Every year, about two and a half million American marriages end in divorce, meaning about five million people have undergone a major change in their legal and family relationships. In the aftermath of your divorce being made final, it is tempting to have nothing to do with legal matters for a while. That's understandable, but you should make one more trip into a lawyer's office—an estate planning lawyer. Hopefully, you will live a long, happy, and healthy life after your divorce, but you will sleep better at night if you have an estate plan that lines up with your new reality. Let's talk about estate planning after your divorce.
When you made your estate plan, you probably did so with the idea that your spouse would be your primary beneficiary, and that he or she would administer your estate if you died. If you suffered an illness or accident that incapacitated you, you probably appointed him or her as your agent under a power of attorney, to make your medical and financial decisions.
At the time, those choices seemed reasonable. After divorce, they might seem like a nightmare scenario.… Read More
Many adults, particularly older adults, have a power of attorney in place so that a loved one can make decisions and act on their behalf in the event they lose the capacity to do so themselves. You might have a power of attorney for financial matters, so that if you became legally incapacitated, the agent you appointed could seamlessly step into shoes and conduct transactions on your behalf, making sure bills are paid, and so forth. You might also have a health care power of attorney, enabling a trusted person to make your health care decisions on your behalf. But can your agent get your health care information?
The intuitive answer would seem to be "yes." Otherwise, how could the person entrusted with making health care decisions on your behalf do so in an informed way? Without access to your health information, he or she might not even know what decisions needed to be made. Until a few years ago, there was a Catch-22 under Ohio law: a health care power of attorney didn't spring into effect until a principal's attending physician declared the principal legally incapacitated. But the agent, also called the attorney in fact, could not get this information until the power… Read More
Just over six years ago, on December 20, 2012, Governor John Kasich signed into law the Ohio Asset Management Modernization Act of 2012 (AMMA). AMMA, which took effect in March of 2013, has been described as “a quiet revolution in Ohio law.” The law put in place a number of changes regarding the management of property, many of which served to limit the rights of creditors against Ohio residents and asset holders. Perhaps the most significant of these was the new ability to create an Ohio domestic asset protection trust (DAPT). Domestic asset protection trusts are available in seventeen states. What exactly is a DAPT, and what distinguishes it from other types of trusts?
A DAPT is an irrevocable self-settled trust, of which the creator (known as the settlor or grantor) is permitted to be a beneficiary, and may be the primary beneficiary. In addition, the trust is structured so that the settlor is given access to funds in the trust. A properly-drafted DAPT also has a feature that lends it its name: creditors of the settlor are unable to reach the assets in the trust. It is noteworthy that the trust only protects assets from possible future creditors. A settlor cannot p… Read More
Second marriages can open a new and joyful chapter in life, especially after a bitter divorce or the pain of a first spouse’s death. Unlike a first marriage, in which your whole future lies ahead, by the time you arrive at the threshold of your second marriage, you have some history. That history often includes children from the first marriage. Your children are an important part of your life, and you want to continue planning for their futures, even as you embark on your own with a new spouse. The tension between these—the desire to leave a legacy for your children while also providing for your spouse—can complicate estate planning. This is why estate planning professionals sometimes recommend QTIP trusts for second marriages.
A QTIP, or Qualified Terminable Interest Property trust, is authorized by language in Internal Revenue Code Sections 2056(b)(7) and 2523(f). What can a QTIP trust do for you and your family? It can prevent unintended outcomes in the event of your remarriage a… Read More
An increasingly common estate planning practice is the establishment of a revocable living trust in which the creator (settlor) is also both the trustee and the beneficiary during his or her lifetime. After the settlor’s death the trust, which was revocable during the settlor’s life, becomes irrevocable, and a successor trustee takes over, distributing or managing the trust for the benefit of one or more beneficiaries. What happens when one of those beneficiaries is disabled? More and more, we are receiving questions about changing a trust for the benefit of disabled beneficiaries.
The potential problem is that the trust may include language dictating that the disabled beneficiary’s share of the trust be held in trust for his or her lifetime, and that distributions be made according to a particular standard, such as for “health, maintenance, education, and support.” If, like many disabled individuals in Ohio, the beneficiary needs Medicaid benefits, will the trust interfere with his or her ability to qualify for benefits?
Medicaid in Ohio is administered by county offices of the Ohio Department of Jobs and Family Services (ODJFS). ODJFS is likely to fin… Read More
If you have made an estate plan, you have probably considered how you will dispose of property ranging from your home down to your wedding ring. But if you own certain firearms, you may need to take special steps to transfer them in a way that offers clarity and protects your loved ones from unwittingly violating gun laws. Ohio gun trusts can streamline the transfer of firearms, making life simpler not only for your survivors, but for the executor of your estate.
What is the purpose of an Ohio gun trust? Primarily, to ensure compliance with federal law. Certain firearms are regulated by the National Firearms Act of 1934 (NFA), and by Title II of the Gun Control Act of 1968, a revision of the NFA. Weapons governed by these laws include short-barreled rifles, short-barreled shotguns (including sawed-off shotguns), machine guns, silencers, and grenades. Firearms covered by these federal laws may be referred to as "NFA firearms" or "Title II firearms."
NFA firearms are required to have a serial number and must be registered with the federal bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF). These weapons may only be possessed and used by the registered own… Read More
If you have amassed significant wealth, either through inheritance, hard work, wise investments, or all three, you may be considering your legacy. Like many people with significant assets (including Bill and Melinda Gates), you may have concluded that it's not necessarily in your family's best interests to inherit a large sum. Wealth can offer security, yes, but also a sense of entitlement and sometimes a lack of motivation, as heirs know they won't need to work for their living.
In addition to concerns about excess wealth leading your descendants to a profitless life of leisure, you may want to set your heirs the example of making a real difference in the world with your wealth. To this end, you may have considered creating a private foundation. A private foundation is a charitable organization, often established by a family or individual, to lend support to charitable causes.
Private foundations are overseen by a board of directors or trustees. This governing body receives charitable contributions, is responsible for investment and management of the foundation's assets, and making grants to worthy charities. The board also handles administrative responsibilitie… Read More
In Ohio, as in other states, attorneys who assist a personal representative in the administration of an estate are entitled to have their reasonable fees paid out of the estate. Attorney fees are governed not only by ethical guidelines established by attorneys' Rules of Professional Conduct, but by other Ohio rules and statutes. As such, attorney fees in estate administration are perhaps some of the most strictly regulated. Although attorney fees are paid out of the estate, Ohio case law has established that it is the personal representative, rather than the estate itself, who is the attorney's client.
What is a reasonable attorney fee for estate administration, and how is it determined? Essential guidance comes from Rule of Professional Conduct 1.5 (Rule 1.5), which states that a "lawyer shall not make an agreement for, charge, or collect an illegal or clearly excessive fee." A fee would be illegal if it violated a statute or some administrative regulation. A fee would be considered "clearly excessive" if an attorney of ordinary prudence would be left with a "definite and firm conviction" that the fee was excessive.
Imagine the following scenario: Your sister, your only sibling, is a single mother of two young children. She hasn't gotten around to making an estate plan because, well, she's the single mother of two young children. You know she does all her banking online, but you don't know the details. If she died suddenly, and you needed to administer her estate, would you know where to begin? Would you even be able to gain access to the information you needed? This is just one of many scenarios that makes fiduciary access to digital assets in Ohio an important issue.
A fiduciary is someone who manages assets for the benefit of someone else, and is required to do so in the beneficiaries' best interest. So "fiduciary" is an umbrella term that refers to, among other things, the executor of a will, the administrator of an estate where there is no will, a guardian, an agent under a power of attorney, or the trustee of a trust.
As a fiduciary, you have the responsibility to act in the best interest of the beneficiaries of an estate or trust, but until recently, it may have been difficult to gain access to the data or documents you needed to do so. Once upon a time, there were pa… Read More
Something that is perfectly appropriate in one setting can be problematic in another. The casual outfit that is perfect for running errands could cost you a coveted job if you wore it to an interview, for instance. And the language used to describe property in your estate plan could, by the same token, cost you that property should you and your spouse later divorce. We certainly hope that divorce is not in your future, but if you came into the marriage with significant assets, or inherit assets during your marriage, you should ask yourself how you would feel about your spouse getting those assets in the event of a divorce. If the answer is, "not very good," you need to think about estate planning for separate property.
To understand separate property, you need to understand how property is divided in a divorce. In Ohio, as in most states, there are categories of property: marital and separate. Marital property is all property, real and personal, that is acquired by either spouse during the marriage, and any interest in such property. Marital property also includes most income or appreciation on separate property that occurred during the marriage due to the contribution… Read More