Over the course of your life, as scary as it might sound, various people might have control over your financial affairs. This type of control could be welcome, as you might have important issues to contend with but would rather someone else handle those issues on your behalf. Other times, such as during incapacity or when you are a minor, you might have no control over your assets. Here’s how you know who is controlling your affairs.
Gaining Control Of Your Assets At The Age Of Majority
When you are a minor, the person who has control over your assets is the person who has legal custody of you – which in most cases is your parents. More formally, the custodian of your assets is responsible for the safekeeping and possible investment of those assets for your benefit. Being of age refers to the age of majority, which is when you are an adult and gain legal rights. This includes the right to sign contracts, consent to medical treatment, invest your money, join the military and vote.
The age of majority in Indiana is 18. When you are at the age of majority in Indiana, then you typically have the right to control your assets. However, if you have a Uniform Transfers to Minors Act (UTMA) account in Indiana, then the age of majority is 21. However, there are exceptions to this UTMA rule if you meet certain conditions (e.g. the transferor is indebted to you, or there is no custodian, or you receive probate property valued at less than $10,000), in which case, you can access UTMA funds as long as you are 18 years of age.
Until the age of majority (or your emancipation), you are not legally allowed to own property. Note that if you are the beneficiary of a trust, then you might receive distributions from that trust under the age of majority. Some or all of those assets might be placed into a custodial account.
People Who Control Your Assets
Those who are responsible for controlling your assets are known as fiduciaries and might include a custodian, trustee, financial professional, attorney-in-fact, guardian, executor or an attorney. Here’s more on these positions:
Custodian. As eluded to above, a custodian is someone who has legal custody of a child. Legal custody doesn’t just include controlling the child and providing for them, but it also includes controlling the child’s finances. A custodian can place your assets in custodial accounts (e.g. UTMA) which are held at financial institutions. Your custodian is responsible for your assets until which time you reach the age of majority and take over.
Trustee. A trustee is responsible for managing and distributing assets held in trust for beneficiaries. You might be a beneficiary of a trust and be set up to receive distributions according to the trust’s terms. With some trusts, the trustee has broad discretion and can freely distribute assets to you, while with other trusts, the trustee only distributes assets to you under strict guidelines. For example, you might be a beneficiary of your parent’s trust in which you receive income from the trust yearly but are unable to access the underlying principal until you are at a certain age which could exceed the age of majority. Relatedly, you might create a trust to manage and distribute your trust assets at your incapacity or death. In that case, as the trustmaker (or grantor), you could establish what type of control applies to your assets. You might even be your own trustee.
Financial Professional. You could do what millions of working Americans do every year and place your assets with a financial advisor, securities broker or asset manager. These types of financial professionals all deal with financial transactions but serve slightly different roles. An advisor is mainly responsible for making investment recommendations. A securities broker is principally responsible for trading securities at your direction or with the use of discretion. An asset manager is typically someone who invests assets on your behalf, taking full control for those assets that are under their responsibility.
Attorney-In-Fact (Agent). When you are an adult, you can establish a power of attorney where you nominate someone known as an attorney-in-fact to control your assets whether at your incapacity or right away. You can allow the attorney-in-fact to make all sorts of decisions relating to your assets including establishing bank and investment accounts, creating trusts, investing money on your behalf, buying and selling real estate, and applying for financial benefits such as Medicaid.
Guardian. If you are incapacitated, then the court might appoint a guardian to manage your care, your assets, or both. Notably, if you are the incapacitated person, you could permanently lose some of your rights including the right to manage your money. In cases of guardianship in Indiana, a person who is appointed your guardian of the estate by the court will gain legal control over your assets for your benefit. In many cases, effective estate planning avoids costly guardianship proceedings.
Executor. Your last will and testament, which you can create if you are 18 and of sound mind, will identify who receives your assets at your death. After you die, your executor or executrix is responsible for carrying out the instructions of your will. Specifically, through a court-supervised process called probate, the executor gathers your assets comprising your estate, pays lawful creditors and tax authorities, and then distributes any remaining assets to beneficiaries.
Hiring An Attorney
Attorneys come into the picture in many ways when it comes to finances. First of all, attorneys sometimes fill the role of custodian, advisor, attorney-in-fact, trustee, and even guardian. Secondly, attorneys create many of the documents which bring these positions of authority to life. An attorney can craft an estate plan for you so that you can dictate who is in charge of your financial affairs at your incapacity and death. With a proper estate plan, you can avoid unnecessary litigation, taxes and family strife relating to your assets.
Hawkins Elder Law has decades of experience helping clients with estate plans that are tailored to their needs and which provide for the effective management and distribution of their assets. Founders Jennifer J. Hawkins and Jeff R. Hawkins are Board Certified Indiana Trust and Estate Lawyers, certified by the Trust and Estate Specialty Board. Reach out to Hawkins Elder Law today by calling (812) 268-8777 or by contacting us online.
About the Authors
Jeff R. Hawkins and Jennifer J. Hawkins co-author this blog with Thomas E. Hynes, a lawyer admitted to practice in Pennsylvania, New Jersey and Florida who has a background in estate planning and elder law. Jeff and Jennifer are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers. They are also active members of the Indiana State Bar Association and the Indiana Chapter of the National Academy of Elder Law Attorneys (NAELA). Jeff is also a member of the Illinois NAELA Chapter.
Jeff is a Fellow of the American College of Trust and Estate Counsel and the Indiana Bar Foundation. He is also a member of the Illinois State Bar Association. He served as the 2014-15 President of the Indiana State Bar Association, and he is a registered civil mediator.
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