Common Estate Planning Questions
Although an estate plan is customized to fit each individual’s circumstances, a few questions are common to almost every plan and important to consider with an estate planning attorney. The preparation of your estate plan should include at least some consideration of the following issues.
1. Should I avoid probate?
Generally, the probate process involves administering a decedent’s assets. This can including collecting debts owed to the estate or gathering assets, paying final expenses and claims, and making distributions as provided by a will or statute. Indiana law provides for two types of probate proceedings, supervised and unsupervised. The supervised probate process requires more involvement of the Court and filings not required in the unsupervised process. The unsupervised probate process requires little Court involvement and provides latitude to the personal representative to administer the estate with little supervision. In most cases, unsupervised probate will result in more efficient administration.
Probate can be avoided altogether through an estate plan that involves a trust. In determining whether to use a trust to avoid probate, common concerns include privacy, the cost of administration, and the time required for administration. A trust typically provides a greater level of privacy than a will, however, it is important to keep in mind that a will typically does not provide detailed information on the value of assets or the amount a beneficiary is to receive from the estate. From a cost perspective, the administration of an unsupervised probate estate likely results in costs similar to that of a trust administration, especially when considering the up-front costs of preparing a trust agreement and funding the trust with assets. A trust is usually slightly to moderately faster to administer than a probated estate, however, it is not uncommon for an unsupervised probate estate to take as little time to administer as a trust.
An estate planning attorney can help you decide whether avoiding probate through a trust makes sense for your individualized circumstances.
2. What taxes will my estate or children have to pay when I die?
As a result of the enacted Tax Cuts and Jobs Act, the federal estate exemption for an individual who dies in 2018 is approximately $11,200,000. The new legislation did not affect the “portability” of a decedent’s unused exemption, and therefore a married couple may utilize both spouses’ exemptions, resulting in a total exemption amount for the couple of $22,400,000. In addition, the Indiana legislature repealed the inheritance tax in 2013. As a result, the vast majority of individuals need not be concerned about “death taxes.”
3. Who will raise my minor children?
This is a difficult topic that individuals and couples with children under the age of eighteen (18) must consider. Reluctance to face this difficult question can, and often does, result in delay in preparing an estate plan until it is no longer an issue. However, failing to express your wishes about who will raise your children leaves the decision in the hands of a judge, who will be tasked with deciding what is in the best interest of your child with little or no knowledge of your child or your family.
4. Who will handle my estate when I die?
In Indiana, a personal representative is appointed by the probate Court in which your estate is administered. The personal representative is charged with the duties of administering your estate. You can specify who you wish to serve as your personal representative. An estate planning attorney can help you decide whether, and who, to specify.
5. Who will control the money I leave for my children and/or grandchildren?
There are a few vehicles that you can, with the help of an estate planning attorney, use to influence how the money you leave for your children or grandchildren is kept and managed until they are old enough to take possession themselves.
In a custodial account, for example, a custodian is appointed to oversee the investment and distribution of account assets until the minor child attains the age of either eighteen or twenty-one, as specified in your will. Alternately, you can create a trust to hold the assets for a minor child. A trust provides more flexibility than a custodial account, allowing you to provide a trustee with directions as to the distribution and use of the assets in the trust. For example, although you might want distribution to occur upon the child’s attaining age thirty (30), you can make specific exceptions for distributions before that time for the child’s health, support, and education, or for specific anticipated expenses you specify, like the purchase of a vehicle or the down payment for a house.
6. What happens if all of the members of my family die in a common accident?
With the help of an estate planning attorney, you can provide for the risk of a tragic circumstance where your entire family perishes in a common accident or your descendants do not survive to the final distribution of all your assets. You may wish to consider for the distribution of your assets among more remote family members, such as parents, siblings, and nieces and nephews. You may also consider charitable organizations, such as a local or national nonprofit organization that provides services for which you have a passion.
If you have additional estate planning questions, please contact a member of Barrett McNagny's Estate Planning and Administration section.