Do You Have A Will?

If the answer is “no,” a recent survey shows that you are not alone.  Only 4 in 10 American adults have a will or trust in place.  While older Americans are more likely to have a plan in place (81 percent of those age 72 or older and 58 percent of boomers), younger Americans, including those at ages of having minor children, are much less likely to have a plan.  A “a whopping 78 percent of millennials (ages 18-36) and 64 percent of Generation Xers (ages 37-52) do not have a will.”  See this AARP article for more information about the survey results.

 

Prince – Dying Without A Will?

The recent passing of music legend Prince serves as yet another reminder to get your estate plan in place.  As reported in the press, Prince’s sister has filed papers with the Court alleging that her brother died without a will.  Dying without a will in place is called “intestate.”  You can find my summary of Indiana’s intestate laws, here and here.  The intestate laws act as a default estate plan, and very likely may not include all of your intentions.

In Prince’s case, it has been widely reported about his great business abilities and his strong desire to be in control of his music and his public image.  It also appears Prince was generous and was a benefactor to many charitable organizations. If Prince truly did not have a Last Will & Testament (and this remains to be seen), then his great desire for control over his art and his charitable intent will not be realized now that he has passed.  A true loss of opportunity for his great legacy.

For the rest of us, this is a reminder that it is never too early to plan and make sure our intentions will be followed.

Estate Planning for Parents of Young Children

This is a topic of much passion for me.  Estate planning is a necessary protection for all parents with minor children.  Yet, national surveys reveal that less than 40 percent of Americans with children under the age of 18 have their estate planning documents in place.  (LexisNexis 2011 EZLaw Survey).

As a parent with young children myself, I understand that it may seem impossible to find the time to meet with a lawyer and get estate planning documents in place.  Life is busy!  Estate planning often seems like something that can wait to another, less hectic time.  Or, some parents, especially those with young children and just beginning their careers, feel that they have not yet accumulated sufficient assets to warrant the need for such a plan.  And, if I’m being honest, although I personally find estate planning to be a topic of great interest, most people do not particularly enjoy the topic or find it unsettling.  Who wants to talk about planning for death?

Estate planning is necessary!  It is as important as the other basic protections we have in place for our children and loved ones.  Here’s why:

1. Avoiding Intestate Distribution.  You likely do not want your Estate distributed according to the “intestate” or default distribution plans put in place by Indiana Probate law.

2.  Naming a Guardian For Minor Children.  You will want to name an individual(s) to care for your children in the event that both parents should pass.  In the absence of a written appointment by the minor’s parents (through a Last Will & Testament or other document), the Court will select a Guardian, most likely choosing among surviving family members who seek the appointment, and without the benefit of instruction from the child’s parents.

3.  Putting in Place a Plan to Manage Your Children’s Inheritance.  If something should happen to you (and your spouse) while your children are minors, you will want to put into place a trust to manage and distribute your children’s inheritance.  Without such a plan, the Court will appoint a custodian to manage the money while your child is a minor and, in most cases, your child will receive her inheritance outright at the age of 18.  Planning with trusts will allow you to put in place the management of your child’s inheritance until ages you determine are appropriate for distributions, holding it in trust beyond the age of 18.  In addition to managing and investing the inheritance funds, the trustee will use the inheritance to provide for your child’s care, support and education until the ages of distribution.

4. Planning with Beneficiary Designations.  An estate planning lawyer will help you set up your beneficiary designations to fully take advantage of trusts you put in place for the protection of your minor children.  Without such properly worded designations, your children will receive assets such as life insurance, 401(k)s, and IRAs, outright at the age of 18, and not protected by trust.

5.  Planning for Incapacity.  In addition to protecting your family in the event of death, an estate plan should also include incapacity planning documents, including a General Durable Power of Attorney, Living Will, and Appointment of Health Care Representative.  If you should become disabled or incapacitated, these documents will be essential to the continued function of your family and eliminate the public and potentially expensive and time-consuming process of a guardianship.

6.  Other Concerns.  A solid estate plan (and counsel of an estate planning attorney) affords other protections.  Additional topics that may be relevant to you and your family include Federal Estate Tax, avoidance of probate, second (or subsequent) marriages, blended families, children with disabilities requiring long-term care, and capital gains/income tax planning.

 

Dying Without a Will in Indiana – Part II: Indiana’s “Default” Estate Plan for Married Persons

First Marriage and no children:  Your surviving spouse will receive three-fourths (3/4ths) of your estate and your surviving parents will receive one-fourth (1/4) of your estate.  If your parents predecease you, then your surviving spouse will receive all of your estate.

Who does this default “plan” exclude?  In the event your parents survive you, your spouse is not fully provided for by your estate.  This plan also excludes everyone else for whom you may wish to provide, including your stepchildren, siblings, friends, and charities.

Married and children with your spouse:  Your surviving spouse will receive one-half (1/2) of your estate and your surviving children will share one-half (1/2) of your estate.

Who does this default “plan” exclude?  Neither your spouse nor your children are fully provided for by your estate.  This plan also excludes everyone else for whom you may wish to provide, including your parents, stepchildren, siblings, friends, and charities.

Second (or subsequent) Marriage, and no children with current spouse:  Your surviving spouse (who did not have children with you) will receive one-half (1/2) of your estate personal property, but only one-fourth (1/4th) of your net real estate.  Your surviving children (from a prior marriage) will share one-half (1/2) of your estate and three-fourths (3/4ths) of your net real estate.

Who does this default “plan” exclude?  Neither your spouse nor your children are fully provided for by your estate.  This plan also excludes everyone else for whom you may wish to provide, including your parents, stepchildren, siblings, friends, and charities.

Dying Without a Will: Indiana’s Default Estate Plan

Indiana law provides a “default” estate plan for you, if you do not have a Will at your death.   This is called an “intestate” estate.

Does Indiana’s default plan match your intentions to provide for your loved ones?  Here’s a guide to determine what the law would provide if you died without a Will in Indiana.

First, a look at your estate plan if you are not married:

Not Married and without children:  Indiana law provides for your estate to be distributed, in equal shares, to your surviving parents and siblings.  Each of your surviving parents will receive no less than one-fourth of your estate.

Who does this default “plan” exclude?  Everyone else.  Only your brothers and sisters (or their children, if a sibling dies before you) and your parents will receive your estate.  A significant other, regardless of years together, will be excluded, as will lifelong friends or caregivers.  Each sibling will be treated equally, regardless of whether your relationship with that sibling was a good one.

Not Married, with children:  Your children will receive your estate, in equal shares.

Who does this default “plan” exclude?  Again, everyone else.  Only your children, in equal shares, will receive an interest in your estate.

In either of these situations, dying intestate as an unmarried person means that friends, other relatives, significant others, and charities, are completely excluded from your “default” estate plan.

Four Essential Documents

Estate planning can sometimes appear complicated, full of acronyms and sophisticated sounding concepts. While it is true that estate planning can be complicated, in its simplest form, an Indiana estate plan should consist of at least the following four documents:

  1. Last Will and Testament. In its most basic form, your Will provides for you to direct the distribution of your assets titled to your name individually upon your death and appoint a person (or persons) to administer your estate upon your death. If you die without a Will, assets titled in your individual name may be subject to intestate administration.
  1. Appointment of Health Care Representative. Also called Health Care Proxy and Health Care Power of Attorney, this document provides for the appointment of a person (or persons) to make medical decisions for you in the event that you are incapacitated and unable to make decisions for yourself.
  1. General Durable Power of Attorney. In your General Durable Power of Attorney, you name a person (or persons) to make financial decisions for you in the event of your incapacity.
  1. Living Will. Your Living Will allows you to state your preferences regarding end of life decisions in the event of an incurable illness or persistent vegetative state.