Q: What happens to the personal property when a spouse dies. Do the kids have any rights to it? Does the will control where it goes?
A: The surviving spouse generally becomes the sole owner of personal property located within the home. The Indiana Code provides that household goods acquired during the marriage and in possession of both the husband and wife becomes the sole property of the surviving spouse.
The presumption can be altered if there is a written instrument expressing a contrary intention. However, since there is almost no chance that such a written instrument will exist at the time of death, it's best to assume that the household goods will belong to the surviving spouse.
If we assume that the code section doesn't apply, then the personal property will be treated like any other probate asset and its distribution will be controlled by the will or intestate laws.
Q: My parents have a trust and they have put all of their assets into it except for their checking account. They said their attorney told them it was OK to leave the checking account out of the trust. Shouldn't it also be in the trust?
A: The simple answer is yes, the checking account should be funded into trust. Trusts work best when they are fully funded. If you leave assets out of the trust, you run the risk of leaving assets that require probate. Since probate avoidance is one of the most attractive features of a revocable living trust, it's best to make sure that it is fully funded.
However, from a practical standpoint, it's not that unusual to find that the settlor's primary checking account has been left out. Checking accounts and cars are two of the most common assets left out of trusts.
Fortunately, a small estate affidavit can be used to transfer up to $50,000 in probate assets. The small estate affidavit can be used to transfer probate assets without going through the probate process.
Just remember that if the checking account, or almost any other asset for that matter, is left out of the trust, it is important to know how it is titled and if a beneficiary has been named. If the account is jointly owned or if the account has a POD beneficiary, it will transfer to the surviving joint owner or the beneficiary without regard to the trust provisions. That may or may not be what you have in mind so it's important to know what will happen to the asset after your death.