Passing the Baton

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Most people think once in a while about the inheritance that they will leave for others. Some people assume that their wealth will transfer to their family members smoothly and other people believe that they must make detailed plans. To some extent, both ideas are true.

State laws cause wealth to pass to a deceased person’s nearest relatives. If a person wants wealth to pass to a nonrelative (such as a stepchild or a life partner who is not a spouse), the person must make a last will and testament, a trust, or other asset transfer device.

Estate plans do not always guarantee that wealth transfers will conclude smoothly or correctly. Basic problems that interfere with planned wealth transfers include:

  • lost or misplaced assets
  • expenses that consume assets
  • asset transfer challenges by family members
  • burdensome asset transfer procedures

You might think that lost or misplaced assets would not be a problem, but the Indiana Attorney General’s office reports that IndianaUnclaimed.gov has already returned unclaimed assets to people worth more than $15,000,000 in 2016. Such assets include stocks, bonds, bank and investment accounts, and life insurance policies that deceased peoples’ family members did not know existed. Basic record-keeping and clear communication to family members about financial matters would eliminate that problem for most people.

Some asset-eating expenses, such as rising medical and nursing home costs are unavoidable for most people. Even in the worst cases, however, savvy estate planning can improve a family’s asset protection prospects. A proper power of attorney (most powers of attorney have hidden defects) enables a disabled person’s family to conserve assets during his or her health crisis. A nursing home resident’s spouse can salvage assets for the family in case he or she dies before the nursing home resident by making a will that protects assets in a trust instead of leaving everything to the nursing home resident.

We have written extensively about planning to minimize family estate battles on our blog at HawkinsLaw.com. If a person’s family members do not get along with each other well, a sloppy estate plan or an unplanned estate may throw fuel on the fire. It is better to plan carefully to head off the battle than to allow wealth transfers to destroy a family.

Some assets are difficult to transfer. For example, a retiree that has stock certificates issued by a former employer must coordinate with a national bank or other financial institution to get a Medallion signature guarantee certificate before transferring ownership of the stock. Most small towns lack banks or financial institutions that participate in the Medallion program. When a person dies owning such assets, the stock transfer process often consumes many hours and thousands of dollars to transfer the assets to the deceased person’s family. Careful estate planning can eliminate most of the asset transfer red tape.

Family wealth transfer is similar to a relay runner’s passing of the baton in a relay race. Champion relay teams plan and prepare for the transfer process so that each runner can maintain a full stride without dropping the baton. Likewise, a person can pass assets to the next generation as smoothly as possible without dropping the baton by carefully planning the transfer.

Jeff R. Hawkins and Jennifer J. Hawkins are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers and active members of the Indiana State Bar Association and National Academy of Elder Law Attorneys. Both lawyers are admitted to practice law in Indiana, and Jeff Hawkins is admitted to practice law in Illinois. Jeff is also a registered civil mediator, a Fellow of the American College of Trust and Estate Counsel and the Indiana Bar Foundation;  a member of the Illinois State Bar Association and the Indiana Association of Mediators; and he was the 2014-15 President of the Indiana State Bar Association.

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