» Estate Planning

Why Transparency Matters in Estate Planning

You likely already understand how important it is to have an estate plan, especially if you have significant assets. You may even have a plan, carefully crafted in conjunction with your estate planning attorney to achieve your goals. There is one step you probably haven't taken, though: discussing your estate plan, and its context, with your heirs. Here's why transparency matters in estate planning, perhaps more than ever.

Your parents may not have discussed their estate planning with you, except perhaps in the most vague of terms, such as where to find their will when the time came. They may have felt uneasy telling you details of their estate plan, and you may have felt even more uncomfortable asking. In the not-too-distant past, money was not something polite people discussed, even among family.

But there may have been another reason for your parents' reticence: a confidence that when it came time for you to manage their estate, you would have the experience and presence of mind to do so. Ask yourself this: are your children prepared to manage the legacy you plan to leave them? If not, how do you plan to change that? The reality is that you cannot do so unless y… Read More

What is a Joint Trust?

For various reasons related to tax issues and drafting challenges, joint trusts have not historically been popular with Ohio estate planning attorneys. Due to changes in tax law in the past several years (most notably an increase in the amount couples can exclude from estate tax), joint trusts have become a more attractive option for many couples. What is a joint trust, and should you consider having one?

Basics of Joint Trusts

All trusts have three roles: the grantor or trustmaker who creates the trust; the trustee who manages trust assets and makes distributions, and one or more beneficiaries, who receive distributions from the trust. A trust may be revocable during the grantor's lifetime, or irrevocable, meaning that the grantor gives up all control of assets once they are in the trust, and the grantor cannot revoke or amend the trust without the permission of all beneficiaries.

A joint trust is a revocable trust. Both parties to the trust are grantors of the trust, as well as both trustees and beneficiaries. In short, they have complete control over all trust assets, just as they did when those assets were in their own name before they were placed in t… Read More

Top Mistakes in Making Beneficiary Designations

How will your assets be transferred to your loved ones after your death? Your first thought may be that your last will and testament will distribute your assets, and this may be true to an extent. Chances are, though, that you have assets that will pass to others because of the beneficiary designations you have made. And without realizing it, you could easily have made mistakes in making beneficiary designations.

Assets owned in your sole name will go through probate, but there are many types of assets that will not. These include assets in a trust; real estate or bank accounts held jointly with another person that have a right of survivorship, meaning that the survivor takes the asset; retirement accounts; life insurance policies; transfer-on-death (TOD) accounts; and payable-on-death accounts. All of these assets may be subject to one or more of the following mistakes. Have you made any of them?

Failing to Name a Beneficiary

What happens if you don't name a beneficiary on a retirement account or life insurance policy? The probable outcome is that the benefits will go through probate when you die. Not only does this create inconvenience, it could, in the… Read More

How a Preservation Trust™ Provides Asset Protection and Income Tax Flexibility

Trusts come in many forms and serve many purposes, including avoiding probate, protecting assets from creditors, and offering tax benefits. Many people also use trusts to protect beneficiaries whom they fear would not be able to manage assets if they inherited them outright. But what if you have a beneficiary that you trust to manage their financial affairs? You can still help them reap the other benefits of a trust while granting them more control over the assets in it. Learn how a Preservation Trust™ provides asset protection and income tax flexibility.

A Preservation Trust™ is more commonly known as a beneficiary-controlled trust. Beneficiary-controlled trusts are a subset of dynasty trusts. Using a Preservation Trust™, you can grant your beneficiary the authority to manage trust assets while still protecting the assets in the trust for their use and for that of future generations.

What is a Preservation Trust™ and How Does it Protect Assets?

A Preservation Trust™ is a trust in which the primary beneficiary also serves as the controlling, or primary, trustee. This allows the beneficiary to have nearly the same level of control over trust asset… Read More

The "Augmented Estate" and How It Can Affect Your Family

You may be familiar with Medicaid as a government program that provides funding for health care to people with limited income. You may also believe that, as someone who has worked and saved for all of your adult life, you will never fall into the category of individuals who need Medicaid assistance. Hopefully, you are right about that.

You might be surprised to learn that many people in a similar situation to yours have ended up needing Medicaid services for one reason: they have needed nursing home care for an extended period. Nursing home care is expensive—in some cases up to $100,000 per year or more—and it is not covered by Medicare except in certain limited instances. That means that when an individual's funds are depleted and they can no longer pay out-of-pocket for care, they may become eligible for Medicaid.

After a person who has received Medicaid dies, the State of Ohio has the right to file a claim against their estate to recover some or all of the assets paid out through Medicaid on their behalf. This is called "Medicaid estate recovery." All states that receive federal Medicaid funding are required by law to establish such an estate recovery progra… Read More

Pitfalls of Transferring Assets to Adult Children

If you're at the stage of your life where you have spent decades working hard to build a solid financial future for your family, and are now in a position to make the lives of your adult children more financially comfortable, you may be wondering about the best way to go about that—for them and for you. Perhaps you're also wondering if a time is coming when you will need long-term care outside of your home. You don't want your assets to go to the nursing home; you want them to go to your family. Should you just go ahead and transfer assets to your children now? You could, but doing so is not without risk. Let's talk about some of the pitfalls of transferring assets to adult children.

Pitfall #1: Loss of Control

You would do anything for your children, and you believe they would do the same for you. So it doesn't occur to you to hesitate to transfer assets, even the deed to your house, to them. You have an understanding, implicit or explicit, that if you have a need, they will take care of you or even transfer the asset back to you. You might even have a "wink and a nod" agreement with them: the asset is theirs in name only, but really, you both intend that it i… Read More

Estate Planning for Blended Families

There is a great need for estate planning for blended families. According to the U.S. Census Bureau, 1300 new stepfamilies are formed every day in the United States. Over 50% of families in the United States involve adults who are remarried or re-coupled. These so-called blended families can offer wonderful new relationships to people who are a part of them—and create tremendous conflict over inheritance when one of the partners in the couple passes away.

Even in so-called "intact" families, in which all the children are legally related to both of the parents, there can be conflict over inheritance, especially if one child receives more than another or is disinherited. In a blended family, the potential for conflict rises exponentially. There is sometimes unresolved hostility between one party's children and the new spouse, or between stepsiblings. Inequities, real or imagined, in the distribution of an estate can destroy what remains of relationships.

How Inheritance Can Go Wrong in Blended Families

Picture, for example, a father who has told his adult children after the end of his first marriage that he's "leaving everything" to them when he dies. Then… Read More

Can You Disinherit a Child in Ohio?

If you're thinking about disinheriting a child, you probably have a good reason for considering this option. And while you aren't obligated to explain your reasons to anyone, letting your estate planning attorney in on your reasoning can help you best achieve whatever your aim is in disinheriting a child.

If, for instance, your child, like so many in this country, has fallen prey to addiction, you may be concerned about them using their inheritance for drugs. Obviously, that could have devastating effects for their health or even their life. In such a case, you may be able to create a trust that will pay directly for their living expenses and even drug or medical treatment. In that way, you could provide for them and promote their health without risk of their wasting their inheritance and without resorting to disinheriting them.

Of course, in some circumstances, there's no estate planning work-around; you genuinely want or need to disinherit your child. If this is the case, the answer is yes, it is possible to do this. It's also possible to attempt to disinherit your child and for them to wind up taking from your estate anyhow. Here's why, and how to make sure your… Read More

What is a Crummey Trust?

Providing financially for children and grandchildren is one of the most satisfying ways to use the assets you've spent a lifetime accumulating. Of course, you have made an estate plan to dispose of your assets after you're gone, but you want to be able to have the joy of giving while you're still alive. Not only does giving during your lifetime allow you to experience the gratitude of your beneficiaries, but making lifetime gifts can be an excellent way to reduce your taxable estate.

As of 2017, you can make a gift of up to $14,000 as an individual (or $28,000 for a married couple) to a child or grandchild each year without incurring gift tax liability on that amount. This gift can be used for their education, travel, even a down-payment on a house when the time comes. But how you give the gift has a significant impact on the benefit you and the beneficiary will get out of it.

Limitations of Custodial Accounts and Regular Trusts

You don't want to give a large financial gift directly to a minor chil… Read More

Choosing an Estate Planning Attorney for Your Family Farm

We've written before in this space about choosing a probate and estate planning attorney.

Obviously it's important to choose someone who's experienced in estate planning and probate law and who is ethical. But beyond that, does it really make a difference whom you choose?

If one of the assets for which you're planning is a family farm, the answer to that question is an emphatic "yes!"

Unique Planning Issues for Family Farms

Family farms are not like other property, for many reasons. Leaving aside financial complexities, family farms, unlike many other assets, have a legacy, a family heritage attached to them.

While it's important to have an attorney who understands what your farm means to you, there is also much more to planning for a family farm than honoring sentimentality. Many economic factors affect the value of a farm from year to year, which could have an impact on estate tax. Like other family businesses,… Read More

About OhioProbateLawyer.com

Ted Gudorf - Ohio Probate Lawyer

The tasks involved in probating an estate can be daunting, especially for those who have never been through it before. We are committed to relieving anxiety around the probate process and to helping Ohioans through an often-challenging time in their lives.

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