A will is a document that you put together which allows you to designate how you want your assets to be distributed at the time you pass away. Within that will, you not only determine who are receiving your assets at the time you pass away but also who you want in charge of that distribution, and that individual is typically known as an executor or a personal representative. It’s that individual’s responsibility to collect the assets at the time you pass away and make distribution of those asset to the people you want to inherit them.
A trust is an estate planning tool which is very similar to a will. It’s a document you put together designating who you want to receive your assets at the time that you pass away. Also putting someone in charge of making that distribution. Under a trust that person’s name is a trustee. Unlike a will though, a revocable trust is actually put together while you’re alive and funded while you’re alive meaning we change title on your assets from your name to the trust’s name. As a result, at the time that you pass away the named trustee steps in and can begin making distribution right away to your beneficiaries which is different from a will. Wills have to be filed in court at the time you pass away so that the executor’s authority to collect assets can actually be activated with a court order. A trust avoids the need to go through court by placing assets in the name of the trust now and allowing for easy distribution at the time you pass away.
We have had a tremendous amount of change in regard to estate planning for same-sex couples with the legalization of same-sex marriage throughout the United States.
However, many individuals are not married, and remain in committed relationships with their domestic partners, or just in a couple relationship, without any legal status.
As a result, they need to specifically plan any estate planning documents to be allowed to be decision makers for one another. A same-sex partner who is not married to an individual would not have any legal authority to handle finances or make medical decision for an individual, and would not naturally inherit from that individual if it’s not properly planned for n legal documents.
In order to properly benefit one another, it’s important for same-sex or domestic partners to properly account for one another in legal documents so that their relationship and inheritance rights are properly defined.
What is an advance directive?
Advance directive are documents which instruct an individual’s family, their friends, their health care providers as to the treatment the individual would want to receive if they have a terminal illness or are otherwise unable to consent to medical decisions themselves. Advance directives include things like an appointment of health care representative, a living will, a POST form, a do not resuscitate form. Things like that.
What are typical provisions for a child in a will?
So a testamentary trust or an account similar to that is commonly used when we have a minor beneficiary.
Under Indiana law, if a child inherits $10,000 outright, before they turn 18, that money is held for them in a restricted guardianship account with the county in which they live. Then they receive access to that money outright upon turning 18.
That is not always what our clients want to happen. So a testamentary trust is a great way to ensure that our client’s wishes are being met. By placing their money into a testamentary trust, our clients are able to select a trustee to manage those trust funds. They are able to select the age which the minor has access to the funds. They are also allowed to indicate what they would like the funds to be spent for while the money is still held in trust, so they can provide for the Health, Education, Maintenance, and Support of the child.
You can also provide for extraordinary expenses, such as graduate school, maybe giving them money for a wedding, or to put down as a down payment on a home, or to start a business. A testamentary trust is a great common method if one of our clients has minor beneficiaries.
Who can serve as my health care agent?
Anyone you appoint can serve as your health care agent as long as they are at least 18 years old, they are not already deceased, they haven’t resigned, they been adjudicated incapacitated by a court, and the Dr. can locate them. So as long as these 5 criteria are met, anybody you appoint can serve as your health care representative.
Will my family need to pay estate tax at my death?
Some of the best news that we’ve had from a tax perspective in recent years, has to do with the changes in estate tax laws. Currently the Federal estate tax has an exemption amount which applies to every individual. That exemption amount was established in 2013 at $5,000,000, but it’s been adjusted for inflation annually. Right now an individual can die and leave up to $5.45 Million free of Federal estate tax. Also, a lot of states have eliminated their estate or level of inheritance tax which would apply. Indiana for example abolished its inheritance tax in 2013. Which means most individuals will be able to leave assets to their families without the payment of Federal or State death taxes.
If I have all me estate planning and long-term care documents from another state, do I have to have them redone in Indiana?
The answer to that question is possibly. Many documents which people put together for estate purposes are actually state specific. For example, wills, powers of attorney, and healthcare documents, are typically handled specifically by a particular state in accordance with their statute. That said, if the document you put together in the prior state of residence was executed in accordance with that state’s laws, it may be valid in the State of Indiana. Its important to have the documents reviewed for their validity and determine if everything’s in order. If the individual has a document like a living trust, that document will typically be good in all 50 states. But again, its important to have things reviewed and make sure that everything is in accordance with Indiana’s laws.
Are there other ways of leaving property to my beneficiaries other than a will or trust?
Yes! In fact, lots of assets do not pass in accordance with an individual’s will or trust. The first thing you’d want to look at is the title to an asset. For example, if you own something jointly with a spouse or child, that asset will automatically pass to the surviving joint owner. So you could avoid passing things through a will or trust by simply adding another owner to an account. Also many assets pass by beneficiary designation, like life insurance or retirement plans. You designate by contract who you want to receive those assets by your death, and as a result, when you pass away those beneficiaries will automatically inherit those funds. In Indiana we have a wonderful statute called the Transfer on Death Act, which allows you to add a beneficiary to almost any type of asset. So you can add a beneficiary to a bank account, an investment account, a vehicle, even your home, by designating a transfer on death document or deed, and that asset will automatically pass at your death to the named beneficiary, regardless of what your will or trust might say.
Must the individual I appoint as personal representative live in the same state?
No! Not necessarily. It’s easier sometimes if your personal representative lives in the same state, but as long as a registered agent is appointed, the personal representative doesn’t have to live in the State of Indiana. An attorney can serve as a registered agent, and represent the estate on the decedent’s behalf.
Should I have a power of attorney for healthcare?
A power of attorney for healthcare or an appointment of healthcare representative is very important to have. The form allows you to appoint an individual who will make medical decisions on your behalf should become unable to do so yourself. Under Indiana law, there is no hierarchy in terms of who would make that decision should you be unable to do so. Individual decisions makers could include people like your family, your parents, your spouse, your children. If those people can’t agree on a decision, you’re left without an individual decision maker to make a final decision. Having a healthcare representative form allows you to appoint someone of your choosing to make those decisions for you.
I made a will 20 years ago when my children were small: Do I need to change it now?
So we generally recommend that our clients periodically review their estate plan, just to make sure nothing major has changed since the time that the estate plan originally was drafted. Certain events that may occur that might necessitate a change include the birth of a child, the birth of a grandchild, or retirement. A change in beneficiary or trustee, or maybe just the change in the value of the total estate. So during our review meetings we will talk with our clients and discuss their family situation, and ensure that the estate plan that they currently have still meets all of their wishes and that everything is passing in accordance with the way that they want it to go.