One of the many duties of a personal representative of an estate is to pay all legitimate debts of the estate before distributing the remaining assets to beneficiaries. But what happens if there are not enough assets in the estate to pay all the money that is owed? Are beneficiaries liable for estate debts?

As a general rule, beneficiaries of the estate of a deceased person (decedent) are not liable for estate debts. (There are some exceptions, such as if the debt was a joint one or the beneficiary of the estate co-signed for the debt.) But it’s still important to pay debt in the proper order, according to Ohio law on the priority of debts.

How Are Debts Paid From an Estate?

Under Ohio law, creditors have six months from the date of the decedent’s death to make a claim for payment against the estate. After six months, any claims against the estate are barred. Part of the reason for this rule is to provide certainty. Otherwise, a personal representative could pay known debts of the estate and distribute the remaining property, only to have a creditor appear weeks, months, or years l… Read More

Probate is the court-supervised process of administering a deceased person’s estate after their death. Ohio probate courts are also involved in appointing guardians for people who lack the capacity to manage their own affairs. These processes can be emotionally charged, and it is not uncommon for family members to have disputes about how estate business should be handled or who should be appointed administrator or guardian. These disputes have historically been resolved by litigation in the probate court.

Probate litigation may result in a definitive answer about the issue at hand, but probate matters are often also about conflicts that a court cannot effectively address. In recent years, probate mediation has become more popular as a way of reaching deeper, more lasting resolutions to the issues involved in probate disputes.

What is Probate Mediation?

Probate mediation is a form of alternative dispute resolution in which a neutral third party, a trained mediator, helps parties to a probate dispute reach a mutually agreeable resolution… Read More

Many, if not most people intend their spouse to be the primary beneficiary of their estate. But there are also many situations in which it makes sense to limit a spouse’s inheritance. Maybe you have family wealth or an interest in a family business that you want to remain in your family of origin if you should die. Perhaps you and your spouse are marrying later in life, and have each accumulated significant assets on your own. You might have children from a previous marriage that you would prefer to inherit your assets; a prenup can protect your child’s inheritance in the event that you predecease your spouse. Whatever your motivation, a prenuptial agreement can be a valuable estate planning tool.

If your first thought when you hear the word “prenup” is divorce, you’re not alone. But a prenuptial agreement is nothing more than agreement between a couple before their marriage as to how they will approach issues (usually financial) during their marriage. While a prenup does deal with how the couple’s property will be treated in a divorce, it can also address what… Read More

When an Ohio resident dies, a personal representative must be appointed to administer their estate. If there was a will, the probate court often appoints the executor named in the will. If the deceased did not have a will, the court will appoint an administrator (typically a close family member) to serve as personal representative of the estate.

The personal representative is a fiduciary — someone obligated to act in the best interests of another party, rather than their own. In the case of a decedent’s estate, this person is obligated to follow the law and act in the best interests of the heirs or beneficiaries of the estate. Most representatives take their fiduciary duties very seriously. Sometimes, though, an executor or administrator commits a breach of fiduciary duty, or there is so… Read More

Many people who establish trusts want to do so in order to protect assets for their loved ones. But there are many types of trusts, and not all of them protect against the same types of risks. All trusts keep assets out of probate. Depending on how they are structured, trusts can be used to reduce taxes, provide for loved ones with disabilities or special needs, benefit a favorite charity, and more. But if you are looking to protect assets from your beneficiaries’ creditors, you may need a domestic asset protection trust (DAPT).

Made possible by the Ohio Asset Management Modernization Act (OMMA) of 2012, the Ohio Legacy Trust Act (OLTA) became law in 2013. permitting the creation of domestic asset protection trusts (also called “Ohio Legacy Trusts” in Ohio. People who live in states that do not allow DAPTs can still create one in a state that does, if the trust complies with that state’s laws. Of the states that do allow DAPTs, Ohio consist… Read More

Ohio guardians have many responsibilities with respect to incapacitated adults on whose behalf they are acting. Guardianship rights are carefully calculated to give guardians the freedom to act for their wards’ benefit, without giving them excessive powers that could be abused.

For example, guardianship rights include the right to make and manage investments on the ward’s behalf, manage the ward’s real estate, and collect debts that are owed to the ward. Ohio Revised Code Section 2111.50 also gives the guardian the right to do some limited estate planning on the ward’s behalf. In August of 2021, that right was expanded somewhat, and procedural safeguards were put in place to protect the ward and other interested parties. Let’s discuss expanded guardianship rights regarding estate planning and managing a ward’s estate in Ohio.

Prior Limitations on Ohio Guardianship and Estate Planning

ORC Section 2111.50, prior to its amendment, granted a guardian the same powers that the ward would be able to exercise on their own behalf, if the war… Read More

People in certain professions, like medicine and law, understand the value of asset protection because those professions are often the target of lawsuits. Others may not feel that their assets are vulnerable to a lawsuit. They may not have existing creditors, and they don’t expect to be sued—or that their children might be. In short, they are not concerned about creditors’ rights to their assets, because they don’t expect to have significant exposure.

But that would be a mistake. The truth is that any of us can find ourselves facing a situation in which a court rules that we owe someone else a lot of money. It is for that reason that discretionary trusts for asset protection have become increasingly popular. Discretionary trusts and trusts with spendthrift provisions are commonly used to protect beneficiaries’ assets from potential creditors.

Creditors’ Rights and Powers of Withdrawal

There are a number of common scenarios from which settlors (creators) of such trusts hope to protect their beneficiaries’ assets. Trusts can pr… Read More

Ohio law provides for a support allowance of $40,000 from the estate of a deceased person for a surviving spouse and/or minor children. If there are no minor children, or the minor children are also the children of the surviving spouse, the spouse will receive the entire allowance. If the deceased had minor children who are not also children of the surviving spouse, the probate court will equitably divide the allowance of support between the surviving spouse and minor children. This amount is sometimes referred to as a “spousal allowance,” “surviving spouse benefits,” or “family allowance.” It is considered a priority claim against the estate, meaning it is paid before most other claims.

The law also provides that the surviving spouse may select one or more automobiles titled in the deceased’s sole name and valued up to a total of $65,000. Any automobiles so selected are not to be included in an inventory of estate assets.

In recent years, there has been some ambiguity in the law about whether a spouse’s selection of even a single automobile should reduce the amount of the surviving spouse benefits. Legislative action that takes effect as of August… Read More