Changes to Ohio Guardianship Law in 2021
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 ward was present, not a minor or under a disability—except the power to make or revoke a will. The guardian could make a revocable trust and fund it with the ward’s property for the ward’s benefit. However, such a trust was not permitted to extend beyond the ward’s minority (if the ward was a minor) or beyond the ward’s disability or life. Consequently, the trust would be of very limited use for estate planning.
Under the law prior to amendment, guardians could conduct some limited estate planning with the approval of the probate court. They could, for instance, convey interests (either present, contingent, or expectant) in the ward’s real or personal property, or release such interests. But ORC Section 2111.50 was silent regarding other estate planning tools.
The law did not explicitly give a guardian the right to create a “transfer on death” (TOD) designation for property belonging to the ward. In Ohio, TOD beneficiary designations are a simple way to allow vehicles and certain other assets to pass outside of probate. The law also did not allow a guardian to disclaim the ward’s interest in property, nor to change beneficiary designations on insurance policies, retirement plans or annuities.
These limitations on guardianship powers protected wards from possible misconduct on the part of a guardian. Unfortunately, they also deprived wards’ beneficiaries and estates of valuable asset protection and tax planning options.
Options Available Under Amended Law
The Ohio State Bar Association’s Estate Planning, Trust, and Probate Law Section was instrumental in drafting amendments to Section 2111.50. The amendments include the following measures which will give guardians more estate planning options for their wards. At the same time, the amendments ensure due process for interested parties.
Under the amended law, Ohio guardians may, with the approval of the court:
- Create, amend, or revoke revocable trusts of property of the estate of the ward that may extend beyond the minority, disability, or life of the ward.
- Change beneficiaries of insurance policies, retirement plans, individual retirement accounts (IRAs), and annuities.
- Create a transfer on death designation, payable on death designation, survivorship tenancy, joint tenancy, or tenancy by the entireties on behalf of the ward.
Court approval for the actions listed above may be given after a hearing. The hearing may take place only after notice is given to parties who may be interested in the proceedings. Parties required to be notified of a hearing to allow a guardian to act include:
- The ward;
- The ward’s heirs at law and next of kin (in other words, the people who would stand to inherit from the ward if the ward did not have an estate plan);
- The beneficiaries under an existing will or revocable trust of the ward;
- Beneficiaries of any insurance policies, retirement plans, individual retirement accounts, and annuities owned by the ward;
- Beneficiaries under any proposed revocable trust and the proposed beneficiaries under any changes in the designation of beneficiaries of any insurance policies, retirement plans, individual retirement accounts, or annuities;
- Any other persons the court orders.
The law still does not allow a guardian to make or revoke a will on behalf of a ward. However, estate planning options are meaningfully expanded. Guardians will now have the opportunity to help the ward transfer property on death in multiple ways that bypass the probate process.
That said, it is important to note that the change in the law does not create any requirement that a guardian engage in estate planning on behalf of a ward. If you are serving as a guardian and have questions about estate planning actions that you can take or should take for your ward or other guardianship rights, contact an experienced Ohio estate planning attorney for guidance.