Estate Planning Lawyers Serving Northwest Indiana
What is a will? What is a living trust? What are your plans for the distribution of your assets after your death? Who should take care of your minor children in the event that both their parents die before they reach the age of majority?
After reviewing your assets, listening to your wishes as to how those assets are to be distributed, and then how any minor children are to be cared for, the lawyers at Funk & Wendlinger, LLC, will advise you as to whether a will, a living trust or both are right for you and your estate. We can also help if you are thinking of updating or changing your current plan.
In a sense, a will is a contract with the world advising how you want your property to be distributed when you die. Under most circumstances, a will must go through probate to determine its validity and make sure that your assets are distributed according to its terms. Some things to consider when making a will:
Is there is a possibility that property is going to a minor child or young adult? If so, you may want to consider at what age they are to receive it. If you do not make a choice they will receive it at age 18. However, if you wish to choose an alternate age such as 21, 25 or 30, you can have the property held in a trust. This property will then be managed by a person you designate as trustee, until your beneficiary reaches the age you have chosen to receive the property.
If you are married and you and your spouse die in a common accident or if you are a single parent and the other parent is deceased, you can direct in your will who will assume the responsibility of raising your minor children. Without specific direction from you, the state of Indiana will make this determination on your behalf in what it determines to be the best interest of those children. In some cases, this determination may not be the same as what you would want. Also by making the choice the relatives and friends will not be fighting with each other. Note this will not work where there are two living parents such as in a divorce or paternity situation. If one parent dies the children go to the other living parent. Children are not property and cannot be passed by a will. There are rare situations where one parent’s lifestyle is such that they are not capable or should not have custody of minor children. In those cases, you can make your wishes known and reasons set forth in a will, but the courts are not bound by that directive. However, it does give the court reason to consider your concerns.
You can disinherit anyone except a spouse. No matter what your will states, your spouse is entitled to receive a certain percentage of your real estate and your other property pursuant to Indiana Statute.
Has one of your children predeceased you? How do you want their share of your estate to be distributed? Your will can dictate whether a share meant for a predeceased child goes to their children or other heirs. It can also direct that their share be divided among your other living children. The terms used for these situations are the Latin terms per stirpes and per capita.
A trust is a document by which a person transfers ownership of his or her assets to a trust and a trustee administers the assets of the trust according to the terms of the document. Property in a living trust avoids probate, thus can be distributed quicker and with fewer attorney fees. Keep in mind that if your residence is placed in a living trust, you will lose your homestead exemption. In a living trust, any property or account has to be titled in the name of the trust. Thus, a living trust is a substitute for a will and allows property to pass to another person after you die without going through probate.
It is important to note that placing assets into a living trust does not avoid taxes. In most living trusts, you are the trustee and thus retain control of your assets. When you die, the living trust specifies who the successor trustee is and they distribute the assets pursuant to your directive without going through probate.
Ways To Avoid Probate Other Than a Living Trust
Some property does not get passed on by a will and thus does not go through probate. These forms of assets include the following:
Assets owned that allow for a beneficiary such as an IRA, an annuity or an insurance policy. These types of assets name a person or persons to receive the asset upon your death. Thus, these types of assets are not controlled by a will and therefore are transferred without going through probate.
A residence owned by a married couple is usually owned as tenants by the entireties with both names on the title. This property automatically goes to the surviving spouse.
The jointly owned property, such as a bank account or cars, automatically goes to the surviving joint owner. Also, where real estate or other property is titled as joint tenants with rights of survivorship, the property goes to those on the title who are still living. Although not a legal term, this is sometimes referred to as a poor man’s will. For instance, if you are husband and wife and one of you die, then all property that is held jointly (real estate, residences, bank accounts, vehicles, etc.) automatically goes to the surviving spouse. Thus, unless you die in a joint occurrence, the terms of a will are not binding on assets held as joint tenants. Further, if you are not married but hold all your property in joint accounts or jointly with someone else, such as a brother, sister or friend, then all the property automatically passes to the survivor. There are dangers in holding accounts or property jointly, and you will want to discuss that with your attorney.
Pay On Death (POD) Accounts
These, like beneficiary accounts, go to the person named on the account as your beneficiary.
Transfer on death deeds and other legal documents: When properly executed (and in some instances, there is a requirement that the deed also be recorded), they allow assets such as land, cars, art work, etc., to be passed to a beneficiary at your death. This can eliminate or affect the need for a will or a trust. Beneficiaries have no right or interest to the asset until the owner dies.
Living Will, Also Known As Advance Medical Directive
This is an instrument that allows you to make known your wishes concerning artificially prolonging your life via methods such as life support, feeding tubes, respirators, etc. It can also state if you want life support to continue even if you are in a coma and not expected to recover. A properly executed living will eliminates family disputes and confusion, as well as possible litigation as to whether or not your life should be prolonged through artificial means. It provides guidance to the person you have selected in your health care power of attorney as your representative to make decisions for you if you are incapacitated. Without a living will, doctors must do everything in their power to keep you alive unless and until a court order is obtained stating otherwise. Without this document, neither a court nor doctors will be able to determine what you want.
Durable Power Of Attorney
This document appoints another to exercise certain powers and duties on your behalf. It does not take effect until such time in the future that you are deemed incapacitated. This is useful in instances where one develops Alzheimer’s or has some other debilitating condition that makes them incapable of acting on their own behalf. It allows you to put someone you trust in charge. A durable power of attorney can be drafted to grant broad powers or be limited to a specific power or transaction.
General Power Of Attorney
This document appoints another to exercise whatever powers and duties you authorize them to do your behalf. A general power of attorney is effective for a specific time frame that you designate or can be left open-ended subject to you later revoking it. This document is useful for instances where you are incapable of acting on your own behalf such as being out of town on business, on deployment with the military or on vacation. It allows someone you trust to manage your property, authorize medical treatment and if you so designate even to sell real estate. If it is used to sell real estate it must be recorded. It cannot be used as a substitute for a guardianship or to change custody.
Health Care Power Of Attorney, Also Known As A Medical Health Directive
This document is like the durable power of attorney; however, it only applies to health care decisions. It only becomes effective when you are unable to act or make decisions on your own behalf. It names a person to make your health care decisions when you are unable to act for yourself. This person then has the authority to make medical decisions on your behalf and give, or withhold, consent to doctors and health care providers for medical treatments they may recommend.
If you need the help of an estate planning attorney in the Lake County area, contact us today by calling 219-865-0002 or filling out our online form.