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:
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
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
It has always been possible for a court to modify a trust for unforeseen circumstances. Traditionally, a court could allow or order a trustee to deviate from a term of the trust if, due to circumstances not known to or anticipated by the trustmaker (settlor), complying with that provision would “defeat or substantially impair the accomplishment of the purposes of the trust…”
Section 5804.12(A) of the Ohio Trust Code (OTC) gives even broader authority to modify a trust for unforeseen circumstances: “The court may modify the administrative or dispositive terms of a trust or terminate the trust if because of circumstances not anticipated by the settlor modification or termination will further the purposes of the trust.”
Ohio law, which is based on the Uniform Trust Code (UTC), has three important distinctions from the traditional (common law) position. First, under Ohio law, a trust cannot only be modified for unforeseen circumstances, it can be terminated early. Second, Ohio law permits the court to modify… Read More
We tend to make our estate plans based on certain assumptions. Most of the time, we assume our children will outlive us, although we know that that doesn’t always happen. What happens if our assumption on that score proves incorrect? One question many people don’t stop to think—or find too painful to think—is “what happens if my heir dies before me?”
There are laws in place, called “anti-lapse statutes,” that are designed to prevent unintended consequences if that happens. For instance, let’s say you have three children, each of whom has three children of their own. When creating your estate plan, you make a will that divides your estate equally among your three children, “share and share alike.”
At the time you made the will, you probably weren’t anticipating that one of your children might die before you. If you did think of it, you might have assumed that your grandchildren would have inherited the share of your deceased parent.
But in Ohio, until recently, you might have been wrong about that.
A 2015 Ohio Supreme Court case highlighted a problem with Ohio’s anti-lapse statute. In that case, Ca… Read More
Think about the things you can do electronically that weren’t possible ten, or in some cases, even five years ago. You can order a pizza from your laptop, cash a check using your phone, monitor someone standing at your front door from miles away. You can sign, scan, and e-mail important documents. Can you, and should you, do your estate planning electronically? Let’s talk about electronic wills and recent updates to Ohio probate law.
A typical will is printed on paper, and signed by the person making it (the testator) in front of witnesses, who also sign, attesting that the testator, who was known to them, was actually the person who signed the will. There are exceptions to this general rule—under some limited circumstances, a handwritten, unsigned will can be valid, for instance—but for many years, this has been the accepted standard.
This is not just the result of attorneys clinging to outdated ways of doing things. Generally, when the law requires people to “jump through hoops” to accomplish a legal goal, such… Read More
Estate planning attorneys are constantly telling anyone who will listen: “Make your estate plan now; don’t put it off.” Primarily, that is because life is uncertain. Even a young person in good health can be struck down by a sudden illness or accident. If that happens, it is so much easier on everyone involved to have that person’s wishes set forth in a written estate plan. But there are other reasons that we urge people not to put off their estate planning, and one of those is the risk that as they age, they will no longer have the legal capacity to make a binding estate plan. It can be painful to think about, but it’s important to talk about estate planning and diminished capacity.
In order to be legally capable of making a valid will in Ohio, the person making the will (the testator) must be able to:
Increasingly in the past several years, estate planning attorneys have come up against the need to plan for intellectual property when crafting an estate plan. Intellectual property consists of things such as patents, trademarks, copyrights, and trade secrets. The overarching goal of all of these is to allow the owner of the intellectual property (IP) to keep others from producing, using, or selling protected goods and services. Because intellectual property is intangible, estate planning for intellectual property poses some unique challenges.
The various different types of intellectual property are protected by somewhat different means. If you have invented a useful new tool, for instance, the process for protecting it with a patent is different than the process used by your author friend to copyright articles she has written. And if you want your invention, brand, writing, or other creation to continue to benefit your family or other beneficiaries after your death, it is essential to work with an attorney who can successfully plan for the transfer of your intellectual property rights.
When you set out to m… Read More
Your estate plan includes a last will and testament, and likely a living trust and powers of attorney. If your goal is to keep your assets out of probate and to provide for your children, you may be overlooking another tool for estate planning: beneficiary designations. Here's a guide to using beneficiary designations in your estate plan.
You probably have some assets with beneficiary designations already, such as life insurance policies. There are also other assets for which you can plan with beneficiary designations, and some documents, such as a divorce decree, that may require you to establish beneficiary designations on certain assets. By deliberately planning your beneficiary designations, you can ensure that your assets pass as you intend with a minimum of red tape.
If you are like many people, your retirement plans are some of your most significant assets. Most retirement plans, like 401(k)s and IRAs, pass through beneficiary designations, not through a will. If you have a 401(k), federal law says that your spouse is your beneficiary. Even so, it is advisable to name him or her as beneficiary on your co… Read More