Estate Planning By Default

Posted by Joshua R. Cook, on May 2, 2016

According to a survey taken about a couple of years ago, a majority of Americans do not have a will.[1]  It’s probably on many people’s “to-do” list, but they may never get around to doing it.  Along with a will, there are many other helpful planning documents that a person can use to manage their affairs in the event they become unable to act or communicate – these types of documents are usually referred to as “advance directives”.  The following is a list of common basic estate planning documents, along with a short description of each document’s purpose:

  1. Will – Identifies the people that will receive a person’s property at death.  Names someone to serve as the “personal representative” – the personal representative is in charge of managing a deceased person’s affairs.
  2. Trust – A trust is a relationship where a trustee manages property for the benefit of the trust’s beneficiaries according to the terms of the trust, which are usually contained in a written document.  Under a typical revocable trust, the creator of the trust (known as the “settlor” or “grantor”) transfers legal title to property to another person (called the “trustee”) pursuant to a written document and retains the power to revoke and change the trust during life – the trust becomes the owner of the property.  Revocable trusts that are properly funded usually have some advantages over the traditional, court-involved probate process, including probate costs savings, faster administration, and increased privacy.
  3. Power of Attorney – Allows a person, called the “attorney-in-fact”, to act on someone else’s behalf with respect to a broad range of matters, such as financial and asset transactions.  In the estate planning context, the document is usually drafted so that the authority of the attorney-in-fact to act only becomes effective upon the person’s incapacity or disability.
  4. Healthcare Representative Appointment – Gives a person authority to act on someone else’s behalf with respect to healthcare decisions.  Becomes effective when a person is unable to act on their own behalf.
  5. Living Will – Requests that life prolonging procedures not be utilized to artificially prolong the dying process and permits a person, or their healthcare representative, to choose whether the person will receive artificially supplied nutrition and hydration after an attending physician certifies in writing that: (1) the person is in a persistent vegetative state or in a coma or has an incurable injury, disease, or illness; (2) the persistent vegetative state or coma is determined to be irreversible or incurable or death will occur within a short time; and (3) the use of life prolonging procedures would serve only to artificially prolong the dying process.  If life-prolonging procedures are desired, another form, called a Life-Prolonging Procedures Declaration, should be used instead of a living will.
  6. Funeral Planning Declaration – Names a person responsible for carrying out a deceased person’s desires for funeral services, ceremonies, and the disposition of the deceased person’s remains.  A person can specify their wishes in as much detail as they want or choose to leave the decisions to the named designee.

When someone does not have estate planning documents, Indiana law provides a default estate plan.  The following chart provides a brief, partial summary of the general results under Indiana law.

Who gets a person’s property when they die without a will?[JRC1]

The list is only a partial summary of the law – if there are no surviving beneficiaries, then the State of Indiana gets the property.

Not married:  descendants – 100%; if no descendants, then parentssiblings, and the descendants of deceased siblings (nieces and nephews)

Married without children: spouse – 100% if there are no surviving parents, 75% if there is a surviving parent; surviving parents – 25% if there is a surviving spouse, otherwise shares with siblings and the descendants of deceased siblings (nieces and nephews)

Married with children: spouse – 50% (can be less if the spouse is a second or other subsequent spouse who did not have children with the deceased person); children – 50%

If parents die without a will that nominates someone to take care of minor children, who gets custody of them?[JRC2] A court will select a person it considers best qualified to serve as guardian of the children – the court will base its decision on the best interests of the children.  When deciding who to appoint as a guardian, the following are some people the court will consider in the order listed: (1) a person nominated by the will of a deceased parent, and (2) anyone related by blood or marriage with whom the children have resided for more than 6 months.
Who can make medical decisions on a person’s behalf if they are unconscious or can’t communicate?[JRC3] A guardian or judicially-appointed health care representative, or if none, then a spouse, parent, adult child, adult sibling, or religious superior.
Who manages a person’s affairs if they become incapacitated?[JRC4] A court-appointed guardian.  When deciding who to appoint as a guardian, the following are some people the court will consider in the order listed: (1) spouse, (2) adult child, and (3) parent.
Who can make funeral arrangements?[JRC5] In order of priority: (1) spouse, (2) adult child, (3) parents, and (4) sibling.

Under the default estate plan outlined above, some people may think that they do not need estate planning documents, which is true – the law provides a default mechanism to resolve a situation, whether it be determining who should take custody of minor children when their parents both die unexpectedly or who has the right to make funeral and burial arrangements for a deceased person.  However, going to court to resolve an issue or conflict among competing family members can be very stressful, expensive, and time consuming.

[1] Eisenberg, Richard, Americans’ Ostrich Approach to Estate Planning, (referring to a survey by Rocket Lawyer) (last accessed March 8, 2016).

 [JRC1]IC 29-1-2-1

 [JRC2]IC 29-3-5-5

 [JRC3]IC 16-36-1-5

 [JRC4]IC 29-3-5-5

 [JRC5]IC 25-15-9-18; IC 29-2-19-17

**Reiling Teder & Schrier, LLC is an Indiana Limited Liability Company. The information contained in this website has been prepared by Reiling Teder & Schrier, LLC for informational purposes only, and is not legal advice. The information on this website should not be relied upon to make any decision, legal or otherwise. If you have any specific questions or inquiries regarding any of the information contained in this website, you should consult with an attorney licensed in your state. The information contained in this website pertains only to matters of Indiana law and the laws of other states may be completely different from the laws of the State of Indiana.