Lawrence Inlow had ridden his company’s helicopter hundreds of times over the past five years. The helicopter rides were part of a work routine that Mr. Inlow had mastered in his ascent to Chief Counsel of Conseco, Inc. However, on May 21, 1997, he took his last ride. He was struck by the rotor blade and instantly killed at the Indianapolis International Airport – at 46 years old. And soon after, his family was pitched into a tragic legal struggle that might have been prevented.
After graduating from the Indiana University School of Law - Indianapolis, Mr. Inlow helped build a provincial insurance company into a national powerhouse. Conseco was founded in 1982, and it went public only three years later. By 1997, the company was worth more than five times its value at public offering. Mr. Inlow clung to his substantial share of Conseco, and by 1997 Mr. Inlow had reached a net worth of over $100 million. He had a wife, Anita, and five children from two marriages, and he lived in a luxurious home in Indianapolis’ wealthiest suburb, Carmel.
But there was a vital piece missing to Mr. Inlow’s successful life – he had no estate plan. Despite all his wealth and legal training, at his death Mr. Inlow had not executed any Will. This would cost Mr. Inlow’s family dearly after his passing. His death offers a tragic example of the costs of not having an estate plan.
Intestacy: The Chaos
Mr. Inlow died without a Will to direct the distribution of his estate. His estate had to be distributed under the Indiana laws of intestacy – a default scheme of distribution for those who have none when they die. (See Ind. Code § 29-1-2-1: Estate distribution.)
In Indiana, like many states, the surviving spouse receives one-half of the net estate if the intestate is survived by at least one child or by the issue of at least one predeceased child. (See Ind. Code § 29-1-2-1: Estate distribution.) If there are no children but the deceased’s parents survive, the surviving spouse receives three-fourths of the net estate. The spouse takes all if there are no children and no surviving parents. If the surviving spouse is the second spouse of the decedent, and she had no children with the decedent, she takes only one-fourth of the net estate. With larger, bifurcated families, intestacy can often produce long legal battles among the family members who feel slighted by the default distributions. The intent of the deceased is never known, and the family members fight over what they each presume it would have been.
The distribution of Mr. Inlow’s estate (“Estate”) produced this exact dilemma. It was not a simple Estate because of his extraordinary wealth and because his surviving spouse, Anita, was his second wife. Mr. Inlow had four children from his first marriage – Jason, Heather, Jeremy and Sarah. He also had one child with Anita – Jesse. After Mr. Inlow’s death, the court appointed Indianapolis attorney Karl Kindig as the personal representative for his Estate, who was later replaced by Fifth Third Bank. (See Inlow v. Inlow, 797 N.E.2d 810, 811 (Ind. Ct. App. 2003).) It will never be known if Mr. Inlow would have wanted either Mr. Kindig or Fifth Third Bank to settle his affairs after death. Without a Will, the court was forced to make that decision for Mr. Inlow.
In March of 1999, Mr. Kindig, the Estate’s legal counsel and accountants met with Anita’s legal counsel, the accountant for Anita and her minor child (Jesse), legal counsel for the older Inlow children, and accountants for the older Inlow children to discuss a proposal for the Estate to make a partial distribution to Anita. They agreed that Anita would receive a partial distribution of $18 million. Further, they agreed that Mr. Kindig would elect what is known as the 65-Day Rule on the Estate’s income tax return, which would result in Anita paying any income taxes attributable to the $18 million. The money was distributed to Anita. Thereafter, Mr. Kindig decided that the Estate, and not Anita, would pay the income taxes attributable to the $18 million.
This decision led to the first bout of litigation among the beneficiaries of the Estate. Mr. Inlow’s four children from his first marriage brought an action in Indiana state court against Anita for the payment of the income taxes on her $18 million distribution and the recovery of the $18 million dollar distribution itself. (See Inlow v. Inlow, 797 N.E.2d 810, 811 (Ind. Ct. App. 2003).) The four older Inlow children would be pitted against Anita and Jesse throughout the prolonged administration of the Estate. The court granted summary judgment for Anita on the grounds that the Inlow children failed to prove that the $18 million distributed to Anita was their property, and on the grounds that Mr. Kindig had the authority to decide whether the Estate would pay the taxes on the $18 million distribution. (See Id. at 818.) The judgement was affirmed on appeal in 2003, six years after Mr. Inlow’s death.
Years later, more fights emerged over details that could have been settled in a will. Mr. Inlow’s funeral was a somber and ornate affair. (See Inlow v. Inlow (In re Estate of Inlow), 916 N.E.2d 664 (Ind. 2009).) The total cost of his funeral, burial and mausoleum was $284,034. (See Id. at 736.) Anita initially paid these costs. Anita sought and received reimbursement from the Estate for the $284,034 she paid for his funeral and burial. Fifth Third Bank had become the successor Personal Representative of the Estate after Mr. Kindig’s resignation. As a separate matter, Mr. Inlow’s heirs, acting through Fifth Third, reached a wrongful death settlement with Conseco in the amount of $884,713. After Anita was paid for the funeral and burial from the Estate, Fifth Third and the four older Inlow children filed a claim seeking reimbursement of the $284,034 to the Estate from Mr. Inlow’s wrongful death proceeds. Anita objected to the reimbursement. The case was delayed and appealed until it reached the Indiana Supreme Court in 2009. (See Id. at 738.) This time, the four older Inlow children won, and the Supreme Court allowed the Estate to recover the funeral expenses from the wrongful death fund. But it was a pyrrhic victory; this matter alone took five years in court and cost over $100,000 in legal fees.
Wrongful death claims are not typically addressed in a will, but the burden of funeral expenses certainly are. If Mr. Inlow had executed a Will, it might have been clear how he wanted his funeral to be paid for, and his wife and children might not have fought over it later. The same is true for the distribution of the Estate’s assets. If there had been a Will, the older children might have been less likely to challenge the amount that Anita received. The administration of any estate faces the risk of costly litigation, but the estates that are guided by comprehensive estate plans are fought over much less frequently.
The Benefits of Planning
Everyone needs an estate plan: the benefits are manifest and universal. Estate planning preserves assets as much as it preserves family harmony, values and traditions. You don’t want your children to fight after your death, and an estate plan, or at least a will, is the simplest and best way to protect against an ordeal like the Inlow family suffered. Most Americans recognize that they need a plan. Yet decades of empirical studies reveal that most American adults do not have so much as an executed will. The continued high rate of intestacy and Mr. Inlow’s story demonstrate the profound importance of confronting your estate plan.
The rules of intestacy are not always in harmony with the prompting of natural feelings. This causes intestate distributions to sharply vary from the real wishes of the decedent, or the decedent’s presumed wishes. Most Americans cannot correctly identify their intestate heirs, so the absence of a will creates uncertainty and possibly frustrated expectations for intended beneficiaries. (See Weidbord at 878.) Moreover, most individuals without a Will do not intend to die intestate and do not understand the potentially undesirable consequences of intestate succession. Disputes over the decedent’s true intent often rise, linger and tear the aggrieved families apart. Estate planning, and in particular Will-making, thus assumes a practical significance in any adult life. One cannot read a dead person’s mind, but family members will still try, and will not be content with the inflexible statutory scheme of intestate inheritance. It is better to have your family follow your wishes expressed in your Will and estate plan.
The Will is the most basic testamentary instrument that grants the decedent control over whom will receive their assets and how their final expenses will be paid. The Will’s principal benefit is that it makes the decedent’s intent express and clear, which assuages family discord over the distributions and expenses. Courts go to great lengths to implement the decedent’s intent by closely honoring and interpreting testamentary instructions. A Will should be prepared by a competent attorney that has some experience in estate planning to ensure that the decedent’s intent will not be misinterpreted and that all the potential obstacles or ambiguities of administering the estate are contemplated and addressed.
You do not have to stop at a Will – you can better protect yourself with a fully-developed estate plan. The backbone of a comprehensive estate plan is the revocable living trust. You may use revocable living trusts to exert more control over the distribution of your assets and avoid the potential hazards and delay of the probate process, if you fund them while you are alive. Funding a trust at death, by having the will “pour over” the estate assets to the trust, does not avoid the necessity of probate. Creating a revocable trust might also be the best way to ensure that your property remains available to be used for your benefit, should you become incapable of managing your own affairs. Other trusts and estate planning vehicles exist to meet more specific objectives.
Perhaps Mr. Inlow’s family would not have spent so many years and fees in court if he had had a Will. We cannot know for certain, but we can rely on years of statistics that litigation occurs less often in estates where the decedent dies with a Will than without. Intestacy has apparent drawbacks, and it is structurally unsuitable for nontraditional families. The Indiana intestacy statutes could not comprehend whether Mr. Inlow favored his second wife Anita and child over his four older children from his first marriage. The statutes and the Personal Representative had to make an assumption, and that assumption was fiercely challenged.
Mr. Inlow was an attorney, but he had no experience in estate planning. He did not take the time to consult with a proper, experienced attorney and execute a Will and revocable trust. The outcome was difficult for his family. Their fights lasted for years and cost hundreds of thousands of dollars in legal fees. There have been countless other examples beyond Mr. Inlow, which means that the trite adage applies: it can happen to you. Make sure that it doesn’t. At the very least, consult with an attorney and prepare a Will.