributions to the people who are supposed to ultimately get the retirement account assets. And Jeff, if I can, can I give just a simple example of this, I think, which is, if you have an IRA in an unsupervised estate, single, only one beneficiary, you can essentially swap names on the account and keep it, essentially, with the same custodian. Right? Yeah. Were it not for the Patriot act and Bank Secrecy act and so forth, you could swap the account. They’ll make you fill out a new account application. It gives your driver’s license and all the usual sort of stuff, you know, a couple drops of blood, and then you’ve got a new account set up, and they just transfer the money over. So it happens very seamlessly, and that could be done if we had this statute in place. Questions, comments from members, discussion? And I think, Jeff, you were accurate. I think one of the reasons that the supervised portion sort of was omitted, I think there was kind of a general thought that in a supervised estate, court orders are sort of part and parcel to that type of a distribution anyway, so we didn’t want to disrupt that. But we can certainly, you know, readdress that. I think going forward, if this is enacted, it would be very easy for the pr with supervised estate to say, look, they added this to the unsupervised, so it’s not controversial. Your honor, please give me an order. Yeah. Authorizing the distribution in Congress. Yeah, fair enough. Any questions, comments? Anybody on that? Pretty straightforward. You want to make a motion? Yeah, go ahead. Move to adopt preliminary draft number 3174. Second. The motion is second. Please call the rule. Chair Jeter? Yes. Senator Brown? Yes. Senator cook? Aye. Representative Meltzer? Yes. Senator Pohl? Aye. Mister Carlberg? Yes. Miss Hamilton? Yes. Mister Kolb? Yes. Mister Martin? Yes. Mister White? Yes. Ten to zero. Okay, the recommendation passes. Ten to zero. Thank you all. We’re gonna move on to PD 3175, notice of probate administration. Nikki, you want to go ahead and give a summary on this one? So, PD 3175 is all to do with the notice that is served. The notice of a state administration and kind of cleans up IC 29,177. It clarifies that the personal representative shall serve a written or electronic copy of the notice to each creditor. And clarifies that the notice that is originally served through the clerk of court will also be used when serving a creditor within one month of the notice being published. And then new subsection l of that section provides a sample notice that shall be filed and then served on any creditors that are identified outside of that window. Excellent job. Thank you, Jeff. Thank you, mister chairman. This proposal actually was originated by somebody on this commission, Mister Jim Martin, because he does a lot of work, he’s always tried to be very scrupulous in how he gives notice to creditors to avoid problems with creditors that are notified a little bit late. If you notify a creditor a little bit late and they have a basis to object to the notice that they got, then that could mean that they are entitled to nine months from the date of death to file a valid claim, and not just three months from first publication. And there’s a case from 2013 where the Court of Appeals in the case of estate of Tolley pointed out, hey, we don’t think that notice to a creditor of their ability to file a claim under the probate code is actually good notice, unless the creditor can tell what the deadline is for filing a claim. And when you serve a creditor with a mailed notice of administration within one month after the first publication date, then the existing statute makes it clear that creditor has three months from the date of first publication to file a claim. And the notice says so the problem arises when you serve a creditor. Maybe it’s somebody that you discovered a little bit late, but you could have discovered earlier if you try to harder. And you serve that creditor more than a month after the first publication date. In that instance, what the existing statute says is that they have a flexible period of two months from when they get the notice to file a claim. And a creditor is not going to know that because the notice itself, the regular original notice, doesn’t say anything about that. So what do you do? So we’ve had this problem since 2013 under the Tali case, where a creditor that was served more than one month after first publication date could actually come in and say, well, I’m not bound by the three month deadline, I can go ahead and file within nine months because the notice to me was defective. So what we’ve done in this proposal is to basically create a second form of notice, which I like to, we use mostly call a tolly notice that basically appears in at the end of the section and it contains additional verbiage and says, you’ve got two months from the date of this notice or nine months from the date of death, whichever is later, in which to file your claim. It would only be used in a situation where you’re serving a creditor more than one month after first publication. And procedurally, what the personal rep or his lawyer would do is to just tender that additional notice to the clerk. The clerk would put a date on it and would put the signature stamp of the clerk on it, post it back to the CCS, and then the PR, the PR’s lawyer would go ahead and serve it. And you’ve basically cured the problem that the court of appeals raised in the Tolley case. And that’s really all there is to it. And I think you mentioned this, but we did add a second form of the actual notice. That’s correct. In the actual statute, because the first notice was already in there. Any questions, comments from committee members? Just a minority quibble. It would be two months from the date of notice or nine months from the date of death, whichever is earlier. That’s correct. Yes. Good. Good clarification. That’s right. Sorry about that. Yes, it’s Jim Carlberg. It just seems a little, the new section that’s added at the end of subsection either is at the end of it. The last sentence says what the deadline to file a claim is, and it refers back to 29 114, one, which is the section entitled, I believe it’s entitled deadline to file claims or something of that nature. And I guess my question is, shouldn’t the, it seems to me you create a trap for people. First of all, I don’t know is the then in f we have now, this two month notice, is the two months part of 29 114 one. The two months is not part of 29 114 one. It’s only in this section, in 29 one. Seven. Seven. And it’s always been that way. That’s what I thought. I took a look, but I know. You know much more about this than I. It just seems to me that all of the deadlines to file claims should be in 29 114 one, and that if, that these two sections should refer someone for the deadline back to that section and that that section of the code should be amended to add this new two month deadline. I don’t have any violent objection to that. I think it’s just a matter of, just seems for lawyers, it’s a trap. You go to the section, it’s just a matter of who’s going to look at what. I mean, most creditors, of course, unless they have lawyers already. They’re just going to be looking at the notice of administration and that will tell them when they’re supposed to file their claims. I don’t think there’s any real harm in adding it to 29 114 one. But most people are not going to go looking for that. They may, they may not, but I certainly take your point on that. Lawyers find a section that lists deadlines and they think they have the deadlines, and now they’re going to find out, oh, it’s off somewhere else, and I didn’t, had no idea to go look there. And that the language with the deadline shouldn’t really be here because then you have two different sections and I don’t know that they’re worded exactly the same. And then you get into these, you create issues when you redefine a deadline in a different place with perhaps different language. That’s my comment. Okay. Yeah, I think it’s a fair comment. I mean, 21 114, one does cross reference subsection seven, but as a practitioner, I see what Mister Karlberg’s saying. So what we can do is, I mean, if the, if the, the committee approves this recommendation, it’ll appear this way in the bill. But, you know, we do have two committees on the Senate House side that meet during session. We can take a peek at that and consider maybe moving that. I think it’s a fair comment. Any others? Yes, sir. You’ve already said what I was going to say, and that is the prelude to 29 114 one is that it’s accepted as provided in 29 177. So whoever’s checking this statute sees right away. Well, I better go check 29 one seven. Seven. To see what’s different. That, yeah, absolutely. Yeah. Thank you for that. I think. Fair point. We’ll look and see if we think it maybe fits better somewhere else. But I think, I think those are good points. Anybody else? Yeah, Senator Cook, just a quick question. Thank you, Jeff. Jeff, if this results in any risk shifting. Who does the risk shift from and to? The risk shifting already occurred in 2013 when the court of Appeals made its decision in the Talley case. And so the risk has always been since then, has been on the personal rep and the personal rep’s agent or lawyer. If the creditor was served with a regular notice, the original kind of notice, that’s in what would now be subsection K, that doesn’t just says file within three months. And if you served that creditor more than a month after the first publication date, then you’ve got a notice that’s technically defective under the holding in the tolly case. So tully created risk to the Pr. Yes. Which this mitigates it mitigates it by basically putting a fix in the statute so that you can then say, ah, I’m serving the creditor more than a month after first publication. I’m gonna use this second form of notice that’s in subsection l, and then that eliminates the risk. And as I said, no creditor is disadvantaged by this. No. Yeah. Thank you. In fact, Jeff, it wasn’t the Tully case. Wasn’t the issue an oral, the question whether there was an oral notice or not? Yes, it was first merchants bank. And there were all kinds of informal communications, including telephone calls, where the bank was informed. They knew the decedent was dead. They knew when he died. The problem was that, that the bank did not actually get a statutory notice of administration. And that’s why the bank was able to file a claim before the nine month deadline and get the claim enforced. Yes, sir. Go ahead. This bill doesn’t completely fix Tali, because if you send out a notice within the first month after first publication, it says the old language, which is file a claim within three months after first publication or nine months, whichever it is, earlier. Right. One of the problems the court pointed out in Tali is how does a creditor know when the three months is up? Now, technology has helped out creditors these days. They can go online, check the docket, and see if the estate filed an affidavit of mailing notice. Or they could check and see when first, you know, proof of publication, see when publication was made. But for the most part, your average creditor isn’t going to know when the three month period started. And so it doesn’t fix all of Tali, but it does go a long way to. Towards fixing the ability to give creditors a specified period of time if they’re notified after one month. And you say that because a creditor may not know what date of first publication is. Correct. We send a notice to the paper and some lawyers will take this tact, they will add in their notices. We expect first publication to be this day. That doesn’t mean it is. It’s just, you know, they may have contacted the newspaper and the newspaper said, yeah, we’re going to do it on these two days. And the first date is this. And maybe it happens that day, maybe it doesn’t. A lot of times it does, but there’s no guarantee that the date that the expectation is stated actually occurs. And so, yeah, you don’t know as a creditor, when does it start? You also got the added problem that the first notice could go out before publication. So you don’t have a date necessarily right before first publication. Yeah, yeah, yeah, yeah, yeah. You could do that too, but there wouldn’t be a date to fill in even if you had a blank. Right, right, yeah. You send out your notices before you get your first publication. I’ve never done that, but. Novel approach, I suppose. Jeff, got any comments on that? No. I’ll just point out, if you wanted to be extra, extra cautious to almost a ridiculous degree, you could intentionally wait more than a month after the first publication date, and then just send the second notice to every creditor. And then the second notice would say you have two months from the date of this notice being sent, or nine months from the date of death, whichever is earlier, to file your claims. So in that case, you’d have the new form of notice that would swallow or supersede the old form of notice. And in fairness to a pr, I mean, I will admit this first notice does require a creditor to do some diligence to try to figure out when their claim is due. But I see it’s certainly a good point. Any other comments, questions? Anybody? Appreciate these, these comments and thoughts which we’ll take with us, you know, as the. As the bill moves, you know, into session. So if I don’t see any other comments, I’m happy to entertain a motion, chairman. I’ll move to adopt PD 3175. Kenneth, motion, second. Please call the roll chair. Jeter. Yes. Senator Brown? Yes. Senator Cook? Aye. Representative Meltzer? Yes. Senator Poll. Mister Carlberg? Yes. Miss Hamilton? Yes. Mister Kolb? Yes. Mister Martin? Yes. Mister White? Yes. Ten to zero? All right, another ten to zero recommendation. Thank you very much. Moving on to our last PD of the day, which is 3266, power of attorney duties. Let Nikki give us the summary. PD 3266 extends the duty of an attorney, in fact, to take certain actions concerning the principal’s taxes and filing taxes, defending appeals and things like that after the death of the principal. And it’s limited to the tax periods prior to and including the death of the principal. Okay. Thank you, Jeff, Mister chairman, thank you. The background of this problem is that frequently a taxpayer will die, and they may have a lot of their assets passing by direct post mortem transfers outside their wills. They may have TOD assets, they may have joint tenancy assets, they may have nearly everything in a revocable trust. And so there’s nothing left, or nothing significant left to pass onto the will. That may mean that you probate the will, but you don’t get a personal representative appointed. And that’s when the problems can arise. Because under federal tax law, an executor, like a personal representative, it has. There’s a definition of executor for estate tax purposes, but not for income tax purposes. And an executor for estate tax purposes is anybody who is in possession, custody or control of the property of the deceased person. But we don’t have a definition of executor for income tax purposes. And the Treasury Department, in its green books, which it puts out every fiscal year, its wish list of things it would like to see enacted in the tax code they’ve had in the most recent green books, we’re thinking about amending, trying to get Congress to amend the deficiency of executor so that it’s broader, and so that for income tax purposes, somebody who’s not been appointed by a court would actually have authority to deal with the federal tax matters of the deceased taxpayer. But current law, there is no such authority. If you are simply somebody who’s the trustee of a revocable trust trust, settler trust died, or you’re a person who’s holding TOD assets or whatever, or you’re the retirement account beneficiary, you don’t have any authority to go to the IR’s and say, hey, I want to settle grandpa’s or mom’s tax debt, or I want to collect these refunds from years ago, or I want to deal with this particular. Or issue, you’d have to go to court and get appointed. And the Sander case in the tax court a couple years ago was one where the tax court said, sorry, you don’t have standing, ma’am, as the daughter and the backup trustee of the decedent, because you weren’t appointed by a Florida probate court. And she ended up having to go back to probate court and get appointed. A lot of times it’s just not worth the money and the trouble to get that done. So the question became, well, how do we authorize the right person to be able to deal with the federal tax authorities, and I guess secondarily with the state tax authorities, if you’ve got a decedent who has unfinished or unpleasant federal or state income tax business. And after some thought, we realized that it wasn’t really going to work if you said, well, anybody who’s holding revocable trust assets or TOD assets would have authority, because you could have multiple people, all of whom have assets that pass from the decedent in post mortem non probate transfers. And how do you figure out who’s got authority and who doesn’t? So that wasn’t really going to work. And some comments by chief counsel’s officer at the IR’s suggested that the idea of having someone holding a power of attorney, having that authority continue after death, would be good because there are going to be limited numbers of people who are named in the POA of a deceased taxpayer. We’ve already had for decades. Under the 1991 power of attorney statute, we had the idea that certain powers in the health care arena last after the death of the decedent, namely the power to authorize an autopsy, the power to make anatomical gifts, the power to provide for burial or cremation, those things last after death, if you’ve got a POA in place. So what this proposal does is basically to say, we’re going to look at the section in chapter five of the POA statute that deals with records, reports and statements, which is the source of an attorney and facts authority to deal with tax matters while the principal is alive. And we’re simply going to say that particular kinds of authority under 35 514, those are going to continue to exist after the death of the principal. And the attorney, in fact, or agent who holds the POA can exercise that authority until a personal representative is appointed for the estate. And at that point, the authority of the attorney, in fact, terminates. Now, I should point out that under our power of attorney statute, unless the POA says otherwise, an attorney, in fact, or agent doesn’t have the duty to do anything. The attorney, in fact, could actually refuse to act. And so an attorney, in fact, if this proposal passes, would not have to step in and take advantage of tax matters. They could say, sorry, I don’t want the headaches, I’m not going to do it. If the attorney, in fact, does act, the attorney, in fact, has to act in good faith and with reasonable care and acts as a fiduciary in the best interest of whoever is ultimately entitled to the assets. But this will give the attorney, in fact, the ability to communicate and deal with the IR’s and with state tax authorities to clean up tax matters that are left over from the last year of the principal’s lifetime and from prior tax years. And that’s really all that it does. Any questions or comments, committee members? Yes, Senator Coates, from a practitioner standpoint, should this become law, do we all need to update our power of attorney forms to specifically reference this power, or would it be captured in the more general language? It depends on whom you’re trying to educate. And of course, I would suggest that if this passes, you could add a paragraph, or you could add a sub paragraph in the section that deals with records, reports and statements. I’ve got embellished language already in my forms to deal with tax matters, and so I expect I’m going to add something because I want the attorney, in fact, who reads the POA to know this authority is there. And if the POA is turned over to the IR’s or the Department of Revenue, I want the tax authorities to know that it’s there as well. And that was my concern. Whether absent this language, might not have its intended purpose. You saved them from having to do the research, basically, yeah. Thank you, Jeff. Any other questions, comments? Go ahead. It’s a default provision. You can, in the power of attorney, say that it does not last beyond death, but if you don’t say anything, it’s there. You have that extended power. Yep. Good point. I think that’s right. Anybody else going once? All right, I’ll entertain a motion. Chairman, I move me. We adopt PD 3266. 2nd motion, second. Please call. Chair Jeter? Yes. Senator Brown? Yes. Senator Cook? Aye. Representative Meltzer? Yes. Senator Pohl? Aye. Mister Karlberg? Yes. Miss Hamilton? Yes. Mister Kolb? Yes. Mister Martin? Yes. Mister White? Yes. Ten to zero. All right, thank you. That was our last PD 100. Appreciate the committee’s time. We’re going to pass out real quick a draft of the final report that we’re going to need to approve today before we adjourn. All that’s missing in there is the individual recommendations on these four PD’s, which we hadn’t done yet, so we were not able to put those in. But if everybody can just take a minute glance at that, happy to answer any questions, or if there’s anything looks wrong or you want to discuss, and then ultimately I will request approval of that. So we’ll break for just a couple minutes here. I don’t know if I’m too soon, but I’ll move the approval of the final report. Does anybody need more time or have any. Any questions? It’s only a page, but I certainly don’t want to rush anybody. I’ll second. Okay, motion and a second. Let’s call the roll chair. Jeter? Yes. Senator Brown? Yes. Senator Cook? Aye. Representative Meltzer? Yes. Senator Pol. Mister Karlberg? Yes. Miss Hamilton? Yes. Mister Kolb? Yes. Mister Martin? Yes. Mister White? Yes. Report is adopted. Ten to one or ten to 00:10 to zero. Thank you so much. Is there any other business before the committee or by any of the members? Appreciate the great discussion and your thoughtful examination and thought through these recommendations. Very helpful. And with that, we’ll stand adjourned. Thank you.
- Representative Jennifer Meltzer – District 73, Shelby, Decatur, Bartholomew, Jennings County
- Kip White – Covington, Indiana
- Jim Carlberg – Attorney, Indianapolis, Indiana
- Sarah Shade Hamilton – Attorney from Delaware County
- Eric Koch – Attorney, State Senator, Senate District 44
- Liz Brown – Senate District 15, Allen County
- Chris Jeter – House District 88, portions of Hamilton, Hancock, Madison, Marion Counties
- Nikki Gray – Staff Attorney for the Committee
- Sarah Elser – Staff Attorney
- Jeff Cobb – Lawyer, Vincennes
- Jim Martin – Trust and Estate Attorney, Maryville, Indiana
- Jeff Deibel – Chairperson of ISBA’s Probate Review Committee
