Duties and Responsibilities of a Personal Representative

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When a person creates a Will, he or she appoints someone to serve as Personal Representative for his or her estate. Often times, a person appoints a family member or friend to serve as his or her Personal Representative after he or she passes.  In other cases, a professional fiduciary or trust company is the best choice. It can be a time-consuming responsibility, but you may feel a duty to the person who has died to help carry out their wishes. Personal Representatives are entitled to be paid for their services, but you must keep careful records of the time you spend on estate business and out-of-pocket expenses you pay for the estate. If you are appointed as Personal Representative in a person’s Will and do not wish to serve, you can waive your right to serve. Also, you can request that the Court appoint another person to serve with you or in your place. You may not wish to serve as Personal Representative because of the possibility of finding yourself in the middle of a family dispute over assets. Also, you may be personally liable if certain tax deadlines are not met or fiduciary duties not fulfilled. The Court decides if you have to be bonded and in what amount. Many times the Will waives the posting of a bond, but the Court may still require a small bond to be posted.

A Personal Representative has many duties and responsibilities. You must keep detailed administration records. A Personal Representative signs all inventories, tax returns, accountings, and Court petitions. As the Personal Representative, you are liable for filing all these documents on time. Hiring an attorney to help you with the estate administration ensures that these documents are prepared correctly and filed at the various deadlines. Some of these filing deadlines include: the inventory, final income tax returns, estate income tax returns, and the federal estate tax return.  You must never put the decedent’s checks or estate monies into your personal bank account. All estate checks and monies must be kept in a separate bank account from your own.

Distribution to heirs is made just prior to the closing of the estate, after an Accounting has been filed with the Court. Sometimes, partial distributions are made earlier. The heirs have a right to know what is going on in the estate administration. If someone questions or objects to any of your actions, you might need to appear in court as Personal Representative. However, if you can show the court that what you have done is proper, then the objections will be overruled.

All estates must stay open a minimum of three months from the first date the notice of administration is published in the newspaper. The length of time it will take to close the estate will depend on the type and extent of assets in the estate, whether any claims are filed, and whether anyone objects to your actions or expenses you paid. In a supervised estate, your duties and responsibilities as Personal Representative are over when the Court enters an Order closing the estate and discharging you as Personal Representative. In an unsupervised estate, your duties and responsibilities are over three months after your attorney files a closing statement as long as no objections are filed.

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Guardianships in Indiana

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Some individuals are not legally able to handle their own affairs due to minority (under age 18) or incapacity. They may have been born incapacitated, or they may have become incapacitated because of an illness, accident, or decline in physical or mental capacities later in life.  What can be done for such individuals? It may be necessary to establish a guardianship to protect such persons. A guardianship is a proceeding where an interested person or corporate entity petitions the Court to be appointed as guardian to handle the affairs of an incapacitated individual (known as the “protected person”). A person may be appointed as guardian over health care and living arrangements and/or financial affairs.

Generally, a guardian is not liable for the actions of the protected person. For example, if the protected person steals a car and wrecks it, the guardian cannot be charged with theft or be required to use his or her personal funds to pay for the damages. If the guardian acts in good faith in carrying out his or her duties, the guardian will not be held liable for his or her actions. However, if the guardian breaches his or her fiduciary duties, then he or she may be found liable. If the guardian is not doing his or her job properly or becomes unwilling or unable to serve, then the guardian maybe removed by the Court. A successor guardian will be appointed after a Court hearing. If the protected person is a minor, then the guardianship is terminated when the protected person turns 18. In the cases of adult guardianships, the guardianship may be terminated by the Court if the Court finds that the protected person is no longer incapacitated. The guardianship can also be terminated when the protected person dies or if he or she moves to another state.

Help for Disabled Persons – ABLE Accounts

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Recently, Indiana has decided to offer ABLE Accounts to disabled individuals and their families. ABLE stands for Achieving a Better Life Experience. ABLE Accounts create tax-free savings accounts for individuals with disabilities. The goal of these accounts is to ease the financial strains faced by individuals with disabilities and their families. These accounts supplement, rather than replace, the benefits someone may already be receiving, such as through private insurance, Medicaid, or other sources.

Who is eligible for an ABLE Account? Minors or adults who are blind or have been diagnosed with a severe physical or mental disability before age 26. The individuals must also be entitled to Supplemental Security Income (SSI) through the Social Security Administration.

What can an ABLE Account be used for? An ABLE Account can be used to cover a variety of qualified essential expenses. The IRS defines qualified expenses as expenses that relate to the beneficiary’s disability and help to maintain or improve health, independence, and quality of life. These include such things as medical and dental care, education, community bases supports, employment training, assistive technology, housing, and transportation. Basically, the ABLE Act provides to disabled persons the same types of saving tools and benefits that all other Americans receive through college saving accounts, health savings accounts, and individual retirement accounts. However, when the beneficiary dies, there is a Medicaid payback provision.

Contributions must be made the account in cash and cannot exceed $14,000 each year. Any contributions that exceed the $14,000 annual limit will be subject to a 6% excess contribution penalty if not corrected in a timely manner. In the past, disabled individuals could not have more than $2,000 in assets to qualify for programs like Medicaid or Supplemental Security Income. However, with ABLE Accounts, disabled individuals can save up to $100,000. The money that is saved through the ABLE Accounts does not count against an individual’s eligibility for any federal benefits programs.

Caring for the needs of an individual with disabilities can be complex and challenging. The new ABLE Accounts may provide an excellent savings plan for many families with disabilities. It is important, though, that the accounts are handled appropriately to avoid losing federal and state benefits. Therefore, it would be wise to seek the advice of a financial planner or attorney.

The Basics of Estate Administration

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First of all, what is “administration”? Administration is finalizing a deceased person’s financial affairs. This includes gathering assets, paying debts, expenses and taxes, and distributing what is left to those who are entitled to it. Those who are entitled would include those named in the Will (if the decedent left one) and beneficiary designations. If the decedent did not leave a Will, then property is distributed according to Indiana’s statute of intestacy.  The decedent is the person who died. A Last Will and Testament is a legal document that tells the personal representative how to distribute the decedent’s assets. The Personal Representative is the person appointed by the Court to administer the assets of the decedent. Sometimes you’ll hear the words “executor” or “administrator.” An executor is a person named in the Will whereas an administrator is a person appointed by the Court because there is no Will. Personal Representative refers generally to both terms.  For a further discussion on Personal Representatives, see our blog post “Duties and Responsibilities of a Personal Representative.”

Estate administration can be either supervised or unsupervised. Supervised administration is administration that is supervised directly by the Court. The Personal Representative must seek the Court’s approval to sell real estate, personal property, or any other asset. Unsupervised administration allows the Personal Representative to perform most of the administration without direct supervision by the Court. However, before authorizing unsupervised administration, the Court must decide that the Personal Representative is qualified to administer the estate unsupervised. Also, all the beneficiaries of the estate must agree to unsupervised administration, unless the Will authorizes unsupervised administration. Generally, supervised administration usually ends up being more expensive because there is more interaction with the Court.

Hats & Heels: A Night at the Top of the Town

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Save the date! On Friday, April 22, Healthier Moms and Babies will be hosting Hats and Heels: A Night at the Top of the Town at the Empyrean, downtown Fort Wayne on the top floor of the PNC building. The Hats and Heels event will be a fundraiser to support the Healthier Moms and Babies program. Our very own Leah Good is a board  member for Healthier Moms and Babies and will be attending in support of the fundraiser.

What will be going on at this Hats and Heels event? The event will feature the upbeat jazz music of the West Central Quartet. Guests will be treated to delectable hors d’oeuvres made by the talented Empyrean chefs. Fort Wayne’s newest microbrewery, Olde School Brauhaus, will be on sight for an interactive beer tasting of some of their most popular concoctions. Not to mention the cash bar will offer your favorite cocktails. The main feature of the event, though, is the silent auction. Auction items will include things like an  intimate dinner party prepared in your home by Chef Eric and Notre Dame football tickets (more items are listed at the link on the bottom). The attire is cocktail casual; wearing a dressy hat is not required but it is encouraged.

What is the Healthier Moms and Babies program? Healthier Moms and Babies is a self-supporting program of the Fort Wayne Medical Education Program. They have this as their mission statement: Our goal is to reduce infant mortality and improve the outcome of pregnancy in Allen County by offering health education and case management services to low-income, high-risk pregnant women and their families. They offer their services through case management and group support sessions. For more information on their program, please visit their website.

Make sure to get your tickets! Tickets can be purchased online at http://hatsheels2016.auction-bid.org/micro2.php. And don’t forget to enter the raffle for a Tory Burch handbag. Raffle tickets are only $10!

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Hats & Heels: A Night at the Top of the Town

When: Friday, April 22nd

Time: 5:30 pm-8:30 pm

Where: The Empyrean Catering and Events. 110 W. Berry  Street (25th and 26th Floor of the PNC Building)

Attire: Cocktail Casual; Wear a dressy hat if you like but it’s not required.

Tickets: http://hatsheels2016.auction-bid.org/micro2.php

Advantages and Dangers of Having a Trust

So why do people create Trusts? There are several advantages to having a Trust, depending on your assets and circumstances and the Trust’s term and funding. If you become incapacitated, a Trust can avoid the need to appoint a guardian over your assets. Revocable and Irrevocable Trusts keep your estate plan confidential because those Trusts, unlike Wills, are not made a part of the public record.  Trusts allow you to plan for the disposition of your assets over an extended period of time. They can also avoid probate if you have out-of-state real estate.

Another key reason people create Trusts is its advantages for those with minor beneficiaries. When a minor inherits property outright, the Court must appoint a guardian over the estate during the child’s minority. This need can be eliminated using a Trust. Also, Trusts can provide for the management of assets until the beneficiary reaches a designated age. In some cases, families have relatives who are disabled. These families can utilize a Trust to help provide for their needs while protecting any public assistant benefits they may already be receiving.

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Now that we’ve considered some of the advantages to having a Trust, let’s discuss some of the dangers. There are many people or businesses who try to sell Trust packages under a variety of names or programs. They may try to say that this package will allow you the opportunity to protect your assets from the Court, nursing home, or tax collector. However, you must be very careful when responding to those opportunities. Most of these programs are sold by nonlawyers whose goal is to sell you a product, even if you don’t need it. For many people, a Trust is unnecessary and would then be a waste of money. For others, though, they have real circumstances or desires that would require creating a Trust. If you think you need a Trust, you should consult with an estate planning attorney. Trusts are legal documents that can affect your taxes, estate plan, and other financial matters. Thus, you should discuss your circumstances and needs with a reputable attorney who can help you decide whether or not you really need a Trust.

What is a Trust and What is Included?

First we want to know, what is a Trust? A Trust is a legal document used in estate planning. Trusts create a legal relationship between a Grantor (the person who holds title to the property) and a Trustee (the person in charge of the Trust property). The grantor transfers property to the Trustee, who then manages and invests the property for the benefit of the beneficiaries. There are two occasions when a Trust can be created: while you are alive or after your death. A living trust is created during your lifetime by a written document signed by you (as the grantor) and your Trustee. A testamentary trust is created within the provisions of your Will so that it does not take effect until your death.

Who can serve as your Trustee? Anyone who is 18 years of age or older and is of sound mind may be appointed as your Trustee. A business entity may also serve as Trustee if they are doing business in Indiana and have Trust powers as authorized by the state of Indiana. You can also have more than one Trustee (whether more than one individual or an individual and a corporate entity) that may serve as Co-Trustees.

Now, you may be wondering, if you (the grantor) create a Trust during your lifetime, does this mean you give up all control over the Trust property? The short answer is not necessarily. The Trustee, who may also be the grantor, has control over the Trust. However, this is subject to any rights retained by the grantor. For example, depending on the provisions of the Trust, the grantor may retain the right to withdraw income and any amounts of principal upon request. The grantor may also keep the right to change or revoke the Trust. In addition, the grantor may preserve the right to direct the Trustee as to how he or she invests Trust funds. In fact, you can serve as your own Trustee in most cases.

What kind of things should be included in your Trust? The Trust at a minimum should do the following:

  • Name the Trustee(s) and successor Trustee
  • Decide who is to receive the Trust income, in what proportion, and for how long
  • Determine when, to what extent, and for what purpose the Trustee may distribute the Trust property
  • Stipulate when the Trust will terminate
  • Name who will receive the Trust property when it is terminated
  • List the duties and powers of the Trustee
  • (For Living Trusts) State whether it is revocable or irrevocable

For a further discussion on Trusts, check out “Advantages and Dangers of Having a Trust” and “Types of Trusts.”