Estate Planning: Avoiding Confusion
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Many people who think of “probate” or an “estate” think of heirs arguing over a deceased person’s wealth. Thankfully, most estates are not contested and they lack Hollywood-style drama. Estate disputes usually involve unclearly worded wills or inconsistent statements about estate plan intentions from the deceased person to family and friends during his or her life. Usually, a good estate plan eliminates ambiguity and confusion.
Bank accounts cause tremendous headaches because people deal with them without thinking about consequences and without discussing them with an estate planning lawyer. Common problems with bank accounts include the following:
● adding some, but not all, beneficiaries to the account, and
● adding someone to an account to be able to sign checks.
The problem with putting someone’s name on a bank account is that state law treats the name on an account as an important indication of ownership. Generally speaking, Indiana law provides that each person shown on an account is a “party” with full right to withdraw all of the funds and receive ownership of the funds when another party dies. In Illinois, if the account owner does not clearly indicate why other people are added to an account, lawsuits can arise to argue whether the original owner intended the other people to receive the funds after the owner’s death or merely be people who were supposed to help the owner take care of the account during the owner’s life.
If a person’s will or trust leaves assets to several beneficiaries, but his or her accounts name beneficiaries inconsistently with the will or trust, the inconsistencies can leave an estate plan underfunded. An underfunded will or trust can make it impossible for a person’s executor or trustee to pay bills and finish the business of the person’s estate administration. This kind of confusion can cause painful hardship and disagreements that can divide families tragically.
A well-organized plan that provides clear and consistent direction with relatively simple and inexpensive legal work prepared by an estate plan attorney. Estate planning lawyers use several tools for assets transfers after the client’s death. The best known tool is a last will and testament. Other tools include trusts and asset ownership systems with “POD” (pay on death) or “TOD” (transfer on death) beneficiary designations. The key to a good plan is to use the right tool to help manage a client’s assets in ways that accomplish the client’s goals. The client’s job is to make goals and the lawyer’s job is to plan to help the client achieve the goals through the estate plan.
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Jeff R. Hawkins and Jennifer J. Hawkins are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers. Jeff is a Fellow of the American College of Trust and Estate Counsel and the 2014-15 Indiana State Bar Association President . © Copyright 2014 Hawkins Law PC.
