Creating an estate plan can be an intimidating prospect if you know nothing about estate planning. In fact, one of the most common reasons people offer for not having an estate plan in place is that they simply don’t know where or how to start. Because every estate plan is uniquely geared toward the specific needs and goals of the creator, you should always consult with an experienced estate planning attorney when you are actually ready to get started on your plan. In the meantime, however, it may be beneficial to familiarize yourself with some of the more common documents needed for estate planning.
Last Will and Testament
You will probably not be surprised to learn that most people use a Last Will and Testament as the foundation of their initial estate plan. Executing a Will ensures that you will not leave behind an intestate estate. Dying intestate means the state decides what happens to your estate assets using the state intestate succession laws. Instead, your Will allows you to make specific and/or general gifts to loved ones. In addition, your Will lets you appoint someone as the Executor of your estate. The Executor is responsible for overseeing the administration of your estate. Finally, your Will offers you the only opportunity you have to officially nominate a Guardian for your minor child should one ever be needed.
Although once used almost exclusively by wealthy families to protect and pass down the family wealth, trusts are now commonly found in the average estate plan. A trust is a relationship where property is held by one party for the benefit of another party. A trust is created by the owner, also called a “Settlor”, “Trustor” or “Grantor” who transfers property to a Trustee. The Trustee holds that property for the trust’s beneficiaries. Trusts are broadly divided into two categories, testamentary and living trusts. A testamentary trust does not activate until after the death of the Settlor whereas a living trust takes effect as soon as all the trust agreement is in place and the trust is funded. A living trust can be further divided into revocable and irrevocable living trusts. A trust can help achieve a wide variety of estate planning goals and can even serve as the foundation of your estate plan if probate avoidance is desirable.
Throughout the course of your lifetime, you will make many decision regarding your own health care. There may come a time, however, when you cannot make those decisions because of your own incapacity. An advance directive helps you plan for that possibility. The State of Indiana recognizes two types of advance directives, including:
- Appointment of Health Care Representative and Power of Attorney – allows you to appoint someone, called your health-care representative, to make decisions about your medical care, including decisions about life support, if you can no longer speak for yourself.
- Indiana Declaration — lets you state your wishes with regard to life-prolonging procedures in the event you develop a terminal condition and can no longer make your own decisions. The Declaration allows you to choose between Indiana’s Living Will Declaration, which allows you to state your preference for the withdrawal or withholding of life-prolonging procedures, and Indiana’s Life-Prolonging Procedures Declaration, which allows you to state your preference for receiving life-prolonging procedures if you are terminally ill.
Power of Attorney
A power of attorney allows you to appoint someone as your Agent to act on your behalf in legal transactions. There are two types of power of attorney, general and limited. A general power of attorney (POA) gives your Agent almost unfettered authority to act on your behalf, meaning your Agent can engage in financial transactions on your behalf, enter into contracts in your name, and sell your assets. A limited POA, on the other hand, only gives your Agent the specific authority indicated in the POA agreement. If you make any POA durable it means that your Agent’s authority will survive your incapacity.
Contact Indiana Estate Planning Attorneys
For more information, please download our FREE estate planning worksheet. If you have specific questions about documents commonly needed for estate planning, or you are ready to get started on your plan, contact the experienced Indiana estate planning attorneys at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.