Riley Bennett Egloff Magazine January 2019 | Page 17

you choose. A trust allows you to control the conditions
upon which your children receive the property you leave
them and avoids leaving money or other assets to your
children (regardless of age) if they are not ready or capable
of managing such assets on their own. A trust can also be
used to avoid certain issues created by leaving money to a
minor (including the need for a court to appoint a financial
guardian with cumbersome and often expensive court
reporting requirements) and to provide for a child until he or
she receives his or her inheritance at an age selected by you
(at least 18 and often older). Proper planning also allows
you to document your desires (which are almost always
determinative) as to the person(s) who will be appointed to
raise your minor children. Without such a designation, one
or more family members may file and pursue (and fight over)
being appointed guardian over minor children.
Married couples often have the misconception that the
surviving spouse will automatically receive the assets of the
first spouse to die. If you do not have a Will or Revocable
Trust, however, your surviving spouse is unlikely to receive
all of your individual assets. For example, in Indiana, if you
die without children but at least one of your parents survives
you, your spouse will only receive a portion (likely 75%) of
your individually-owned assets, with the remainder going to
your parents. Or, if you die with children, there will be a
split of individually-owned assets between your surviving
spouse and your children (regardless of age). Unmarried
couples will generally not receive any of the individually
owned assets of the first of them to die, making planning a
necessity for those couples. Planning for spouses, partners
or significant others can avoid these unintended results.
Generally, a Will or Trust will not affect the transfer at
death of assets jointly owned with a survivorship interest
in another and those assets left by a beneficiary designation
(such as a life insurance policy or IRA or other retirement
accounts). However, the planning process is an excellent
time to review your designations to ensure they are up to
date and meet your wishes.
Planning in a Second Marriage.
Most second or subsequent marriages have some
combination of ‘his’, ‘her’ and ‘our’ children. For couples
in these marriages, especially those where children are
involved, estate planning is even more critical to ensure that
the surviving spouse and all children and families involved
are provided for. These couples must consider and find a
balance that addresses the often competing interests of taking
care of a surviving spouse while ensuring that any children
of either spouse are adequately provided for at the time of
the first spouse’s death and after the death of the survivor.
Without proper planning, all assets of one spouse could pass
to the surviving spouse who could, intentionally or even
unintentionally, leave those assets to only the survivor’s
children and/or a new spouse upon their death, with nothing
going to the children or family of the first spouse to die.
Planning in these situations often involves some combination
of a trust, life insurance, and other planning tools that ensure
the surviving spouse, all children involved, and other family
members of each spouse are provided for in the manner that
the couple chooses.
Tax Considerations.
Tax planning is no longer a primary consideration or even a
concern for most individuals who engage in estate planning,
especially for residents of states like Indiana that do not have
an inheritance tax. This is because the recent Tax Cuts and
Jobs Act of 2017 has nearly doubled the already significant
lifetime gift and estate tax exclusion to $11.4 Million per
person for 2019, so the vast majority of estates are not subject
to federal gift and estate tax. This lifetime gift and estate tax
exclusion, which will adjust for inflation until it sunsets in
2025 (unless extended by Congress), is in addition to the
unlimited marital deduction, which allows you to leave an
unlimited amount of property to your surviving spouse tax
free, and the annual gift tax exclusion, which in 2018 will
enable you to gift up to $15,000 per donee of your choosing.
For those individuals with assets whose value approach or
exceed this increased exclusion amount, estate planning is
necessary and needs to take into account tax considerations.
For tax determination purposes, the calculation of one’s
gross estate generally includes the value of beneficiary-
designated assets such as life insurance policies and
retirement accounts. Many of our clients are surprised by
this, especially concerning life insurance proceeds, an asset
generally understood to be ‘non-taxable’, which is likely
true with respect to income taxes but not for establishing
the amount of your gross estate subject to gift and estate tax.
Aside from the total value of an individual’s assets, there
are certain types of assets you may own that require tax-
specific planning and other matters that could make taxes an
essential consideration in preparing your estate plans.
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