The Indiana legislature was quite busy this past session regarding probate and trust law when it passed HEA 1205, HEA 1208, SEA 66, SEA 67 and SEA 193.  This update will focus on HEA 1208 and the changes made regarding service of notice in probate estates, which became effective July 1, 2022.

As we transitioned from filing pleadings by mail or in-person to electronic filing, the role of the clerk of the court regarding service of notices in probate estates was in flux.  In HEA 1208, the legislature clarifies the clerk’s role.

I.C. 29-1-1-12 sets forth the process of serving notice on interested persons in a probate estate.  Subsection (c) of the statute previously stated that “the personal representative or party charged with the duty of giving notice shall furnish the clerk with sufficient copies of the notice, prepared for mailing, and the clerk shall mail notice.”  This provision is now repealed by HEA 1208.

I.C. 29-1-1-16 requires proof of service of notice to be filed prior to a hearing.  The reference to “the clerk or other” has been deleted from the statute regarding service made by the clerk, since the clerk is no longer responsible for serving notice.

Elections to take against the will of a decedent by a surviving spouse must be filed with the clerk of the court pursuant to I.C. 29-1-3-3.  Subsection (c) has been revised to require the clerk to serve a copy of the election on the personal representative of the estate and the “personal representative’s attorney of record through the E-filing System of the Indiana Courts or by first class postage prepaid.”  

I.C. 29-1-7-7(a) no longer includes the language “the clerk of the court shall publish” notice of the estate administration.  That language has been deleted, and new language has been included to simply state that notice “shall be published.”  Also, notice can be served “through the E-Filing System of the Indiana Courts or by first class posted prepaid mail on each heir, devisee, legatee, and known creditor whose name and address is set forth in the petition for probate or letters, except as otherwise ordered by the court.”  The sentence “The personal representative shall furnish sufficient copies of the notice, prepared for mailing, and the clerk of the court shall mail the notice upon the issuance of letters” has been deleted.  In other words, the attorneys must serve notice, and it is recommended that an Affidavit of Service or Certificate of Mailing Notice be filed with the court to confirm service has been made.  

HEA 1208 clarifies notice and objection deadlines related to final accounts in supervised estates.  Previously, there were conflicts in the statutes related to the deadline for an interested person to file written objections to a final account (i.e., I.C. 29-1-16-6 and 29-1-16-7).  

Upon the filing of a final account, hearing and notice must occur pursuant to I.C. 29-1-16-6.  The court or clerk must set a date by which all objections to the final account and petition for distribution must be filed.  Now, the date must be “at least fourteen (14) days before the hearing date” and the personal representative or his/her agent must serve notice upon all persons “who are entitled to share in the final distribution of the estate, and whose names and addresses are known to the personal representative or may by reasonable diligence be ascertained as set forth in the personal representative’s petition for distribution.”  The notice must state that the final report will be acted upon by the court on the date set unless written objections are presented to the court “at least fourteen (14) days before the hearing date.”  Previously, the personal representative had to provide this information to the clerk, together with sufficient copies of said notice prepared for mailing.  This requirement has been deleted.  Now, the personal representative or the personal representative’s agent shall send a copy of the notice “through the E-filing system of the Indiana Courts or by first class postage prepaid mail to each of the interested parties at least thirty (30) days prior to the hearing date.”  If notice is served by publication, the “fourteen (14) day” written objection deadline must be included in the notice that is published in the newspaper.  

I.C. 29-1-16-7 previously stated that any interested person may file written objections to any item or omission in the account “at any time prior to the hearing on an account of a personal representative.”  That language has been deleted and replaced with “As stated in section 6 of this chapter….”   

Electronic filing has reduced the role of the clerk of the court regarding service of notice in probate estates.  The probate code is now catching up to clarify the responsibilities of the practitioner vs. the responsibilities of the clerk.  It is now your responsibility to ensure proper notice is served.  While the clerk will affix a stamp and date to the notices for the practitioner and post the notices to the docket, you will not be “served” via Odyssey with these notices.  Rather, you and your staff will need to be proactive and download/copy the notices so that you can serve them on interested parties.  Also, it is imperative that you file an Affidavit of Service or Certificate of Mailing Notice to ensure the court’s record is clear that all interested parties have been served to avoid any issues down the road.  When in doubt, take action to serve everyone that could be considered an interested party and file an Affidavit of Service or Certificate of Mailing Notice to protect yourself and your personal representative from “lack of service” claims made by beneficiaries, creditors and other interested parties. 

Please note that this post is only a brief summary of HEA 1208 and does not constitute legal advice nor does it establish an attorney/client relationship.  Should you have specific questions regarding the above, please contact Benjamin T. Ballou at Hodges and Davis, P.C.      

  The guardianship code incorporates several statutes found in the probate code.  One must be mindful of these statutes when handling guardianships.  

IC 29-3-2-6 Application of decedents’ estates law to guardianships and protected persons

Sec. 6. (a) The applicable rules regarding decedents’ estates in IC 29-1-7 through IC 29-1-17 apply to guardianships and protective proceedings under IC 29-3-4 when consistent with this article and IC 29-1-19.

(b) IC 29-1-1-6 through IC 29-1-1-7, IC 29-1-1-9 through IC 29-1-1-10, IC 29-1-1-12 through IC 29-1-1-14, IC 29-1-1-16 through IC 29-1-1-18, and IC 29-1-1-20 through IC 29-1-1-24 apply to guardianships under this article and IC 29-1-19.

(c) This article extends to persons specifically provided for under IC 29-1-19. The provisions of this article are cumulative to the provisions of IC 29-1-19. A conflict arising between this article and IC 29-1-19 is resolved by giving effect to the law stated in IC 29-1-19 in cases to which it applies.

(d) The provisions of IC 29-1-15 concerning the sale of decedents’ property apply to the sale of protected persons’ property.

(e) The provisions of IC 29-1-16 concerning accounting in decedents’ estates apply to accounting in protected persons’ estates that are consistent with this article.

(f) The provisions of IC 29-1-14-2, IC 29-1-14-10, IC 29-1-14-11, IC 29-1-14-12, IC 29-1-14-13, and IC 29-1-14-17 concerning claims against decedents’ estates apply to claims against protected persons’ estates.

As added by P.L.264-1989, SEC.3

In 2020, Mammoth Solar submitted an application for approval of a 4,511-acre commercial solar energy farm in Pulaski County. Pulaski County’s Unified Development Ordinance (“UDO”) required a special exception for construction and operation of solar energy systems (“SES”). The UDO specified a detailed list of information that all SES applications “shall include”, together with a list of additional information that any commercial SES applications “shall include.” Among the information and materials the UDO stipulated to be submitted with a commercial SES application were: a detailed site layout plan, including a fire protection plan for the construction and operation of the facility; a topographic map; a communications study; certification of compliance with utility notification requirements; and evidence of compliance with storm drainage, erosion, and sediment control regulations. Mammoth Solar’s application admittedly did not include the foregoing items, but Mammoth Solar explained that the information would be submitted later, during the design phase of its project and prior to obtaining a building permit. The Board of Zoning Appeals proceeded to hold a public hearing on Mammoth Solar’s application, at the conclusion of which, the BZA approved the special exception.

Several remonstrators appealed the BZA’s approval of Mammoth Solar’s application to the Pulaski Superior Court. The trial court concluded that the BZA did not have authority to hold a public hearing or approve Mammoth Solar’s special exception because the application did not include all of the information specified in the UDO. The trial court thus vacated the decision and remanded the matter back to the BZA.

On appeal, the Indiana Court of Appeals affirmed the trial court’s decision. Mammoth Solar v. Ehrlich, 196 N.E.3d 221 (Ind. Ct. App. 2022). The Court of Appeals noted that the interpretation of an ordinance is a question of law and that an agency’s incorrect interpretation of an ordinance is entitled to no weight. The Court further stated that where an agency misconstrues an ordinance, there is no reasonable basis for the agency’s action, and therefore, the action is arbitrary and capricious and must be reversed by the reviewing court. The Court reasoned that where an ordinance uses the word “shall,” the requirement is viewed as mandatory unless it is clear from the context or purpose of the ordinance that a different meaning was intended. Here, the Court of Appeals found that the UDO unambiguously stated that the application “shall include” the specified information and left the BZA no room for discretion to allow Mammoth Solar’s application to proceed without all of the information required in the UDO. The Court found unpersuasive Mammoth Solar’s argument that because other provisions of the UDO gave an administrator authority to determine the form and content of development applications and update application requirements, the BZA had latitude to permit submission of some information at a later time. The Court found that any such authority did not allow modification of application requirements after that application has been submitted. The Court therefore concluded that the BZA had no authority approve Mammoth Solar’s special exception because the application submitted was incomplete. As a result, the Court held that the BZA’s approval of the application was arbitrary and capricious, and was properly reversed.

The Indiana legislature was quite busy this past session regarding probate and trust law when it passed HEA 1205, HEA 1208, SEA 66, SEA 67 and SEA 193.  This update will focus on SEA 193, which became effective July 1, 2022. 

To the surprise of many, the Indiana legislature eliminated Indiana’s Probate Code Study Commission in 2014.  In 2019, the legislature re-established the Commission pursuant to I.C. § 2-5-16.1-1 et seq.  The Commission is seen as a conduit and liaison for the Probate, Trust and Real Property Section of the Indiana State Bar Association and the legislature.  The Commission is intricately involved in reviewing proposals, drafting legislation and making recommendations to the legislature.  Pursuant to I.C. § 2-5-16.1-3, the Commission consists of the following members:

(1) Nine (9) members appointed by the governor that meet the following requirements:

(A) Each Indiana congressional district must be represented by at least one (1) member appointed under this subdivision who is a resident of that congressional district.

(B) One (1) member must work in the trust department of a bank, trust company, savings institution, or credit union chartered and supervised under IC 28 or federal law.

(C) One (1) member must be an attorney licensed in Indiana who primarily practices in the area of creditors’ rights.

(D) One (1) member must be an attorney licensed in Indiana who practices in the area of estate planning.

(E) One (1) member must be an attorney licensed in Indiana who practices in the area of guardianships.

(F) One (1) member must be an attorney licensed in Indiana who practices in the area of trusts.

(G) One (1) member must be an attorney licensed in Indiana who practices in the area of probate of estates.

(H) One (1) member must be an attorney licensed in Indiana who practices in the area of probate litigation.

(I) One (1) member must be an Indiana trial court judge, full-time magistrate, or full-time commissioner whose jurisdiction includes probate.

(J) One (1) member must be an active or retired faculty member of an Indiana institution of higher learning who specializes in the field of estate planning and probate.

(2) Three (3) members appointed by the president pro tempore of the senate from among the members of the senate, not more than two (2) of whom may be affiliated with the same political party.

(3) Three (3) members appointed by the speaker of the house of representatives from among the members of the house of representatives, not more than two (2) of whom may be affiliated with the same political party.

(4) The chief justice of the supreme court or a designee of the chief justice, “who shall serve as a nonvoting member.”

SEA 193 added language to subsection (4) stating that the chief justice or a designee of the chief justice is now a nonvoting member of the Commission.

SEA 193 also revised I.C. § 2-5-16.1-6(b) which sets forth the requirements for the Commission to take final action.  Under the new legislation, “at least eight (8) voting members of the commission are required for the commission to take final action.”

The Commission plays a vital role in the legislative process in the areas of probate, trust and real property matters.  The re-establishment of the Commission by the legislature in 2019 ensures that proposed legislation has been vetted and reviewed prior to reaching the floor of the Indiana House and Senate for review, deliberation and enactment.  

 

Please note that this post is only a brief summary of SEA 193 and does not constitute legal advice nor does it establish an attorney/client relationship.  Should you have specific questions regarding the above, please contact Benjamin T. Ballou at Hodges and Davis, P.C.      

Indiana residents now have a streamlined option for appointing a health care representative to speak on their behalf in the event they become incapacitated and to simultaneously make their future health care wishes and treatment preferences known.

Senate Enrolled Act 204 (“SEA 204”), codified in Indiana Code § 16-36-7, allows the appointment of a health care representative, health care power of attorney, and living will to be included in one document known as an Advance Directive.

Previously, Hoosiers were required to execute multiple documents when choosing who to appoint as their health care representative, what powers that representative would have, and what wishes the individual had in relation to end-of-life care and other future health care decisions.

The updated law defines “Advanced Directive” as “[a] written declaration of a declarant who 

(1) gives instructions or expresses preferences or desires concerning any aspect of the declarant’s health care or health information, including the designation of a health care representative, a living will declaration made under IC 16-36-4-10, or an anatomical gift made under IC 29-2-16.1; and 

(2) complies with the requirements of this chapter.”

Advanced Directives must be signed, by paper or electronically, in front of two (2) witnesses or a notary public.  A copy of the executed directive must be provided to the first named health care representative and provided to the individual’s health care provider to place in the individual’s electronic medical record.

The passage of SEA 204 represents a long overdue update to Indiana’s advance directive statute as it is the first update in over 25 years.  It is important to note Advanced Directives executed prior to January 1, 2023 under the old laws are not invalid; however, beginning January 1, 2023, all new Advanced Directives must comply the new law. 

Furthermore, the new law does not invalidate Indiana’s P.O.S.T. forms or out-of-hospital DNR forms which may still be used as needed based on an individual’s current health care directives and needs.

Please note that this post is only a brief summary of SEA 204 and does not constitute legal advice nor does it establish an attorney/client relationship.  Should you have a specific questions regarding the above, please contact Emilie E.D. Hunt at Hodges and Davis, P.C.

The Small Business Reorganization Act of 2019 (the “SBRA”) became effective on February 19, 2020. The SBRA streamlined the Chapter 11 process through a new Subchapter V of Chapter 11. Notable benefits to debtors of a Subchapter V reorganization under the SBRA are an expedited plan confirmation process and the elimination of a creditor’s committee. Most importantly, it is not necessary to obtain plan approval from an impaired class of creditors, provided that the bankruptcy court determines that the plan is “fair and equitable” to each impaired class.

As enacted, the SBRA conditioned eligibility for a small business bankruptcy under Subchapter V on an aggregate secured and unsecured debt ceiling of $2,725,625.00. As part of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), that amount was increased to $7,500,00.00. This increase allowed heavily leveraged entities and business owners, as well as entities financing property of significant value, to benefit from the newly enacted provisions of the SRBA during a period of unprecedented economic disruption for many segments of our economy.

Although the CARES Act provisions were originally set to expire on March 27, 2021, the Covid-19 Bankruptcy Relief Extension Act of 2021 extended the increased debt ceiling for another year. Although proponents of bankruptcy reform in Congress have introduced legislation to permanently increase the Subchapter V debt limit, the increased debt limit reverted to its original ceiling on March 27, 2022, subject to adjustments for inflation.

Several temporary amendments to the Bankruptcy Code related to commercial leases will remain in effect for Subchapter V cases through December 27, 2022. Under the Consolidated Appropriations Act of 2021 (the “CAA”), Subchapter V debtors who can show a financial hardship as a result of COVID-19 can, with court approval, postpone the initial payment of rent upon the filing of a case for 120 days, which is 60 days more than generally provided by Section 365(d)(3) of the Bankruptcy Code. Although the rent must be repaid as an administrative expense, some courts may allow deferral until after confirmation of the Subchapter V plan of reorganization. Further, under the CAA amendments, a debtor may take up to 300 days (an increase of 90 days from the generally available 210 days) to determine whether to accept or reject its commercial lease. While most of the CAA amendments favor a debtor/tenant, the CAA also protects certain pre-bankruptcy payments of deferred rent from “clawback” as bankruptcy preferences.

On March 14, 2022, Senator Chuck Grassley introduced, with bipartisan support, the “Bankruptcy Threshold Adjustment Technical Corrections Act,” which sought to permanently reinstate the $7.5 million debt limit for Subchapter V. The Act also seeks to increase the Chapter 13 eligibility debt ceiling to an aggregate sum of $2,750,000. The Senate passed the Act on April 7, 2022 with an amendment that would cause the increased Subchapter V threshold to once again sunset two years after enactment. The bill is now before the House. 

Chapter 11 reorganizations have generally been cost-prohibitive for business debtors, and have required the cooperation of secured creditors and landlords to be successful. Subchapter V created a framework that sought to level the playing field, and the CARES Act and CAA amendments further expanded the opportunities for expedited reorganizations.  Although Subchapter V is currently (and perhaps only temporarily) available to fewer small businesses and business owners, businesses, their owners, as well as their advisors, should continue to consider the possible benefits of bankruptcy in this time of economic uncertainty.

This Article is a brief summary of recent changes to Chapter 11 of the Bankruptcy Code, including the temporary amendments to the SRBA included in the CARES Act and CAA, as well as related pending legislation. The information provided in this article does not constitute legal advice nor does it establish an attorney/client relationship. Should you have any questions regarding this article, please contact Hodges and Davis attorney Shawn Cox.