So the Bank says you need "Letters Testamentary"...

The following scene is commonplace: a grieving, surviving loved-one goes to the bank to collect funds from a decedent's bank accounts, only to be told by the banker that it's necessary to obtain Letters Testamentary (or Letters of Administration). If you've never gone through the process of administering the estate of a loved-one, you probably have no idea what these documents are, or how one goes about obtaining them.

Here are some quick answers:

Letters Testamentary:

Letters Testamentary are simply a (usually) one-page document issued by the Clerk of the Probate Court of the county in which the decedent resided, stating that the Probate Court has appointed the person bearing the Letters as the Personal Representative (or Executor) of the decedent's estate. These are issued when the decedent has passed leaving a validly executed Last Will and Testament (hence the term "Letters Testamentary.")

Letters of Administration:

Letters of Administration are very similar to Letters Testamentary, and perform the same function, but are issued by the Clerk when the decedent passes away without leaving a validly executed Last Will and Testament, and the Personal Representative is left to administer the estate not pursuant to the terms of a Will, but instead pursuant to Indiana's laws of intestacy.

How does one obtain Letters?

A prospective Personal Representative or Executor should quickly contact an experienced estate attorney to prepare the necessary pleadings to file with the appropriate Probate Court. The attorney will prepare a document called a "Petition" asking the Probate Court to appoint the client as a Personal Representative or Executor. Sometimes, depending on the county, both the client and the attorney will be required to appear before the Judge or Probate Commissioner. If the Petition is approved, the Court will then, enter an Order appointing the client as the Personal Representative of the estate. The Court's Order should also include instructions to the Clerk of the Court to issue the Letters Testamentary or Letters of Administration.

The main point to take away is that when it becomes clear that "Letters" are necessary, it is important to contact an estate attorney so that you can be adequately advised and represented before the Probate Court that must enter the Order to appoint a Personal Representative and issue the "Letters."

If you need representation in obtaining Letters Testamentary or Letters of Administration, or simply have questions regarding these or other estate administration or estate planning issues, please feel free to contact me at (317) 575-8222, or visit our website for more information.

How do I get a Power of Attorney?

In this entry I'll attempt to address some common questions regarding Power of Attorney documents, as there seems to be a vast sea of misinformation about them confronting the general public.

I often get calls with the question: "How do I get Power of Attorney for my mother/father?"

What has usually happened is that mother or father is either in failing health, or has started exhibiting signs of dementia or other loss of cognitive abilities, and son or daughter is attempting to manage the parent's financial affairs.

First, to answer the initial question, a Power of Attorney must be granted by mother or father to the person designated as the "attorney-in-fact," through a validly executed Power of Attorney document drafted by qualified counsel. You can find additional information about the different types of Power of Attorney documents and their benefits at our website, at www.halcombsingler.com. However, this answer raises follow-up questions of its own:

1. Does mother/father currently possess the necessary mental competency to execute the document?

2. Does mother/father truly understand the implications of granting Power of Attorney? When, and to whom, does he or she feel comfortable granting that authority?

Mental capacity:

It's important to note that when an attorney drafts and prepares a Power of Attorney document, it must be after careful consultation with the principal, and that the principal (usually mother or father) fully understands the authority he or she is granting, and that he or she possesses the capacity to execute the document(s). It is sometimes the case that mother or father's mental capacity has already deteriorated to the point that it's no longer possible to have them grant a power of attorney. If that's the case, then the only option may be to petition a probate court for formal guardianship over the parent. Whether a power of attorney or guardianship is the appropriate course of action should be determined through consultation with a qualified attorney.

Principal's desire to grant authority:

A Power of Attorney document generally conveys broad authority to the attorney-in-fact, and should not be granted lightly. Principal should have a thorough consultation with counsel regarding the authority granted, and when the documents should become effective. Powers of Attorney may become effective either (1) immediately upon execution, or (2) only after the Principal's treating physician confirms in writing that the Principal is no longer able to manage his/her affairs. The principal should discuss the pros and cons of each of these alternatives with the attorney before the documents are drafted, so that an informed decision is reached.

Whether your situation calls for a Power of Attorney document, or a formal guardianship proceeding, we can offer legal guidance and support. If you have questions about any of these issues please feel free to contact me at (317) 575-8222. For additional info, please check out our website at: www.halcombsingler.com

Avoid common pitfalls when a loved one passes

When a loved one passes away it is not a natural reaction to immediately begin thinking of the administrative issues that result from the death. A period of reflection and grieving is a normal part of the human response to loss. I'm not writing this blog entry in an attempt to advocate that those normal emotional responses should be downplayed or abbreviated in any way. I do, however, want to convey the importance of consultation with an estate professional within a reasonable amount of time after the loss in order to avoid larger problems that can result from inaction.

Even surviving spouses need to consult with an attorney.

It's often thought that when a spouse dies, the surviving spouse, who may be a joint owner of nearly all of the couple's property, doesn't need to seek counsel or carry out any type of estate administration. This is, unfortunately, a misguided belief. While it's possible that no formal probate administration is necessary, there are still many tasks that must be completed in order to completely resolve all the asset and tax issues that may arise from one's death. Affidavits of survivorship should be completed in a timely fashion to transfer property solely to the survivor. In addition, there may be federal estate tax, state inheritance tax, or other tax issues that arise which will be spotted by a qualified attorney. While transfers to spouses are generally not taxable, there may be other issues that require the filing of a return. These tax issues come with strict filing deadlines, which can carry penalties for delay.

Don't delay in probating a will.

If a decedent dies leaving a last will and testament, it is imperative to offer it for probate with your county's probate court soon after the death. In Indiana, a will cannot be admitted to probate if it is not offered for probate within 3 years of the date of death. I have, unfortunately had clients bring in a decedent's will well over 3 years after the date of death, and ask how they can get the decedent's property legally transferred to the persons designated in the will. The excessive delay in offering the will for probate can result in the will no longer being admissible into probate, and the decedent's property will then pass NOT according to the decedent's wishes as set forth in the will, but will pass according to Indiana's laws of intestacy. Talk with an attorney soon after the death to ensure that all of these administrative tasks, including the probating of the will if necessary, are completed in a timely fashion.

Even if there's not a will, there's still a way.

While it is certainly my advice that a will is a mandatory piece of almost any estate plan, if your loved has passed without leaving a will it's not "the end of the world" for purposes of administering the estate. There are many things that a good estate attorney can do to help with the administration process regardless of whether there is a will. Indiana's laws of intestacy still allow the probate court to appoint a Personal Representative for purposes of administering the estate, and the attorney can guide that Personal Representative through the process.

Don't be an ostrich.

While the administrative burden of estate business may seem overwhelming, especially in tandem with the emotional strain of losing a loved one, ignoring these issues will only exacerbate the problem. Sticking one's head in the sand and hoping that the issues resolve themselves is not an acceptable strategy. When the loss of a loved one strikes you or someone you know, please seek qualified estate counsel immediately to ensure that you don't fall victim to the many pitfalls that can result from inaction or delay.

If you have questions about any of these topics, or regarding estate planning, estate administration, probate, guardianship or other related matters, please feel free to contact me at (317) 575-8222.

Also, check out our website at: www.HalcombSingler.com

Why Estate Planning is Important for Young Couples and Families

I often hear from younger clients, "Why do I need an estate plan?" Many of them assume that "estate planning" deals only with planning for transfer of assets. A comprehensive estate plan deals with much more than assets. In this post, I'll briefly discuss the common objections I hear, and explain why estate planning should be a priority for people of all ages and asset/income levels.

"I don't have any children. Everything will just go to my spouse anyway."
While this statement seems intuitive, it is factually inaccurate. Under Indiana's law of intestacy, if a childless person passes away without a Will, and leaves a surviving spouse and one or more surviving parent(s), then the surviving spouse is entitled to 75% of the decedent's estate, while the surviving parent is entitled to 25%. This is obviously an invitation to conflict between the surviving spouse and the in-laws. Even a simple Will can relieve this potential problem.

"I don't really have a lot of assets."
As I mentioned before, estate planning encompasses much more that asset planning. A solid estate plan will include not only asset planning, but also crucial documents for planning your health care and maintenance of your assets in the event that you become incapacitated by illness or injury and are unable to manage your own affairs. I often recommend that clients include in their estate plan Power of Attorney documents to designate an attorney-in-fact to deal with financial issues and also health care issues in such an event. These documents not only lend peace of mind in knowing that you've designated someone you trust to manage your affairs, but can also help to avoid a costly formal guardianship proceeding in a probate court in the event of incapacity.

"I have children, but if something happens to me, my spouse will just take over."
This is a shortsighted statement, as it's entirely possible that a common tragedy could result in both parents being unable to provide care for the children. A comprehensive estate plan will enable you to clearly express your preferences for who will care for your children as their guardian(s) in the event that both natural parents are unable provide that care for any reason.

These are common issues that face young families and couples. No young person wants to think about their own mortality, but the addition of a spouse and children creates a responsibility to plan for potential unforeseen events. I strongly recommend that all young families and couples sit down with an attorney and discuss their plans for passing control of their assets and responsibilty for providing care for their themselves, their spouses and children in the event of an incapacitating injury, illness or death.

If you have questions about estate planning, wills, trusts, powers of attorney, guardianships or the like, please feel free to contact me at (317) 575-8222. I take great pride in being accessible to my clients and providing clear and practical advice in the areas of estate planning, probate, guardianships, business and real estate law.

Is 2010 Really a Federal Estate Tax "Holiday"?

You may have heard or read that there is no Federal Estate Tax for estates of those who pass away in 2010. If you believe the news of a suspension of the Federal Estate Tax sounds too good to be true, your suspicions are well warranted. There are two major drawbacks of this Estate Tax "holiday":

(1) Your heirs will not receive a "stepped-up" basis for their inherited property, and

(2) The Estate Tax comes back with a vengeance in 2011, with a punitively low $1 million exclusion per person.

The "stepped-up basis" that was part and parcel of the Estate Tax scheme of years past allowed heirs to inherit property with a new basis based on the fair market value of the property as of the date of death of the decedent. For example, if you purchased a vacation home for $200,000 in 1990, your cost basis for that property would be $200,000. If you sold that property in 2007 for $300,000, you would be subject to capital gains tax on the $100,000 difference between the sale price and your basis. However, if you passed away in 2007 leaving that property to your child, and at the time of your death the property had a fair market value of $300,000, your child would inherit the property with a new "stepped-up" basis of $300,000. Therefore, if your child were to sell the property for $300,000 in 2008, he or she would incur no capital gains tax as a result of the sale because the sale price did not exceed his or her basis for the property.

This scenario is now drastically different for those dying in 2010. If you pass away in 2010, there would be no Federal Estate Tax on the property passing to your heir(s), however, he or she would receive "carry-over" of your basis for the property. The heir's basis would be your original $200,000 basis, meaning he or she would face the looming capital gains tax burden upon the sale of the property if it had appreciated in value. Keep in mind that this basis issue applies to all assets, not just real estate.

The second and most frightening problem with this Estate Tax "holiday" is that like all "holidays," it will come to an end. Under the current tax code, the Estate Tax is scheduled to return in 2011 like a grizzly bear that hasn't eaten for a year. In 2009, the Estate Tax excluded estates under $3,500,000. This $3.5 million is referred to as the "exclusion amount." In 2011, the Estate Tax returns, and the exclusion amount is only $1 million. This means that thousands more Americans will be subject to the Estate Tax and its oppressively high rates which can exceed 50 cents on the dollar. Factoring in that this tax must be paid by your heirs within nine months of the date of death, it is easy to see how this new lower exemption amount will deal a crushing blow to many small businesses and family farms.
There has been much speculation amongst estate planning experts as to whether Congress will act to amend the Estate Tax laws prior to the coming 2011 calamity, but no bill has passed both the House and Senate. Thus we're left with more uncertainty, and a very pressing need to address the estate plans of our clients whose assets may exceed $1,000,000 in value.
I would urge you to discuss these issues with an estate planning attorney, as there are many tools available to help minimize the tax burden on your estate and your heirs while protecting the assets you've worked so hard to accumulate.
If you have questions or would like discuss estate planning or other legal issues facing you and your family, please contact our office. We're here to help.
Gregory M. Halcomb
(317) 575-8222

***Please be advised that nothing in this blog should be considered legal advice. In order for me to give legal advice, it would be necessary for me to meet with an individual and discuss his or her unique situation before rendering a legal opinion or strategy.

Please also be advised that any comment or communication posted here will not be considered confidential and does not create an attorney-client relationship with me or our firm. Also note that I do not seek to practice law in any jurisdiction in which I am not licensed to do so.

If you have questions, or need legal advice...

Please feel free to contact me. My office contact info is as follows:
HALCOMB SINGLER, LLP
718 Adams Street
Carmel, IN 46032
(317) 575-8222

Also, see our firm website at:
http://www.halcombsingler.com

Welcome to my Indiana Estate Law Blog!

I hope you'll find this blog informative and entertaining as I'll attempt to keep you apprised of interesting developments and topics in Indiana estate planning and probate law.
By way of introduction, my name is Greg Halcomb and I'm an Indiana attorney with my primary office in Carmel.
My primary practice areas include estate planning (wills, trusts, etc.), probate and estate administration, real estate, business formation and civil litigation.
I was raised in Versailles, Indiana where I graduated from South Ripley High School in 1998.
I earned my bachelor's degree from Butler University in 2002, where I was an active member of the Phi Kappa Psi fraternity.
I earned my law degree from Indiana University School of Law - Indianapolis, and was admitted to the Indiana Bar in 2005. I am also admitted to practice before the U.S. District Court for the Southern District of Indiana. I'm a member of the Hamilton County, Indiana State, and American Bar Associations.
In my spare time, I'm an avid runner and fitness enthusiast with a passion for outdoor adventure. I will attempt to occasionally inject into this blog anecdotes from my life outside the office, if for nothing else, to dispel the impression that estate lawyers are a dull, stodgy lot.