Updated: Dec 17, 2018
You may not be thinking about your Last Will and Testament or Power of Attorney, especially if you’re young and healthy. Many people know they should have an estate plan but don’t take the time to create one, until a major life change happens such as having a baby or a family member dying. This guide can help you think about estate planning now so you’re prepared for the future.
What is estate planning?
Many people think “estate” refers to rich people with large homes and expensive possessions. However, nearly everyone has an estate, regardless of their income or social standing. An estate simply refers to your net worth: your home, your money, and your possessions minus your debts and liabilities. Estate planning allows you to specify what will happen to your possessions, investments, life insurance, pets, and children once you die. First, you need an attorney.
What should you look for in an attorney?
Look for an attorney that primarily does estate planning. They will be more knowledgeable about your options than a “jack-of-all-trades” attorney. You want an attorney who will do it right the first time and can update it in the future as needed. Also, consider the cost. Call around and find out what price range you’re looking at. It is not always a good idea to go with the cheapest attorney you find. If you choose the cheapest attorney, you may need to pay someone else to fix your Will in the future when it doesn’t reflect your wishes.
Ask your friends for suggestions. Word of mouth can be the best way to find a knowledgeable and experienced attorney. Or look online at reviews and see what others are saying about a particular attorney. Try to pick an attorney that wants to educate you about your own documents, rather than simply preparing a Will or Trust that you don’t understand. You should know what your Will or Trust says to be sure it reflects your wishes.
What should you include in your plan?
Once you select an attorney, he or she will be able to find out what you want to accomplish and suggest options that best reflect your situation. For example, if you have minor children, then you want to nominate a guardian for your children in your Will. If you have a disabled child or spouse, you may want to set up a Special Needs Trust.
Having a Will is important but you should also have in place a financial power of attorney and a health care power of attorney. A financial power of attorney appoints someone while you are alive to help take care of your finances (i.e. paying bills, writing checks) when you are no longer able to do so yourself. A health care power of attorney appoints someone to make health care decisions on your behalf should you become incapacitated.
Can you write your own Will?
It is not a good idea to write your own Will or use an online resource to do so. Estate planning should be customized to your needs, wishes, and situation. An online resource cannot anticipate and prepare for all those specifics. Using an online Will writing service may save you money up front but will often end up costing you more in the long run, such as when you get it fixed or after you die when it doesn’t accomplish what you needed it to.
What happens if you die without a Will?
In Indiana, if you die without a Will, then the state determines how things will be handled according to the intestacy laws. Any assets you own jointly or that name a beneficiary will be distributed directly to that person. Any other assets will be handled through the state laws.
Indiana law dictates that if you are not married and have children, everything goes to your children. If you are married with no children or parents living, everything goes to your spouse. If you are married and have children with that spouse, 1/2 goes to your spouse and 1/2 to your children. There is a predetermined line of inheritance for every situation. Some scenarios like second marriages can get a little more complicated.
In addition, if your children inherit a portion of your estate, their shares will need to be held in a guardianship account for their benefit until they turn 18. That means extra time, work, paperwork, and cost. However, this can be avoided with a simple Will. You can include custodial provisions in your Will that avoids the need for a court guardianship. Instead, you appoint a custodian to manage the funds for the minor through an account under the Indiana Uniform Transfers to Minors Act.
Rather than letting the state decide how your estate is distributed, you can make your own wishes clear by having an estate plan. You may feel apprehensive or even afraid of thinking about your death, but putting off estate planning could lead to disaster. Instead, make sure you have your wishes clearly expressed in a Last Will and Testament or Trust. Also, make sure you have a financial Power or Attorney and Advance Directives for Health Care. These documents can be immensely helpful to your family and save a lot of headache later on.