IBA: Estate Planning 101 for Lawyers – Are You Prepared?

By Rebecca Geyer, Hollingsworth & Zivitiz

Geyer

As an estate planning attorney, I regularly counsel clients about disability and death planning. If truth be told, however, I’m not always good at following my own advice. Attorneys procrastinate as much as the clients we represent, too often getting caught up in our daily endeavors and failing to make sure our own affairs are in order. As fall approaches, I’m making time to review my estate planning, and I encourage you to do the same. Here are a few issues you might consider:

Wills and Trusts. If you have yet to do so, I strongly recommend taking the time to put a will or trust in place. Wills and trusts provide a mechanism for you to designate how and to whom your assets will pass following your death and who should administer such distribution. There are numerous ways to plan for the division and distribution of your assets to address potential concerns such as education planning, children with special needs, long term care concerns, or a beneficiary’s poor financial management skills. If you have minor children, your estate planning should address the issue of guardianship to ensure your children are raised by the people of your choice should you die. Although a will should address guardianship, don’t overlook Indiana’s new standby guardian statute (Ind. Code § 29-3-3-7) which allows the parent of a minor or the guardian of a protected person to designate a standby guardian for the minor or protected person in a written declaration. The designated standby guardian begins serving as guardian of the minor or protected person upon the death or incapacity of the parent or guardian. The statute is intended to ensure that a minor or protected person has a legal guardian in place until a petition for guardianship of the minor or protected person can be heard following the parent’s or guardian’s death.

Planning for Disability. Just as important as wills and trusts are documents designating someone to make financial and health care decisions on your behalf should you be unable to make such decisions yourself. A Power of Attorney allows you to designate someone to handle financial transactions for you should you be unable to act on your own behalf. Many married couples assume a Power of Attorney is unnecessary if their accounts are owned jointly as the non-disabled spouse can continue to access funds and pay bills. While this is true, a joint owner does not have authority to sign for you to sell or refinance an asset without legal documentation granting them such power. Most people also own at least one account, such as a retirement plan or life insurance policy, in their individual names, making a Power of Attorney necessary so that someone has authority to act on such accounts if the owner becomes disabled. Without a properly executed Power of Attorney, your family may be left with no choice but to pursue legal guardianship to access your finances in the event of your disability.

Health care documents are also extremely important. An Appointment of Health Care Representative or Health Care Power of Attorney allows you to designate someone to make medical decisions for you if are unable to speak for yourself. A properly designated HIPAA Release is also imperative. Since the passage of the Health Insurance Portability and Accountability Act (HIPAA), most medical providers will not speak to your family members about your medical condition without a HIPAA release so as not to violate your privacy rights. Indiana law also allows you to determine whether you want your life artificially prolonged by tubes and machines in a Living Will or Life Prolonging Procedures Declaration. If you have specific wishes for your funeral, you might also consider executing a Funeral Planning Declaration.

Review Your Existing Plan. If you have an existing estate plan, when was the last time it was reviewed? Numerous changes in Indiana and federal law may result in unintended consequences if your estate plan is not updated. Outdated estate tax clauses may require the unnecessary division of your assets at your death or result in loss of control for the surviving spouse. Reviewing the titles to your assets is also a must. Even with properly executed estate planning, your assets may not pass the way you envision. The title of your assets trumps your estate planning documents so carefully review each account to ensure you know exactly how it passes at your death. You may wish to take advantage of Indiana’s expanded Transfer On Death Act to transfer assets such as bank accounts, real estate, and motor vehicles at death without probate. If you have a living trust in place, are your assets titled in the trust’s name? Non-probate assets such as retirement plans and life insurance policies pass by beneficiary designation. Do you have primary or contingent beneficiaries named on such accounts? Failing to name a beneficiary on your life insurance policy may subject the proceeds to Indiana inheritance tax should the policy become payable to your estate. If you’ve set up a trust for your minor children, have you changed the beneficiary designations on your insurance policies and retirement plans so that such assets flow into the trust at your death? If your minor children are designated as the beneficiaries of your accounts, Indiana law will require a guardianship or protective order to collect such account proceeds (if they exceed $10,000), and they may pass to your children at age 18 instead of under the terms of the trust you established. You should also consider the income tax implications of your beneficiary designations. Proper planning can maximize the amount of retirement assets passing to your beneficiaries while deferring the payment of income tax over the course of such beneficiaries’ lifetimes.

Review Your Practice Contingency Plans. Do you have plans in place for your legal practice should you be unable to work or die? Now is the time of year we pay our annual dues to remain active lawyers in the state of Indiana. Part of the annual registration process is the designation of an attorney surrogate to cover your practice should you become disabled or die. Have you considered who this individual should be for your practice? If you are a solo practitioner, this issue is of extreme importance. Who will handle your cases should you be unable to work or pass away? Do you have disability insurance in place to cover your overhead expenses and provide you with income if you are unable to practice law? Taking time to consider these issues now can help alleviate some of the stress and uncertainty when the unexpected occurs. So practice what we preach and get your own planning in order this year.•