Married – Estate Planning Guidelines
Thank you for allowing us to assist you with your estate planning. We hope you understand and will greatly benefit from your use of the estate planning documents you purchased through our virtual law office.
Although you purchased documents from our online self-help website, we want to make sure that you are aware of a few additional steps you might want to take as part of your estate plan. Specifically, we hope you consider changing your beneficiary designations on life insurance, bank accounts, retirement plans, and other accounts and products not directly governed by your estate planning documents. Below are some general guidelines and suggested language for your use in this regard. Please be careful and select the instructions that apply to your particular circumstances.
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Beneficiary Designations for Life Insurance and Retirement Plans
In order to add further flexibility to your estate plan, it is advisable that you name the Family Trust under your Will as the contingent beneficiary after your spouse (who would be the primary beneficiary) of your life insurance policies. This enables the surviving spouse to disclaim life insurance proceeds to the Family Trust if circumstances would make funding the Family Trust beneficial. Specific examples regarding how you may wish to name beneficiaries follow:
Primary Beneficiary: [spouse-full name]
Contingent Beneficiary: Trustee(s) of the Family Trust under the Last Will and Testament of [your-full name]
With respect to your retirement plans, it is advisable that you name the Descendants’ Trusts under your Will as the contingent beneficiary after your spouse (who would be the primary beneficiary) of your retirement plans. Specific examples regarding how you may wish to name beneficiaries follow:
Primary Beneficiary: [spouse-full name]
Contingent Beneficiary: Trustee(s) of the Descendants’ Separate Trusts, for the benefit of my descendants by right of representation, under the Last Will and Testament of [your-full name]
Beneficiary designations for retirement plans often differ from those for life insurance because retirement plan distributions are generally subject to income tax to the recipient upon receipt while life insurance distributions generally are not subject to income tax.
When your children attain an age at which you believe they would properly manage any assets left outright to them, you may wish to consider naming them directly as contingent beneficiaries of any retirement plans as this would simplify the distribution or transfer of the retirement funds and may result in more advantageous tax treatment.
Please note that the above examples for making beneficiary designations may not be compatible with the particular standard forms provided by your human resources department/insurance company/financial institution/etc., or may not be permitted under their particular rules or policies. We have not researched the existence of such limitations and are not specifically advising you regarding such issues. Doing so would require an additional engagement with us as it may be necessary to draft around specific policies and/or to seek specific approval before submitting the beneficiary designation. Please consult with your human resource representative/ financial advisor/insurance agent/etc. regarding the existence of such limitations, and contact us if you decide additional assistance is required.
We will be relying on you to change your beneficiary designations. However, if you have questions, please feel free to purchase a 30-minute (or more) phone consultation with one of our attorneys.
Conflict of Interest Disclosure
It is customary for a husband and wife to employ the same attorney or law firm to help them plan their estates. It is important for you to understand that matters that one of you might discuss with an attorney may not be protected by the attorney/client privilege from disclosure to the other.
The Attorney’s Rules of Professional Conduct prohibit an attorney from agreeing with one of you to withhold information from the other. Anything either of you discusses with an attorney is privileged from disclosure to other parties. If both of you have a difference of opinion about your proposed estate plan, an experienced estate planning attorney can point out the pros and cons of those different opinions. However, the Rules prohibit the lawyer from advocating or favoring one of your positions over the other.
Although unlikely, if conflicts arise between you which in an attorney’s professional judgment makes it impossible to perform his/her duties to both of you as stated in this letter, the Rules of Professional Conduct require the attorney to withdraw as your joint attorney and to advise one or both of you to obtain independent counsel.
Gifts of Tangible Personal Property
Your last will and testament permits you to leave some or all of your tangible personal property, not otherwise specifically disposed of by your last will and testament, to beneficiaries named after the signing of your last will and testament. In order for such gifts to be binding under Indiana law, they must be set forth in a writing that is signed by you and describes with reasonable certainty the items and the beneficiaries to whom such items pass. The term “tangible personal property” does not include tangible personal property used in a business, and that term is more specifically defined in the definition section of your last will and testament.
Although making a gift in this manner is legally binding, we recommend that such gifts not include items of material economic value. While this method of making gifts is convenient, you should note that a bequest made without the assistance of legal counsel bears a greater risk that your wishes will not be fulfilled.
Assets Passing Outside of Will
Not all of your assets will pass pursuant to the instructions set forth in your last will and testament. Certain assets will pass by other means. For example, life insurance proceeds, annuity proceeds and retirement plan assets pass pursuant to beneficiary designations and jointly owned assets generally pass to the surviving joint owner(s). So that your goals are met, it is important that you consider how such assets would pass to your beneficiaries in the event of your death. With respect to the jointly held assets, if it is not your intention that your interest in a particular jointly held asset pass to the surviving joint owner(s), you should not own the asset in that manner.
Included in your estate plan are instructions that give your surviving spouse the right to disclaim to a Family Trust part or all of the assets given to him or her. The value of assets passing to the Family Trust, if any, will be determined by your surviving spouse. With respect to the assets passing outright to the surviving spouse, the surviving spouse will be free to dispose of such assets as he or she desires. Planning with a disclaimer feature gives your surviving spouse the flexibility to adjust your estate plan to respond to changed circumstances involving your family, your assets or the applicable tax laws.
A feature of the Family Trust is that at the surviving spouse’s death the remaining undistributed trust assets pass to the named remainder beneficiaries. The remainder beneficiaries are determined at the time of your death and cannot be changed by the surviving spouse after your death. However, the remainder beneficiaries will receive only the assets that have not been distributed to the surviving spouse during his or her lifetime. It is possible that most or all of the assets of the Family Trust will be distributed to the surviving spouse during his or her lifetime, leaving few or no assets for the remainder beneficiaries.
The surviving spouse may serve as the trustee of the Family Trust and will have the discretion to make distributions to himself or herself. There is no requirement that the surviving spouse have access to the income or principal of the Family Trust or serve as the trustee in order to accomplish the desired tax planning. Naming the surviving spouse as the trustee of a trust under which the surviving spouse is a beneficiary could limit the asset protection features available to such trusts under state law.
Annual Review of Your Estate Plan
You should reevaluate your estate plan on an annual basis to determine if changes are appropriate in light of changes in your economic situation, family or health, or changes in the law. Many of our clients re-execute their estate planning documents on an annual basis, in order to: (1) confirm that their plan addresses any changes they have experienced over the prior year; and (2) reaffirm their testamentary intent, thereby making it more difficult for disgruntled relatives to challenge their wills in court. We would be happy to assist you, if you need and request that help.
In order to make this annual review process simple and cost-effective, our law firm offers a simple, inexpensive service: Estate Planning Assurance Plan (link). If you would like us to help you determine whether or not you need to make changes to your estate plan, you may simply let us know by purchasing our Annual Update & Assurance Plan below.
I would like one of the attorneys at GRIFFITH LAW GROUP LLC to help me determine whether I need to revise my estate planning documents.
Otherwise, it is your sole responsibility to monitor and review your estate plan on a regular basis, particularly when your circumstances change through such events as a birth or death of a loved one, divorce, remarriage, major illness or injury, and the like. Should you desire to revise or revoke your estate plan in any manner, you should consult with a knowledgeable estate planning attorney before doing so.
Should you have other questions or need other services, please let us know how we might be of help to you.