As this blog post is being written, and possibly as you read it, the United States is in the grip of the coronavirus pandemic. The pandemic has led many people to think about their estate planning in light of COVID-19. The coronavirus also has many of us working and learning remotely, leading to the realization that many things we are used to having take place in person can take place electronically.
It was only a matter of time before someone tried to write a will on an electronic device, and before the validity of that will was questioned in court. In fact, such a case arose in Ohio several years ago. A man named Javier Castro dictated his will to his brother. The brother transcribed the will on an electronic tablet. Javier himself signed the will on the tablet with a stylus; two witnesses signed the tablet, affirming his signature.
In 2013, the Lorain County Probate Court ruled that the will was valid. Ohio wills are required to be in writing, and the court concluded that the electronic writing met that requirement. Ohio wills also must be witn… Read More
Estate planning attorneys have a saying: “It’s never too soon to make an estate plan, but soon, it could be too late.” That’s not just a clever slogan used to generate business, and unfortunately, the emergence of a novel coronavirus has demonstrated the truth of this expression.
The good news is that the great majority of people who contract this virus do recover (even if they must suffer some misery in the meantime). The bad news, which has been splashed across TVs, radios, newspapers, and the internet, is that some people don’t. The greatest death toll has been among the elderly, but no age group is immune.
This isn’t said to frighten you, but to empower you. If you are reading this right now, and your estate plan doesn’t fully address your needs, this is your opportunity to take steps to ensure that it does. We hope that the coronavirus does not have a serious impact on you or your family. But even if it doesn’t, you will benefit from taking these estate planning measures:
These days, people move around more than ever. You might buy a house in Dayton, get transferred out of state for work, and continue to rent out the Ohio property. Or you might spend most of your life in Ohio, only to spend your later years living with an adult child in a neighboring state. Whatever the reason, there are many people who live outside of Ohio, but continue to own real property in the state. When they die, that real property needs to be disposed of. Ancillary probate in Ohio is one mechanism to deal with real property whose owner died outside of the state.
Ancillary probate is addressed in Chapter 2129 of the Ohio Revised Code. If a resident of another state dies owning property in Ohio, any interested person (usually, but not necessarily, an heir) can apply to be ancillary administrator in any county in Ohio where property of the deceased person (decedent) is located.
As a practical matter, this almost always refers to real property. Personal property such as furniture, art, jewelry, cars, etc. in Ohio will probably be gathered by the personal representative of the estate in the state where the deceased lived, and dealt with in that state's probate co… Read More
In December 2019, the president signed into law the Setting Every Community Up for Retirement Enhancement Act, better known as the SECURE Act. As the name suggests, the law is intended to make it easier for American workers to save for their retirement. Let’s examine what the SECURE Act does, and how it might affect your retirement and estate planning.
Prior to the SECURE Act, beneficiaries of inherited IRAs and 401(k)s could “stretch” distributions out over their life expectancy. This had a couple of distinct advantages. Because required minimum distributions (RMDs) were stretched out over a longer time period, perhaps decades, that additional income to the beneficiary was less likely to bump them into a higher tax bracket. In addition, of course, beneficiaries could count on a consistent payment amount year after year.
The SECURE Act has done away with the stretch provision, at least for many people. Under the SECURE Act, if the owner of a 401(k) or IRA dies after January 1, 2020, the beneficia… Read More
What does it take, in terms of mental capacity, to be able to make a will in Ohio? To create a trust, make a gift, or to form a limited liability company (LLC) for estate planning purposes? The answer to these questions is at the heart of many challenges to Ohio estate plans.
A will is only valid if the person making it, known as the testator, had "testamentary capacity." But what exactly is testamentary capacity, and when does a test for it apply? Does an individual need greater capacity to make a will than, for instance, to make a lifetime gift?
Unfortunately, Ohio law does not have a statute on the books setting forth the test of capacity for using various estate planning documents and making certain transfers. Attorneys and judges must rely on the common law, and while there is some case law on the capacity to make wills, there is much less regarding the definition of capacity to create a trust, an LLC, a power of attorney (POA), or a gift.
The issue of testamentary capacity comes up most fre… Read More
The situation you’re about to read about sounds like a question that might end up on the Ohio bar exam—but don’t let that stop you from reading! The problem really is an interesting one, and more to the point, something that could end up affecting the property of you or someone you love. Even more importantly, we will tell you how to avoid a loss that you might not have ever seen coming.
If you have been reading this blog for awhile, you have heard about transfer on death accounts, which allow an account holder to place a designation on a bank or other financial account so that, when they die, the account automatically passes to the transfer on death (TOD) designee. But TOD designations aren’t only for bank accounts. You can transfer securities, vehicles and even real estate with a TOD designation, which is a beneficiary designation. A significant advantage of a TOD designation is that it allows the asset in question to pass immediately, an… Read More
Any estate planning attorney worth his or her salt will recommend to clients that they execute powers of attorney (POA) for both healthcare issues and finances. Many people tuck these documents in a drawer, feeling secure in the knowledge that they'll be ready to use when needed. With healthcare powers of attorney, that is generally true.
But an unfortunate scenario with financial powers of attorney unfolds often. A person, called the principal, executes a power of attorney allowing another person, her agent, to take certain actions on her behalf should she become incapacitated. When that day arrives, the agent, with POA in hand, goes to the bank or investment firm to transact business on behalf of the principal. Expecting no issues, the agent is shocked to find out that the bank will not honor the POA. Unfortunately, at that point, the principal lacks the legal capacity to execute new POAs that comply with the financial institution's requirements.
W… Read More
If your marriage is headed toward divorce, or if you’re in the thick of a divorce right now, estate planning probably isn’t on your mind. If you’ve recently come through a divorce, you may not want to think about estate planning, either; you probably don’t want to see another lawyer for a good, long time. If you’re dealing with divorce, some reluctance to dive into estate planning is understandable. Unfortunately, it may be more important to create or update an estate plan now than ever. Here’s what you need to know about estate planning before, during, and after divorce.
When we speak of estate planning before divorce, we mean before the divorce case is even filed, rather than before it is final. If your spouse files for divorce and blindsides you, you may not have the opportunity to do pre-divorce process estate planning. But if you are planning to file, or suspect your spouse is moving in that direction, there are some estate-planning actions you may want to take.
Wh… Read More
When you consult an attorney about estate planning, you trust that he or she is going to consider your goals and devise a plan to meet them. In general, most attorneys do. But as the saying goes, “You don’t know what you don’t know,” and it may not occur to you to tell your attorney that you want help with asset protection. Unfortunately, it also doesn’t occur to many attorneys to ask their clients about this critical issue. As a result, attorneys and clients focused on one goal, such as minimizing taxes or business succession planning, might make asset protection mistakes in estate planning. Let’s talk about some of the common mistakes, and how best to avoid them.
First off, let’s define “asset protection.” Asset protection is a type of financial planning intended to protect assets from creditors and keep them available for you or your intended beneficiaries. Some estate planning tools and techniques leave assets vulnerable to the claims of creditors, including divorcing spouses.
You may not have known to raise the issue of asset protection with your attorney, but he or sh… Read More
Trustees given the responsibility of administering a trust know that their rights and responsibilities are determined by the trust instrument, and by state law. Many trusts are “discretionary” trusts, which means that distributions are made in the trustee’s discretion, often for the “health, education, maintenance and support” of one or more beneficiaries. This standard is referenced in the Internal Revenue Code section 2041(b)(1)(A), and many creators of trusts (settlors) appreciate this standard for distributions because it helps to avoid the risk of transfer taxes. Other trusts are "wholly discretionary" and provide maximum asset protection for beneficiaries. But what does “health, education, maintenance, and support” mean in terms of making trust distributions?
The answer to that question depends in part on how much discretion the trust instrument gives to the trustee. As a general rule, a trustee must exercise the discretionary power to make distributions Read More