divorce estate planning

Estate Planning Considerations During Divorce in Indiana

There are many things to consider during a divorce and while estate planning may take the back burner to child custody and property division, it should still be regarded as one of the primary concerns. While there are some things concerning your estate that you will not be able to do until your divorce is final, it is never too early to begin devising a plan to help ensure that you know exactly what to do, when to do it, and how to do it. This blog explores estate planning considerations during divorce in Indiana and how you can be prepared to implement a new plan immediately following your divorce. 

The first thing that divorcing couples need to know about estate planning is that in Indiana any provision of a Will leaving assets to a spouse becomes invalid on the date that a final decree of dissolution is issued in the divorce. So there is no need to worry that after your divorce any asset passing through your estate will be given to your ex. However, you will need to examine your current Will in order to determine exactly who your assets will go to once your former spouse is no longer eligible to inherit. If you have not named an alternative beneficiary, your assets will be distributed according to Indiana’s intestate succession statute, as if you died without leaving a Will. The estate distribution statute (I.C. 29-1-2-1(d)) governs distribution of an estate when there is no surviving spouse. 

I.C. 29-1-2-1(d)(1) describes distribution when there are surviving descendants. Dispersal shall be to your “surviving issue” in equal shares if they are all of the same degree of kinship, or if not of the same degree, those of lesser degrees shall take by representation. In plain English, your children, grandchildren, great-grandchildren, and so on and so forth are your “issue”. Your children are all of the same degree of kinship, and your grandchildren are all of the same degree, but a lessor one than your children. Keep that train of thought going. Now, taking by representation means that one of the group of family members inheriting under the statute (normally the decedent’s children) is deceased and unable to take their share of the estate, so that group members children inherit their parents share and divide it equally between them. For example, the decedent has three children, two living and one deceased, who left two children. So there are three shares of the estate, each of which is approximately 33%. The two living children inherit their 33% and the remaining 33% goes to the two children of their deceased sibling, with each getting one half of the 33%. 

If you have no children, or do not want your estate to be distributed according to a statute instead of your personal wishes, you will need to change your Will as soon as possible, as the statute goes on to cover all conceivable family members that may inherit under the provided circumstances, and if exhausting them all, gives the entire estate to the State of Indiana (I.C. 29-1-2-1(d)(8). When planning a new Will, you should think about any untitled personal property that you want to give to a specific person, such as furniture, household goods, or knick-knacks, as well as what assets can be titled or designated to pass outside of your estate, so that they do not need to be included in your Will. 

When a person dies, their Will is used to determine how to distribute any assets within the estate. However, some assets pass outside of the estate, and are disbursed directly to an heir without a probate case being filed or executor appointed. These assets include jointly titled property, assets naming a transfer on death or pay on death beneficiary, and policies, such as life insurance, designating a general beneficiary. Any asset with a title or designation of the owner(s), such as a bank account (I.C. 32-17-11-18) or vehicle which is owned jointly with another person passes outside the estate, going directly to the joint owner, regardless of what any Will says. When a transfer or pay on death beneficiary is named on a financial account, vehicle (Indiana Bureau of Motor Vehicles), or real estate (I.C. 32-17-14-11), that property too passes outside of the estate, directly to the named beneficiary. For some, naming joint owners and beneficiaries can make estate planning much easier, and save their family the time and expense of probating a Will. However, with a Will, you can leave untitled personal property, such as furniture and household goods, to the heir of your choosing by simply attaching a handwritten list, which can be modified at any time. Oftentimes, a combination of the two estate planning strategies works best. 

Another estate planning consideration during divorce in Indiana is your Power of Attorney and Appointment of Healthcare Representative. If you are unable to make decisions, you will need to appoint someone to take your soon to be former spouse’s place in making them for you. While your children may be a good choice for both, it is important to recognize when one of your children might be unable to make an important decision regarding your health and consider naming a close friend or sibling, who might not be as emotional, as your healthcare representative. 

When minor children are involved, a simple trust could be a good option for you. If you have a child with disabilities, one who might spend their entire inheritance right away, or who needs protection from creditors, a spendthrift trust might be best. With the numerous options for how to leave your assets to who you want them to go to, estate planning can be quite complex and may require the assistance of an experienced estate planning attorney. 

This blog was written by attorneys at Ciyou & Associates, P.C. It is for general educational purposes. The blog is not intended to be relied upon for any legal matter or issue. The blog is not legal advice. This is an advertisement.


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