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The Truth About Wills

Wills do not need to be complicated, and for most families they can be truly helpful. They also have a number of advantages over trusts as a means of transferring property from one generation to another. Indiana has no estate tax and under federal law a married couple can shield more than ten million dollars in property transferred by lifetime gifts and at death, and for an individual the available exemption is over five million dollars. So, for an Indiana couple only large estates need to be subjected to the types of rigorous tax planning that used to be so common.

The central purpose of a will is to allow the person whose property is subject to the will (he or she is called the “testator” or “testatrix” respectively) to control the initial disposition of that property (known as the “decedent’s estate”) following death. As individuals or couples first give thought to this process they usually have easy answers to the more obvious questions, and choose to pass the bulk of their estates to a spouse, a child or children, or other relatives. But the process gets a bit more difficult with the “what if” questions lawyers so often ask. What if your wife pre-deceases you and your children are still under age 18? What if a child pre-deceases you and leaves a surviving spouse, with or without children? If money is to be left in trust for minor children, who will be the trustee? What if the designated trustee can’t or won’t continue to serve in that capacity? These are some of the questions that often precede the drafting of a will. The need to mull over these and other questions normally mean that more than one meeting or at least a continuing dialogue between lawyer and client is needed in order to prepare a will for a client. Whether through a living trust or a will, the wishes of a testator or testatrix can be put into effect once the process is complete.

Another important purpose for a will or a living trust is give some direction to the process of handling the decedent’s estate after death. Wills commonly nominate a personal representative for appointment by the probate court to take charge of the decedent’s estate, to pay the decedent’s creditors, to collect the estate assets and to see that they are distributed as required by law and directed by the will of the deceased testator or testatrix. Living trusts use trustees instead of personal representatives, but the functions are normally the same, and like estates, trusts can be subjected to court scrutiny if there are complaints about how the estate is handled. And both personal representatives and trustees have duties to see that income taxes imposed on the estate are properly paid. Lawyers and accountants are often useful in helping the personal representative or trustee fulfill these duties, although the necessity for such assistance is typically related to the size of the estate.

Wills, like trusts, are flexible in the sense that they can easily be amended if circumstances change for the testator or testatrix. Unfortunately one of the biggest mistakes a person can make after having a will or living trust created is to fail to periodically review it to see if any circumstances have changed that might require some amendment. Such circumstances may be a material change in the content of the estate, a change in relationships, a change in the capacity of a person named as a trustee, or as a guardian or personal representative, or death or divorce of beneficiary in a will or trust. And on occasion the realization that some important “what ifs” were not answered may necessitate a change.

Nickloy & Barry LLP is prepared to help its clients with their wills or trust requirements, whether those requirements are for drafting, amending or reviewing these important estate planning documents. If we can be of help please call us at 317-773-3030.