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… Read More
Ohio, like other states, has laws that dictate how a the estate of a deceased person (decedent) passes when there is no will. These laws, called “laws of intestate succession,” guide courts, and administrators, as to how the decedent’s assets should be distributed. How does Ohio inheritance work when there is no will?
For the most part, laws of intestate succession try to approximate what most people would intend if they had made a will. If there is a spouse and children, for instance, they will inherit rather than a half-sibling or a first cousin once removed. (If you would prefer your first cousin once removed inherit from you instead of your spouse, you had better get yourself an estate plan—or a divorce lawyer.)
Things get considerably more complicated, though, when there are no close relatives, or when heirs are not of the same degree of relation to the deceased. It’s easy to figure out what to do when the deceased is survived by three adult children, but no spouse: the estate is divided into three equal shares. But what if one of those adult children has died, leaving three children of his own? Or what if the deceased had no surviving spouse, chil… Read More
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… Read More
A new omnibus bill, HB 595, has made some changes to Ohio probate law that could affect your will or trust. The law is far-reaching, and contains much more information than we can address in a single blog post, but there are some developments in Ohio probate law that could have an impact on you or your loved ones. Here are some of the important developments from Ohio HB 595.
Prior to the effective date of HB 595, an existing document could be incorporated into a will "by reference." This means that simply by referring to a document, book, memorandum, or record in a will, the document could become part of the will. The actual document had to be deposited in the probate court at the time the will referring to it was probated, within 30 days afterward, or later if the court granted an extension of time for good cause.
HB 595 provides that if a will incorporates a trust instrument only under the circumstances that a bequest to a trust is ineffective, the trust instrument needs to be deposited in the probate court within 30 days of a final determination that the bequest was ineffective.
In addition, HB 595 that if it… Read More
Most of the time, when someone leaves a will, their assets are distributed according to the terms of the will, after all of the debts of the estate are settled. Occasionally, though, a last will and testament will make bequests that just cannot be fulfilled; there are not enough assets left in the estate. When that happens, who gets shortchanged? Do some heirs receive their entire bequest, while others get little or none of what was "left" to them? Abatement of legacies is the law of who gets what, and how any shortfalls are handled.
Why would abatement of legacies be necessary? Who would leave their heirs assets that they didn't have? Most people don't intend to do that, of course. But the reality is that the value of an estate can go up and down between the time a will is written and the time it becomes necessary to distribute assets. In addition, estate debts can be higher than anticipated, particularly if the last illness of the deceased person incurred significant medical bills.
Put simply, there are often the same number of people at the table, but the size of the pie is smaller. The question then becomes: how is the pie divided? Do some people leave the ta… Read More
Every year, about two and a half million American marriages end in divorce, meaning about five million people have undergone a major change in their legal and family relationships. In the aftermath of your divorce being made final, it is tempting to have nothing to do with legal matters for a while. That's understandable, but you should make one more trip into a lawyer's office—an estate planning lawyer. Hopefully, you will live a long, happy, and healthy life after your divorce, but you will sleep better at night if you have an estate plan that lines up with your new reality. Let's talk about estate planning after your divorce.
When you made your estate plan, you probably did so with the idea that your spouse would be your primary beneficiary, and that he or she would administer your estate if you died. If you suffered an illness or accident that incapacitated you, you probably appointed him or her as your agent under a power of attorney, to make your medical and financial decisions.
At the time, those choices seemed reasonable. After divorce, they might seem like a nightmare scenario.… Read More
Many adults, particularly older adults, have a power of attorney in place so that a loved one can make decisions and act on their behalf in the event they lose the capacity to do so themselves. You might have a power of attorney for financial matters, so that if you became legally incapacitated, the agent you appointed could seamlessly step into shoes and conduct transactions on your behalf, making sure bills are paid, and so forth. You might also have a health care power of attorney, enabling a trusted person to make your health care decisions on your behalf. But can your agent get your health care information?
The intuitive answer would seem to be "yes." Otherwise, how could the person entrusted with making health care decisions on your behalf do so in an informed way? Without access to your health information, he or she might not even know what decisions needed to be made. Until a few years ago, there was a Catch-22 under Ohio law: a health care power of attorney didn't spring into effect until a principal's attending physician declared the principal legally incapacitated. But the agent, also called the attorney in fact, could not get this information until the power… Read More
Just over six years ago, on December 20, 2012, Governor John Kasich signed into law the Ohio Asset Management Modernization Act of 2012 (AMMA). AMMA, which took effect in March of 2013, has been described as “a quiet revolution in Ohio law.” The law put in place a number of changes regarding the management of property, many of which served to limit the rights of creditors against Ohio residents and asset holders. Perhaps the most significant of these was the new ability to create an Ohio domestic asset protection trust (DAPT). Domestic asset protection trusts are available in seventeen states. What exactly is a DAPT, and what distinguishes it from other types of trusts?
A DAPT is an irrevocable self-settled trust, of which the creator (known as the settlor or grantor) is permitted to be a beneficiary, and may be the primary beneficiary. In addition, the trust is structured so that the settlor is given access to funds in the trust. A properly-drafted DAPT also has a feature that lends it its name: creditors of the settlor are unable to reach the assets in the trust. It is noteworthy that the trust only protects assets from possible future creditors. A settlor cannot p… Read More
Second marriages can open a new and joyful chapter in life, especially after a bitter divorce or the pain of a first spouse’s death. Unlike a first marriage, in which your whole future lies ahead, by the time you arrive at the threshold of your second marriage, you have some history. That history often includes children from the first marriage. Your children are an important part of your life, and you want to continue planning for their futures, even as you embark on your own with a new spouse. The tension between these—the desire to leave a legacy for your children while also providing for your spouse—can complicate estate planning. This is why estate planning professionals sometimes recommend QTIP trusts for second marriages.
A QTIP, or Qualified Terminable Interest Property trust, is authorized by language in Internal Revenue Code Sections 2056(b)(7) and 2523(f). What can a QTIP trust do for you and your family? It can prevent unintended outcomes in the event of your remarriage a… Read More
An increasingly common estate planning practice is the establishment of a revocable living trust in which the creator (settlor) is also both the trustee and the beneficiary during his or her lifetime. After the settlor’s death the trust, which was revocable during the settlor’s life, becomes irrevocable, and a successor trustee takes over, distributing or managing the trust for the benefit of one or more beneficiaries. What happens when one of those beneficiaries is disabled? More and more, we are receiving questions about changing a trust for the benefit of disabled beneficiaries.
The potential problem is that the trust may include language dictating that the disabled beneficiary’s share of the trust be held in trust for his or her lifetime, and that distributions be made according to a particular standard, such as for “health, maintenance, education, and support.” If, like many disabled individuals in Ohio, the beneficiary needs Medicaid benefits, will the trust interfere with his or her ability to qualify for benefits?
Medicaid in Ohio is administered by county offices of the Ohio Department of Jobs and Family Services (ODJFS). ODJFS is likely to fin… Read More