Short answer

If beneficiaries or creditors dispute how estate money should be split, the personal representative (executor) cannot safely distribute disputed funds without either a written agreement of all interested parties or a court order. In Indiana you must file a petition with the probate court asking the judge to approve a partial distribution, approve a settlement, give instructions, or allow funds to be deposited with the court. The court will require notice to interested persons, consider the estate accounting and any creditor claims, and then issue an order that permits release, directs a different handling (for example, holding funds in escrow with the court), or resolves the dispute by approving a settlement.

Detailed answer — step by step (what to expect and what to do)

Below is a practical step-by-step roadmap for getting court approval to release estate funds in Indiana when parties disagree. This guide assumes no prior legal experience.

1. Identify roles, assets, liabilities, and who must get notice

Start by confirming who the personal representative is (the person appointed by the court to manage the estate) and who the interested persons are: beneficiaries named in the will, heirs under intestacy, and known creditors. Prepare a basic accounting showing assets on hand, known debts, and any liquid funds you propose to distribute or reserve. The probate court process requires that these interested persons receive notice of petitions and hearings.

2. Check whether the estate can make any interim distribution

Indiana law allows the personal representative to request interim (partial) distributions in appropriate cases, but the representative must protect the estate against unpaid debts, taxes, and known disputes. The safest approach is to petition the court for approval of partial distribution and propose a reserve for potential claims. The court will weigh creditor protection against the beneficiaries’ request to receive funds.

3. File the correct petition with the probate court

Common petitions used when money is disputed include:

• Petition for partial distribution (requesting court authority to distribute a portion of the estate while holding back a reserve);
• Petition for instructions (asking the court to resolve a legal question about how to divide funds);
• Petition to approve a settlement (when parties have reached an agreement and want the court to enter it as an order);
• Motion to deposit funds with the court registry (asking the court to hold disputed funds in its registry until the dispute is resolved);
• Petition for interpleader or appointment of a special fiduciary (when the personal representative asks the court to resolve competing claims or to replace the representative for a limited purpose).

When you file, attach a proposed order outlining exactly what you want the judge to authorize (who gets what, what is held back, any proposed escrow or bond, etc.).

4. Serve notice and provide supporting documents

Indiana probate procedure requires notice to interested parties. Provide copies of the petition, any accountings or inventories, the will (if applicable), and proposed orders. The court clerk can confirm local notice rules and timelines. Proper notice gives the court jurisdiction to decide the dispute.

5. Attend the hearing and present evidence

At the hearing the judge will consider evidence: the estate accounting, creditor claims, any written agreements between beneficiaries, and arguments about fairness and creditor protection. The judge can approve the requested release, modify it, order a different split, require funds to be deposited with the court, or direct alternative dispute resolution (mediation).

6. Alternatives the court commonly uses

• Approve a partial distribution with a set reserve to cover claims and costs.
• Order all or part of the disputed funds deposited with the court registry (court escrow) until claims are resolved.
• Approve a negotiated settlement and enter it as a binding court order.
• Appoint a neutral or special fiduciary to evaluate the claims and distribute funds.
• Deny distribution until disputes and creditor claims are resolved.

7. If the dispute continues after the court’s order

The court’s written order controls distribution. If a party refuses to comply, other parties may ask the court to enforce the order, award sanctions, or seek contempt remedies. If someone files an appeal, the funds may remain under court control during appellate review.

Relevant Indiana law and where to read it

The Indiana Probate Code governs estate administration matters. For statutes, start with Title 29 of the Indiana Code (Probate): Indiana Code Title 29 (Probate). That Title contains rules about the duties of personal representatives, accounting, distributions, and procedures for handling claims and disputes in probate.

Practical example (hypothetical)

Suppose an estate has $100,000 in cash. Two beneficiaries disagree: one claims a special bequest that would take $40,000, and another says there are likely creditor claims that could take $30,000. The personal representative can petition the court for partial distribution of $30,000 to beneficiaries while keeping $70,000 as a reserve, or ask the court to deposit $70,000 into the court registry until creditor claims settle. The judge will consider evidence and enter an order specifying the split and reserve.

Helpful Hints

• Keep clear records: inventories, receipts, bank statements, and any communications among beneficiaries.
• Provide a proposed accounting when you file a petition. The court relies on good documentation.
• Give complete, timely notice to all interested persons to avoid jurisdictional problems.
• Propose a reasonable reserve if you ask for a partial distribution. Judges favor protecting the estate against creditor claims.
• Consider mediation before or during litigation. Courts often encourage settlement and may order mediation.
• Ask the court to deposit disputed funds with the registry if you want to stop competing claims from forcing you to make a risky distribution.
• Check the personal representative’s bond. If the bond is low, the court may require an increase before permitting distributions.
• Contact the probate clerk in the county where the estate is pending for local forms and deadlines. Local practice matters.
• Meet short deadlines for creditor claims and filings. Missing deadlines can change rights to distribution.
• When in doubt, consult an Indiana probate attorney. Complex disputes, large estates, or potential creditor exposure make professional help worthwhile.