OCTOBER 2021
CURRENT ISSUES IN THE AREAS OF ESTATE, TAX
AND PERSONAL AND BUSINESS PLANNING
The information that follows summarizes some of the current issues in the areas of estate, tax and personal and business planning which may be of interest to you. Although this information is accurate and authoritative, it is general in nature and not intended to constitute specific professional advice. For professional advice or more specific information, please contact my office.
Right To Make Funeral Arrangements. Indiana law specifies a detailed list of individuals who may control the disposition of a decedent’s body and make arrangements for funeral services. At the very top of the list is a person granted authority in a funeral planning declaration. Following that, the people who can make decisions and the order listed are: an individual specifically granted authority in a power of attorney or health care advance directive; the surviving spouse; a surviving adult child, or if more than one, a majority of the adult children; the surviving parent or parents; a surviving sibling, or if more than one, a majority of the surviving siblings; an individual in the next degree of kinship under Indiana law; if there are none of the foregoing persons available or willing to act, then a stepchild of the decedent, and if more than one, a majority of the surviving stepchildren; a person appointed to administer the decedent’s estate; and last, any other person willing to act and arrange for the final disposition of the decedent’s remains, including a funeral home that has a valid prepaid funeral plan in place as long as the funeral home attests in writing that a good faith effort has been made to contact any living individuals described in the foregoing order. Effective July 1, 2021, a court-appointed guardian was added to the hierarchy of persons who could authorize burial or cremation, etc., but a court-appointed guardian is now in the seventh position, well below the surviving spouse and adult children. Many conflicts arise when a person does not have a power of attorney or a health care advance directive in effect. Even if a person has had a guardian appointed over him or her, if there are children involved, and the children will not assist with the process of making arrangements, or if they disagree, then the funeral home will not rely on the decision of the guardian. If there is no surviving spouse who has the ability to decide, a guardian or representative of the spouse may not be able to act in the spouse’s place. My advice to my clients is that every person should have a power of attorney and every person should have a health care advance directive. If a client has funeral preferences, whether formal arrangements have been made or not, those preferences should be clearly expressed, preferably in writing, and communicated to important family members and in particular the designated attorney-in-fact and health care representative. If there is any question whether a person’s wishes will be given effect, a client should consider signing a funeral declaration. A copy of that funeral declaration should be provided to specific family members and in particular those designated to make funeral decisions and anyone designated under a power of attorney or a health care advance directive.
Changes In Health Care Advance Directives. Effective July 1, 2021, a new form of health care advance directive can be executed in Indiana which will eliminate the need for a living will. Indiana’s various laws relating to health care decision making were somewhat convoluted, although when implemented properly and when appropriate documents were put in place, health care decision making by a surrogate in Indiana could be accomplished effectively when proper guidance was given regarding the decisions to be made. Living wills were misunderstood by almost everyone. Most people thought that a living will was the principal document for end of life decisions, which was not true – a living will had no legal effect unless a person was terminal (i.e., death was a virtual certainty within a very short period of time), and even then it only applied if there was no one who could make decisions regarding the withdrawal or withholding of life-sustaining treatment. Consequently, a living will was a document of “last resort.” It was very important to include guidance in a power of attorney for health care and appointment of health care representative instrument documenting who was to make decisions and what decisions should be made in particular circumstances. Indiana’s new health care advance directive legislation makes it very clear that one document can now control all health decision making. Health care advance directives executed prior to July 1, 2021, are still effective, but people who have signed old documents, particularly many years ago, should consider signing a new health care advance directive that articulates a person’s current wishes and which gives clear guidance regarding the decisions that should be made. It should be very clearly indicated whether artificial nutrition and hydration is appropriate in particular circumstances, whether treatment for a reversible secondary condition (such as an infection) is appropriate if not necessary for comfort and if the primary effect is to prolong the dying process, whether resuscitation and defibrillation is appropriate in certain circumstances, and whether pain-relieving medication is appropriate even if the use of that pain-relieving medication could have the effect of hastening death. It is important for people to realize that such “guidelines” are merely that, i.e., they are intended to provide guidance to the decision maker. The decision maker will make the ultimate decision based on what he or she feels is medically appropriate and in accordance with the person’s wishes for whom the decision is being made.
Importance Of Language To Bequests. Suppose a testator in a will bequeaths a specific vehicle to a family member or friend. If that vehicle does not exist at the time of death, then the doctrine of “ademption” would effectively revoke that bequest. Consequently, if a testator wants a bequest of a vehicle to be satisfied from any vehicle which exists at death, the will needs to say that. Suppose the bequest is of a specific sum of money to be paid out of the proceeds from the sale of certain capital stock and that stock is not owned at the time of death – in one case, the court found that the decedent’s intention was that the bequest should be satisfied from the general assets of the estate when that may or may not have been the testator’s specific intention. Similarly, a bequest of “my jewelry” will likely be satisfied from the jewelry which exists at death even though that jewelry may not have been owned at the time the will was executed. It is very important for gifts set forth in a will or trust to be very specific in regard to whether or not those gifts should be satisfied in particular circumstances. The same considerations apply to both wills and trusts, since a trust is typically a substitute for a will and often will be used in tandem with a “pourover” will as a means of satisfying gifts of property while avoiding the probate process. People make a very serious mistake when they write their own wills or use online services. One major mistake that they make in such circumstances is that proper consideration is not given to beneficiary designations for life insurance or retirement accounts, with the result being that substantial assets do not pass in accordance with the specific wishes as may have been set forth in a will or trust.
Additional Information. Future issues of this Newsletter will address other issues of current interest. Please contact my office with any questions that you might have.