Stautz Law

Tag: Estate Planning

  • Who is a “Child” in Indiana Probate?

    Video

    Transcript

    (Auto-Generated)

    Introduction

    Good morning, it’s Andy Stautz with Stautz Law. I am back for another talk about Indiana probate and inheritance law. Today’s talk is very specific and it’s to answer the question, who is a child for the purpose of Indiana inheritance law?  

    So… Kind of one of those issues that doesn’t seem like a big issue until you are at the margins, until you get to these close calls.  

    So who’s a child? Obviously, an ordinary biological child to married parents, definitely a child.  

    Statutory Definition

    From there, it gets a little more complicated. We’ve got a definition in the law. So Indiana Code 29-1-1-3. Definitions. Definition (a)(1), the very first one: “Child includes an adopted child or a child that is in gestation before the death of a deceased parent and born within 43 weeks after. The term does not include a grandchild or other remote descendants, nor a child born out of wedlock, except as provided in IC 29-1-2-7.” Okay, that was mostly a direct quote. I left a couple things out.  

    So if a child has been adopted, great, they’re, boom, legally a child for inheritance purposes. Because we’re in the probate code here, by the way.  

    Doesn’t include grandchildren. Okay, that makes sense, but good to have it there. 

    Does not include a child born out of wedlock, except it’s provided in this other section, 29-1-2-7. If we look at 29-1-2-7, it’s a way of kind of deciding who, like which line out of wedlock children inherit from.  

    And it is, as you might suspect, gendered. So basically you definitely inherit from the mother; on the paternal side, only if paternity is acknowledged. That’s broad strokes. I don’t want to get into the details.  

    Other Circumstances: Step-Children, Non-Adopted Children

    Then you’ve got the weird question of, okay, that handles adopted children and handles biological children, both married and unmarried. What about not-adopted children? So what if someone comes and says, well, it’s a stepchild. Or it’s a person who lived in the house and was raised as a child, but wasn’t like wasn’t formally adopted and isn’t and has no biological tie.  

    The answer in both of these cases, according to just the terms of the statute, is sorry, not a child. The Indiana Probate Code really is focusing on, you know, bloodline or legal formality. There’s no concept here of, well, we can decide that, they’re basically a child, we treat them as a child.  

    Obviously, there are equitable arguments there. You know, you never really know, get lucky with the case law. Maybe there’s a way to sort of bring those other people into the orbit of the probate code. But it’s an uphill battle, right? The statute as defined doesn’t include those edge cases, even if socially or morally or whatever, we would say, oh yeah, it’s the person’s child.  

    Avoiding Statutory Definition: Pick Your Own Heirs

    So that’s pretty harsh. That’s a pretty harsh consequence, I think, in some cases.  

    Fortunately, though, or the nice thing is, you can avoid that. You can avoid that by having a will or having a trust. Because remember, the probate code rules for what children inherit are just the default intestate rules. If you write a will, you can say, my stepchild gets, you know, shares equally with my biological children.  

    Or, you know, John Doe, whom I have reared as my own, you know, is my sole heir. 

     Whatever you want to do. So that’s kind of the tension, right? The probate code, the default rules have to draw a line somewhere and you might not like where that line is. That’s why you do planning in advance.  

    Conclusion

    So hopefully that was helpful in just kind of discussing both the intestate situation and giving you one more great reason to make sure you’ve got a will. But general information about the law is not a substitute for legal advice. If you need an analysis of your situation or you want me to talk about your case, give me a call or e-mail me. You’re on my website. I hope that talk was helpful though. And that’s all I have for now. Bye. 

    Want to talk more?

    Call for a free consultation about your estate planning or probate needs.

    Call Now

  • Choosing Trustees for Testamentary Trusts

    Video

    Transcript

    (Auto-Generated)

    Hi folks, it’s Andy Stautz with Stautz Law. I am back for another general informational video about Indiana law. Today we’re talking about testamentary trusts, specifically your choice of trustee, choice of fiduciary for your testamentary trust.  

    So I’ve recorded lots of talks about how testamentary trusts work, what they are, But basically, it’s a trust that you create in your will. So the trust doesn’t exist until the will is probated. Now all of a sudden, okay, we’ve got a trust.  

    Why the Choice of Trustee Matters

    Just like for any other trust, you need a trustee. That’s the person who is in charge of carrying out your instructions. And the choice of trustee is really important, really important, okay, because You can put any instructions you want in a trust, just about, I mean, you know, within reason, but you can get as creative as you want in the drafting. You can write any rules you want, you can make it complicated, you know, wish lists go crazy.  

    But push comes to shove, a trust only actually works, you know, Legal validity aside, a trust only actually works, only does what you want it to do, if you’ve got a trustee who’s going to carry out your instructions. That’s just behavioral hard truth. I mean, you can’t make something happen unless the trustee does it for you.  

    So you want to get it right. You want to choose a trustee who understands what the instructions are, and it’s going to carry them out and that you can count on.  

    General Trend: Individual Fiduciaries

    So the trend, and it’s been an ongoing trend since long before I was in practice, is to have like individuals, family members, friends, et cetera, serve as trustees. Okay, because I think this has to do with like bank consolidation and the loss of trust departments and increasing fees and requirements. So for many people with a small estate planning trust, right, they’re not going to have a big bank handling it for them. They’re going to name a family member or a friend.  

    Considerations in Choosing Testamentary Trust Trustee

    First Consideration: Can Your Trustee Do the Work?

    And as we’ve discussed in the past, that introduces behavioral risks, right? Because you need to make sure your trustee knows how to do the actual work of being a trustee. like making accountings, keeping an inventory, reporting to the beneficiaries if they need to do that… actually can . . . has the financial and administrative savvy to carry out the trust instructions. 

    Second Consideration: Trustee Conflicts?

    The second point is, you need to make sure it’s someone whose interests align with your interests as regards to the trust. So you don’t want a situation where the trustee is tempted to co-mingle funds or to apply trust funds to benefit his or her own life, et cetera.  

    And a common scenario here is, okay, what about the parent of a minor? If the parent of a minor is a trustee for that minor, they’re constantly going to be facing decisions like, okay, do I use my own money to pay for, childcare expenses, et cetera? Or can this be a trust distribution? Can I use trust money? And, that’s . . . maybe it doesn’t make a difference, right? But it’s something to think about. Do you want your trustee to be in a position where they make that choice or face that temptation?  

    And so, especially for testamentary trust, where the trust doesn’t have any history or pattern, it just comes into being once you’re gone. You need to be especially sure that your trustee or the person you’re thinking about naming as a trustee is going to accept the appointment, is going to know what to do, and you know, isn’t going to face conflicted decisions often or all the time about how to follow your instructions.  

    Conclusion: People and Values, not Hard Law

    This is not a realm of legal certainty, right? This is a discussion about values and people, and it’s very case by case and specific. So I realized it was general talk, but it’s one of the things we’ll talk about if you come to me for your estate planning, and it’s one thing you should definitely be talking to, you know, any attorney about if you’re in a place where you’re making a testamentary trust or considering one.  

    I hope that’s been a helpful overview. You’re on my website. Give me a call, give me an e-mail, and we’ll set up a time to talk about your specific facts. Hope that was helpful, and bye for now. 

    Want to talk more?

    Call for a free consultation about your estate planning or probate needs.

    Call Now

  • Step Up in Basis Indiana Houses

    Video

    Transcript

    (Auto-Generated)

    Good morning, folks. It’s Andy Stautz at Stautz Law. I am back for another talk about an estate planning topic. And this topic is step-up in basis for houses. So this is a tax, this is kind of a tax planning topic.  

    Step-up in basis is an important concept to understand in your estate planning because it’s probably the biggest tax effect you’re going to feel, or your heirs are going to feel, really.  

    Other Estate Taxes Not Likely

    As you might know, and as I’ve talked about elsewhere, the current threshold for the federal estate tax is really high. It’s like $15 million under the new law, and that’s per person. So most people just don’t have to worry about a federal estate tax anymore. And Indiana abolished its inheritance tax, getting to be a long time ago now, you know.  

    Planning for Income Taxes

    So for most people, it’s kind of income taxes that they need to worry about, or income taxes for their beneficiaries. And so for a lot of people where the house is kind of one of the big assets in their estate, you’ve got to say, OK, well, what’s the tax consequences for my beneficiaries going to be if you use a transfer on death deed? You know, that’s probably the most common device, or pass it by will, or put it in a trust.  

    And the answer is usually there aren’t huge tax consequences for your heirs. And that’s because the step-up in basis adjusts your basis in the house or in the real property from your basis to whatever the value of the house is at the time of your death.  

    How Step-Up in Basis Works

    It helps to talk about an example. Let’s say you bought a house in 1990 for $100,000, and now it’s worth $400,000. If you were to sell the house right now, you would owe capital gains tax on the $300,000 in capital gains. That’s the $400,000 sale price minus the $100,000 of basis (the amount of money you put in to start with).  

    Now, there is an exemption from capital gains on the sale of primary residences, which is $250,000 per person or $500,000 for couples. So for most ordinary people, selling houses, they don’t actually have to worry about capital gains taxes.  

    But if you’ve held a property for a long time or it’s appreciated a lot, you know, maybe you’re getting kind of close to that, kind of close to that tax hitting. actually coming into play.  

    But the step-up in basis for the house would be if you have a transfer on death deed, you leave the same $400,000 house to your heirs, you die next year, sorry to hear it, your heirs have a $400,000 basis in the house. That means if your heirs inherit the house, it’s worth $400,000, their new basis is $400,000, and they sell it right away, they owe $0 in capital gains taxes, because there’s been no gain since that basis was stepped up, since it increased from your basis of $100,000 to the fair market value of date of death, $400,000.  

    So even if there were no capital gains exemption on the sale of a primary residence, your heirs usually don’t have to deal with capital gains taxes for an immediate sale.

    But the upshot of all of that is the step up in basis means inherited houses, inherited real estate is not going to be a huge tax problem for your heirs if they sell it right away.

    And that’s kind of good for heirs who aren’t planning to live in the house, because to get that exemption from capital gains taxes, they have to live there for at least two years. So for heirs who inherit a property and sell it right away, the step-up in basis means there’s $0 in capital gains taxes owed, and it doesn’t matter that they don’t get the exemption. If they don’t. (Obviously, they can move in and hold it, and that’s a new consideration.)  

    But the upshot of all of that is the step up in basis means inherited houses, inherited real estate is not going to be a huge tax problem for your heirs if they sell it right away.

    Step Up in Basis vs. Lifetime Gifts

    Obviously, if they hold it, different story, and, you know, This is one of the reasons, by the way —and this will be kind of my last topic, we’re coming up on five minutes— One of the reasons you need to think carefully before making a lifetime gift of your house or appreciated real property is because then you won’t get that step up in basis. So if you give the property away during your lifetime, the basis stays with it. But just a traditional transfer on death deed, will, trust you get the step up.  

    Okay, that’s all for today. It’s a complicated topic, obviously, but that specific question comes up enough. I wanted to answer it. I hope it’s been useful as an informational topic.  

    And if you are doing Indiana estate planning and probate, I’ve got offices in Indianapolis and Greenwood, and I’d love to help you out with your case. You’ve got my contact information on the website and here on the end screen, so goodbye for now. 

    Want to talk more?

    Book your initial planning meeting with Stautz Law and we’ll discuss your individual needs. No obligation.

    Book Now

  • Fixing Bad Wills

    Video

    Transcript

    (Auto-Generated)

    Good morning, folks. It’s attorney Andy Stautz at Stautz Law. I do Indiana probate and estate planning, and today we’re talking about fixing DIY wills or bad wills.  

    So our last video, which I just did, you know, 10 minutes ago, I was talking about how DIY wills go bad. You know, I said, Look, I’ve been seeing a bunch of probate estates where the family says, you know, here I’ve got this will and it’s a disaster, right? Like it’s not signed properly, it’s invalid, whatever.  

    Can you fix it?  

    Ounce of Prevention Worth a Pound of Cure

    So, start with the start. The best way to fix a DIY will or a bad will is to, while the person is alive, go get a new one written, by a professional, right? It’s way easier to fix problems before you die.  

    But let’s assume it’s too late, okay? The person passed, all that’s left is this handwritten will or bad will, you know, improperly executed will.  

    What can we do?

    Possible Solution #1: Family Settlement Agreement

    The easiest fix is a is a family settlement agreement, which is kind of a nickname for a statutory procedure in the probate code. So that’s Title 29, and then Section 9, I think. I’ll cite it in the transcript. [Statute is here: Indiana Code 29-1-9]

    And basically it says, You’re allowed to come to an agreement to compromise a controversy about the effect of a will. So you can use a settlement agreement that’s to say, we, the family members, we, the heirs, agree to treat this will as valid.

    Now, the problem with that is, or, you know, that’s great if you can do it, but it requires the consent of everybody involved. So everybody who would get something under no will and everyone who would get something under the new will, right? So if you’ve got a will leaving everything to Jerry, but the intestate heir is Sam, then, you know, Jerry can’t say, I agree to treat the will as valid, right? Sam and Jerry have to agree. Everybody’s got to agree. And that requires finding everybody, you know, making sure they’re okay with it.  

    So sometimes it’s possible, but sometimes it’s just not.  

    Possible Solution #2: Supervised Administration

    Another fix, if you can’t find everybody or everybody doesn’t agree, is to go for a supervised administration and then get a court order directing, you know, directing administration. So you can petition the court for a determination [These are in I.C. 29-1-6-5 and I.C. 29-1-6-6, for example] and say, you know, are we following this? Is this valid? You know, what should we do? It might not come out like you want, but that way at least you’ve got, you know, nobody gets in trouble for relying on a court order, right? Like it’s a great way to solve that.  

    Possible Solution #3: Disclaimers and Assignments

    And then finally, you know, you can do something similar to a family settlement agreement through disclaimers or assignments of interest, which are a little bit, are subtly different from each other, but both have the effect of someone giving up, right, their rights, either to an intestate share or under a will.  

    So sometimes you can use those to kind of either fix the will or achieve the same effect as the will intended, putative will intended. So, you know, if Oh, let’s say the intestate heirs are Sam and Jerry again, and the will leaves everything to Jerry. The invalid will leaves everything to Jerry. Well, if Sam says, you know, I give up my share, then Jerry gets everything. You know, that’s basically the same effect as the will by a roundabout way. But in all of these cases, right, we’re doing problem solving after the fact. We’re trying to make up in probate for what we could have done with, with proper planning ahead of time.  

    Recommendation: Do it Right and Avoid Problems

    Now I do both estate planning ahead of time, making the wills and probate after the fact. So for me personally, as a lawyer for my business, it doesn’t matter what you do, but I’m here to tell you doing the will right up front, you know, saves a lot of time and trouble. I don’t mind solving the problems later and it’s kind of fun. But it takes more work. It’s more expense to you and the other heirs.  

    So those are some ideas. There’s no legal advice here. That’s just kind of talking about what I’ve seen. If you need help with a problem, a probate problem, or fixing a will, call me. My contact information is on the end screen and you’re on my website. So take a look around and I look forward to working with you. Thanks. Bye.

    Want to talk more?

    Book your initial planning meeting with Stautz Law and we’ll discuss your individual needs. No obligation.

    Book Now

  • How DIY Wills Go Wrong

    Video

    Transcript

    (Auto-Generated)

    Introduction: Writing Your Own Will?

    Good morning, folks. This is Andy Stautz at Stautz Law. I’m an Indiana estate planning and probate attorney, and today I am here to talk about DIY wills and how they fail.  

    And this talk is prompted by my recent experience. I’ve had several estates in the past few weeks where there have been complications, expensive and unforeseen complications arising from a decedent who left a DIY will, right?  

    So these are people who thought, oh yeah, well, you know, I can write a will, I can do it myself, okay? And they fail in all sorts of different ways, but there are a few that are the most common.  

    Can You DIY a Will?

    So let’s start at the start. Can you write your own will? Yes, you can. Obviously, and there are now lots of websites online where you can download a will. It’s an option, it’s out there. But there are some traps. And I think you should, it’s worth paying a professional to do for you to make sure you don’t fall into one of these traps.  

    Problem #1: No Witnesses!

    So what am I seeing? What do I see? Number one, most obvious is the will was never witnessed. Okay? So if you just write on a piece of paper, you know, the house goes to Jerry and you sign it, that’s great. You know, hopefully your heirs will honor that. But they don’t have to. It’s not a valid legal document. We can’t present it to a court and say, this is his last will and testament because Indiana law requires two witnesses. [That statute is I.C. 29-1-5-3]

    Problem #2: Interested Witnesses

    Which brings me to the second obvious problem. A lot of times it’ll be, I leave my house to Jerry, signed, you know, Bob and Jerry. And it’s like, you can’t do that either, okay? A witness who’s interested, you know, the guy who gets stuff under the will can’t be a witness to that bequest. Okay, it doesn’t necessarily invalidate the whole will, but Indiana law makes an interested witness invalid as to the bequest, you know, as to the gift he gets. So giving the house to Jerry and signing by Jerry, that’s no good. [That statute is Ind. Code 29-1-5-2(c)]

    What are some other common problems? Those are probably the two most common.

    Problem #3: Vagueness, Ambiguity

    Vagueness is another common problem I see. It’ll say, you I leave my car to Jim and it’s, you know, maybe that writing is dated years ago. It’s like, okay, well, you know, which car? What are we doing here? And it’s a bigger problem for real property. I mean, a car, no big deal. But, you know, land records are more formal. The recorder has to accept the evidence that the transfer happens. So that’s another problem.  

    Problem #4: No Self-Proving Affidavit or Consent to Unsupervised Administration

    Finally, are things that aren’t necessarily like fatal to the will, but are annoying to the heirs who have to administer it. And probably the most annoying is, you know, no self-proving affidavit. So if you just sign the will with two witnesses, it’s valid. But to get it admitted to probate, one of the witnesses, one or more of the witnesses has to come forward and swear that it’s actually the will.  

    You know, you can avoid that — and all my wills, all professional wills avoid that by adding a self-proving affidavit to the end, which is just some magic words. But what it does is it excuses you from having to bring the witness back at time of probate. So just a little trick.  

    And finally, I’ve never seen a DIY will with a consent to unsupervised administration. But if you’ve got cooperative heirs, that little consent saves you like thousands of dollars in probate. Because it just, it lets you, it lets you use the unsupervised procedure, which is so much faster, so much easier. than supervised probate.  

    Conclusion: Save Time and Money, Do It Right the First Time

    So those are some common problems. There are more bizarre ones, but by far the most common is failing to properly execute it. And then the rest are subsidiary problems. So I think you should hire a professional if you’re thinking about getting a will done. It’s not that expensive. It’ll save you lots of money in the long run.  

    You know, I don’t care, I suppose, because, a messy probate is more expensive and that’s usually in legal fees. So it’s for your own good. Get a pro to look at it beforehand and save yourself trouble later. But that was just a quick talk about how these DIY wills go wrong and hopefully give you something to think about. Thanks. 

    Bye. 

    Want to talk more?

    Book your initial planning meeting with Stautz Law and we’ll discuss your individual needs. No obligation.

    Book Now

  • LLCs as Trust Substitutes!?

    Video

    Transcript

    (Auto-Generated)

    Hi folks, it’s Andy Stautz at Stautz Law. I am here today with the avant-garde of estate planning. I’m kidding. This talk is just kind of a thought experiment. It’s not informational. It’s definitely not legal advice. It’s just kind of a “what if?”  

    So you might have seen my talk a couple weeks ago about planning around LLCs. If you’re a small business owner or you’re self-employed, you’ve got an LLC, I talk about how you can. Put those in trust. Make them payable on death. You know, handle them in probate and just kind of how to deal with that.  

    Today. I want to float the idea that an LLC is a lot like a trust, and if you were really crazy I think you could use an LLC to do pretty much everything that a trust does.  

    Is an LLC the same as a Trust?

    Because think about it. OK, what’s a trust? A trust lets you separate legal and equitable title to property. And you give the trustee a set of instructions on how to administer the property for the benefit of the beneficiary, the beneficiaries.  

    OK, What’s an LLC? Well, an LLC is an entity that controls some property according to instructions that are in an operating agreement for the benefit of the beneficial owners. Who could be whoever.  

    Those are pretty analogous concepts. I mean, both are ways to hold property with instructions.  

    Reasons for Different Treatment in the Law

    Now trusts are specially favored in the law because, you know, we’ve got an elaborate trust code on how to create them, how to administer them, how to deal with situations where they’re not administered properly. How to change them if they’re not doing what you want to do, right? Lots of protections in the trust code. And. That kind of comes from. That comes from history, obviously. UM. But it’s not… Like… in an average smooth trust administration, do you need it? But the trust code is kind of a way of hedging around the fact that trusts are highly favored in the law, right? I’ve talked before about how trust is a legal fiction, right? There’s no reason the government needs to let you use a trust at all, much less use a trust to avoid probate, for instance.  

    Well, you know what? How is an LLC different? Couldn’t you in theory make an LLC have an operating agreement with succession terms in the operating agreement. Make the interest in the LLC transferable on death. And then at death, you know, you avoid probate because it’s immediately payable to your successor interests. Your successor operator knows what to do and follows the operating agreement, and then you use the corporate code, you know, running a business for the benefit of the shareholders, basically like you use the, the, the corporate fiduciary code. As a like enforcement mechanism, if you need it.  

    How is it different?  

    I don’t think so… That’s just a funny idea… I don’t seriously recommend that anyone try it, and if you came to my office asking for it. I’d probably say no. But it’s an interesting thought experiment.  

    It’s like, OK, what are we doing here? We are giving instructions. What do we want? We want the instructions to be followed. We want there to be an enforcement mechanism if it’s not, and we want to do it as privately as possible.  

    Practical Reasons NOT to Use an LLC as a Trust Substitute

    So the only advantage to using an LLC and having like this totally separate set of rules would be if you thought there was some advantage in… If there were like simplicity gains or cost effectiveness gains, right? Because people write their own LLC operating agreements all the time, most people would not dream of writing their own trust.  

    But then it’s like, OK, by the time you’ve got an LLC operating agreement sophisticated enough to be a trust substitute, it’s like, OK, you need professional advice anyway. And so that’s where you come back to: If you walk to my office and you want to plan using that instead of a trust, I probably won’t.  

    But it’s a fun idea. And I think I might be the only person kind of floating it, but it’s one way of thinking. It’s a lot and I hope it’s entertaining. And if you are an attorney and you do this, I would love to hear about it. And if you are a client or someone’s setting up your estate plan, and you either have done this or you’ve seen someone who does this, or you’re interested in trying it. I would love to hear. Because it sounds fun.  

    OK, that’s all. A goofy one for today, but reach out if you want to talk about it. This is not advice, this is a theoretical discussion. OK? That’s all for today. Bye now.

    Want to talk more?

    Book your initial planning meeting with Stautz Law and we’ll discuss your individual needs. No obligation.

    Book Now

  • To Do List for New Parents

    Video

    Editorial Comment

    This talk contains a LOT of references to estate planning concepts that you may or may not be familiar with. In order to keep it to a reasonable length, I didn’t explain every concept I mention. In the transcript below, I’ve tried to link out to my other resources on each topic. So you should be able to follow along and click through wherever you need more context!

    Enjoy!  

    Transcript

    (Auto-Generated)

    Hi folks, it’s Andy Stautz at Stautz. I’m back for a follow-up talk about an Indiana estate planning topic. So just before this, I recorded a talk on why new parents need a will. So you should watch that or read it. This follow up is more of a to do list. Like OK, what all is on your plate here in terms of estate planning?  

    Item #1: Get a Will

    OK so, you know, “get a will” is a pretty easy piece of instruction: either call an estate planning attorney or go to one of the do-it-yourself things and do it yourself. (At your own risks there.)  

    Item #2: Get your ancillary documents: POA, Healthcare, etc.

    Also, though, there are some other related things, so #2: think about your ancillary documents. So not the will itself, but you know, financial power of attorney, a healthcare advance directive, right? It makes sense to think about all of it at once and as one package. I’ve talked about those documents elsewhere. I’m not going to go through what they do right now.  

    Item #3: Talk About Your Values

    That’s one thing: to do a values conversation, right? When you’re doing planning, you need to talk to your spouse. And your children. I mean, obviously we’re talking about a situation where you’ve got a baby, so maybe not there, but you know, talk to your spouse. What do we want it to look like? You know, what are we worried about? What can we prevent? What are our values? End of life decisions. Worst case scenario decisions: who raises our kid if we’re gone decisions? You know. Make it a date night. Mom can drink again so you know, open a bottle of wine and sit down and talk about it. It will be good.  

    Item #4: Check Beneficiary Designations

    Other non-will, non-probate non-”other documents.” But just like getting your property affairs in order. So a big one is beneficiary designations on your retirement accounts. For a lot of young couples I know, for us, right, our brokerage account, you know 401(k), IRA, that’s the biggest single piece of property we’ve got. And if you’ve got a beneficiary designation, it’s not a probate asset. It’s not controlled by your will.

    So log on to your portal, your vanguard, your fidelity, whatever, and make sure it’s correct. Because some of those providers automatically, like, cancel your old designations if you get married or if you have a kid, but not all of them do so, so go check. Make sure it’s who you want it to be. You know, probably spouse as your primary, and then your backup might be, I don’t know, your parents, if they’re still living. You know, you can do it to a trust if you’re doing sophisticated planning, but we’re just talking like basics. Make sure it’s correct. Same thing with life insurance. If you carry life insurance.  

    Item #5: Figure Out How Your Assets are Titled

    And then the other thing would be, relatedly, organizing title. Make sure you know how you own things, so if you if one of you owned a house before you got married, you know, are you both on the mortgage? Are you both on the deed? What about your cars? Same thing. Because anything you own jointly with your spouse also avoids probate and just goes to your spouse. So you might want that, you might not want that. I’ve talked in other videos about how joint tenancies work and what they might do or not do.  

    How Much Work Is This?

    But just kind of, in my mind, when I tell new parents “get a will, you need a will,” it’s not just, you know, your three page document with your signature on it. It should be a good reminder to kind of, like, get everything in order, right? Just sit down and do it. Really. It might only take a few hours. Honestly like 2 hours maybe. Call an attorney. Hey, when do you have a consultation? next week? you go to that. That’s… call that one hour. And then you go home and you do your homework. And you fix all your beneficiary designations and you make a binder. Let’s call that another hour, and then you come back and then you sign the will and your documents. Right, like two hours, 2 1/2 hours.  

    And it will save you tons and tons of time and money and stress. UM. Whether or not you “need it,” right? It’s being able to sleep. It’s knowing. OK, my kids are fine. I’ve done what I can do to make that easy for them.  

    Conclusion: You’ll Feel Better, I Promise

    So that that’s kind of your list, you know, get the main documents, get the ancillary documents, fix your beneficiary designations, make sure you know how things are titled, and talk about it with your spouse and with, you know, if you’re designating a guardian like. Hey, would you raise my kids, if I’m gone, that kind of thing.  

    So do those things. It’ll feel good and you know, people are relieved to get it done and it’s the responsible thing to do so. Hope that makes it easier to kind of see. OK, that’s what you’re dealing with. That’s how long it will take. Don’t put it off. Alright, give me a call if you need help with any of that. I hope that was helpful. Bye for now.

    Want to talk more?

    Book your initial planning meeting with Stautz Law and we’ll discuss your individual needs. No obligation.

    Book Now

  • Why New Parents Need a Will

    Video

    Transcript

    (Auto-Generated)

    Good morning, folks. It’s Andy Stautz at Stautz Law. I am back today for another talk about Indiana estate planning. Today’s topic is why new parents need a will. And this is a topic near and dear to my heart, because a few weeks ago my wife and I welcomed our first child.  

    So we’ve recently redone our estate planning and lots of our friends are in similar spots. You know you’ve got kids, maybe new babies. Or maybe you’ve just been meaning to do it for a while. And it’s like. OK. Why is this on your To Do List?  

    So I’m going to go through the what I think are the the biggest, most salient reasons. There are probably others. But I’m thoroughly persuaded all new parents need a will. Why?  

    Reason #1: Avoid Leaving Property to a Baby

    Reason #1 as soon as you have a baby. Your baby is now a 50% intestate heir if you die. That means if you die without a will the day after your baby is born, your baby is entitled to half of your property, not your spouse. Well, your spouse gets half, but your spouse doesn’t get everything. Is what I mean.  

    A lot of people assume that their spouse is going to get everything. It’s not true. I made a video about that like a few weeks ago. So number one reason is to override the rules that you would get if you didn’t have a will.  

    And the reason you want to override those rules is because it’s really inconvenient for a child to get a bunch of property. I mean you need to establish a guardianship for that property. And you know, if one spouse is still living, it’s not necessarily a huge deal, but it’s probably not what you want, not what you want to be dealing with. You know your spouse is going to be having the worst time in their life, right? You don’t want to be there trying to like set up that stuff.  

    And if you were both to die, you really want to make some provision to avoid having your baby directly inherit a bunch of property, again because Guardianships are an absolute pain. And because when a guardianship ends at 18, it ends, and now you’ve got, you know, this young adult with no guidance at all.  

    So avoiding intestate succession, avoiding guardianship.  

    It Doesn’t Need to Be Complicated

    You know you can put a testamentary trust in your will, so you don’t need to do a full, expensive trust planning right now. You just need a back stop. Like OK worst case scenario. You know, we’ve got this will that says where the property goes and in the case of both spouses dying, you can set up a trust like in the wills themselves, an emergency last minute, here’s what it does. Again avoiding guardianship, putting some structure around the inheritance so that you’re not leaving your child with a mess or a lump sum inheritance or whatever.  

    Designating a Guardian for your Child

    And the other reason also related to Guardianships is. You should use the chance in your will to designate a “guardian of the person.” So who’s going to raise your child? You know, that’s the remaining spouse, but in the event of a common disaster you want to. If you’ve got, if you’ve got an opinion on who raises your kid, you probably do. You know, you should put it down there  

    So. Like I said, it doesn’t need to be complicated. I’m not saying every new parent needs to like. Come up with some complex plan. You know, do a trust administration, any of this. Just having a will to override the “half to kids” intestate succession half to spouse, half the kids just like. Having a will that says “all to my spouse.” It’s just a really important backup plan.  

    Is It Worth It? Expected Value of Having a Will

    And you know, we can, we can price out the expected value of that. You could say, OK, well, what’s the risk one of us dies while our children are minors. You know, whatever you think that risk is, if you’re an actuary, you can figure it out. What’s the cost? If we mess it up, we don’t have a will. OK, what does it will cost, you know, and I think it’s like insurance, right? It’s a backstop. It’s a worst case scenario plan. But the expected value is positive. You would be really glad you had it if you need it and hopefully you don’t.  

    Building Good Habits: Beat the Procrastination

    And lastly is you know it’s a start, right? For lots of people life events are triggers to start doing estate planning which they’re going to need to do at some point. And so it’s kind of good to have something down that you can revise later versus, you know, being older, having more complicated property and family affairs, trying to do everything for the first time. You know, you’re a grown up. Time to have an estate plan. It’ll save your family and loved ones legal trouble and emotional trouble.

    Conclusion  

    So that’s the pitch. Get it done. You know. Hire an attorney or or do it yourself, get something done. I think hiring a professional is worth it, but you know, cash is tight. That’s up to you. OK, that’s what I’ve got today. I think I’ll do a follow up on a “to do list” that includes more than just the will, because there are a couple of other things you want to do to make sure your property affairs are in order. That’s all for today. Thanks for watching. 

    Want to talk more?

    Book your initial planning meeting with Stautz Law and we’ll discuss your individual needs. No obligation.

    Book Now

  • Estate Planning for LLCs

    Video

    Transcript

    (Auto-Generated)

    Hi folks, it’s Andy Stautz at Stautz Law. I am back for another talk about Indiana estate planning topic. Today we’re talking about estate planning for LLCs: really, for owners of LLCS. And this is kind of becoming increasingly common for small business owners, self-employed people to have to have their business entity set up as an LLC and then needing to do their estate planning and kind of coming up with a way to do that.  

    What is an LLC Ownership Interest?

    So to start with the very basics: your interest in an LLC is an asset that you own, right? You have equity. If you go out and form an LLC for your company or to be an independent contractor or self-employed… when you form an LLC, you are the owner. Your 100% interest, that’s an asset, right?  

    And we can talk about what that’s worth, but it is worth something.  

    Does an LLC go through probate?

    And unless you do something special, it’s a probate asset. So that means when you’re doing your estate planning, you need to think about the LLC interest, just like a bank account or a house, right? You need a way to figure out who it goes to and how.  

    So if you’ve got a will… Well…. You know, usually your will is going to have a “residuary clause” that’s going to say “Everything else I own,” (you know, maybe you give away some tangible property and maybe you deed the house…) again, the residuary clause has “everything else I own, all my other probate assets are distributed such such such”  

    Do you want your LLC to go through probate?

    OK, so that would catch an LLC interest. But you don’t necessarily want to put your LLC through probate. You might not want to put anything through probate and have to deal with, while the probate estate is being administered, you know your personal representative has to handle either running the business if it’s going to be a continuing operation or winding it up.  

    That can be complicated, you know, no one knows your business as well as you do so. It’s a big ask for your representative.  

    Estate Planning for Your LLC

    So you should probably do some planning in advance.  

    One obvious way to do it, of course, is with a trust. You know you can put an LLC interest into a revocable trust.  

    You can also make an LLC interest at a payable on death, a transfer on death asset. So we’ve talked in the past about transfer on death deeds for houses, payable on death designations for bank accounts, you know, beneficiary designations on retirement accounts. You’re allowed to do that for an LLC interest as well, in Indiana. That’s in the section of the Indiana Code that deals with business associations. I think it’s Title 23. I’ll link it.  

    So one way you could potentially do an LLC administration is by making it transfer on death. That kind of depends on you having an operating agreement. UM, you know, some people like to have, like actual membership certificates to make that transition easier. That’s one option that keeps you away from trust based planning, if for some reason you wanted to do that.  

    Other Considerations: Succession Planning for LLCs

    As I was saying, you know, if it does, if your LLC interest does go through probate, your personal representatives in charge of keeping the business running or winding it up. You’re going to have the same issue if you transfer it on death, or if you put it in a trust, right? So a separate talk needs to be. OK, not only how do we avoid probate, if avoiding probate is what we’re going to do, [but also] how do we do this long? But also, you know, what’s the succession plan for continuing or winding up the business?  

    I think that should be kept for another day. Because that’s a big topic on its own. And that’s a topic that’s more strategy, personal desires and less, you know, legal details.  

    It’s easy enough to give enough power [to your trustee or personal representative] to get it done, it’s just thinking about what you want, how it should go.  

    That’s our overview for today. We’re going to leave it there. We’re at 5 minutes.  

    Conclusion and Key Takeaways

    And just as key takeaways: an LLC interest is an asset. It’s a probate asset if you don’t do anything else. You should look at putting it into a trust or making it payable on death if probate avoidance is part of your plan.  

    And then we’ll talk in future about how succession planning should work in general and you know, maybe a little more on how administration should work in those in those situations.  

    So hope you enjoyed that. It was just a brief overview. If you’ve got more questions, give me a call my phone number and website are right here at the end of the video and I look forward to hearing from you. Have a good one

    Want to talk more?

    Book your initial planning meeting with Stautz Law and we’ll discuss your individual needs. No obligation.

    Book Now