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Advanced Directives – My Personal Experience When Planning for the Unexpected

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My Story

Like many of you reading this article, I never think a major medical disaster could happen to me or, if something did happen, that I would be competent enough to make decisions for myself. Well, as a ‘relatively young’ guy, this was not the case recently when I needed emergency surgery to prevent permanent paralysis.   Two years ago, I was practicing my golf swing on a late Thursday afternoon at Sleepy Hollow in Brecksville, Ohio.  I’m a terrible golfer and I wanted to ensure I wouldn’t embarrass myself the next day while playing with a client.  Near the end of my practice, I decided I wanted to see how hard I could hit the ball.  I hit the ball with maximum effort that ended up landing on the fairway outside of the nets.  During my swing I felt a ‘pop’ in my back and my leg went numb.  I decided to call it quits and go home to rest.

That night, while resting I leaned over to grab the TV remote.  Without warning I had excruciating pain suddenly occur in my back and my legs went limp.  I was on the floor unable to move or reach my phone. Luckily, my friend was visiting and he called EMS.   When EMS arrived, I was crying from the pain, unable to move my legs, laying on the floor.  I have never experienced anything more painful in my life. The paramedics gave me a shot of fentanyl for pain – it did nothing. Upon arriving at the hospital, the nurses gave me a shot of morphine – it did nothing. Then the doctor ordered a dilaudid.  After an hour of being on a combination of fentanyl, morphine, and dilaudid, I was finally relieved of pain and in addition, also relieved of my mental abilities.

After an MRI was performed, the doctor came to give me the news.  She said that I had a severe lateral herniated disc. The disc exploded and was piercing the nerves that control my legs.  I would need emergency surgery within the very immediate future, or I would have permanent paralysis in my right leg for life.  She explained that because the herniation was lateral, it required a more complicated approach.  It was one that she could handle, but she felt her colleague (who was on vacation) was more adept due to his experience. The doctor suggested that I wait three days, in severe pain and on multiple pain meds, to have her collegial surgeon perform the surgery. She needed to know what I wanted to do.   However, because of the effect the medications I was taking for pain, I did not have the mental competency to make this decision myself. Instead, those who I named in my advanced directives would need to make these decisions for me.

What are advance Directives?

Simply put, advance directives are legal documents that provide detailed instructions about who should oversee your medical treatment and what your end-of-life or life-sustaining wishes are. In the event you are unable to speak for yourself, like in my case of mental incapacity, the medical professionals can contact someone else who has authority to make those decisions for you. Though there are many advance directive documents out there, the three most common are Healthcare Powers of Attorney, HIPAA Authorization and a Living Will.

Healthcare Power of Attorney – A healthcare power of attorney allows you to appoint a trusted person to make all healthcare decisions in the event that you are unable to make them for yourself.

Living Will – A living will eases the burden on your healthcare POA to ‘pull the plug’ when you are in a permanent vegetative mental state.

HIPAA (Health Insurance Portability and Accountability Act) – Medical records are private and are covered under the HIPAA laws. You Healthcare POA must have the authority to obtain your medical records through a properly executed HIPAA authorization.

My Healthcare POA

By this time, I was admitted in the hospital and the surgeon needed an answer regarding when I wanted the surgery to take place.  The doctor asked to contact my healthcare POA. I said, no problem her name is Kathy and I will provide her number.  I reached for my phone and it was then I realized that I had forgotten it when EMS brought me in.  Like many of us, I did not memorize Kathy’s number so without my phone, I was stuck.  Additionally, since this was during the outbreak of COVID my friend who called EMS was not able to come into the hospital either.

The nurse taking care of me looked through my cart and noticed I already had my healthcare POA on file, naming Kathy as my Agent. I wasn’t thinking clearly so I hadn’t thought to ask the nurse to check.  It was then that I remembered, in a slight daze, that I practice what I preach.   Three years earlier I completed all of my advanced directives and made sure to upload them with all three major hospitals: Cleveland Clinic, University Hospital, and Metro.

The hospital called my Healthcare POA and she came to my rescue.  As a nurse herself, she knew exactly what medications I was on and how to interpret the medical situation.  Moreover, and critically important, she knew how to handle the insurance barriers that come with getting medical treatment.  Had I not completed my Healthcare POA, Living Will and HIPAA several years prior, I may have had a surgery from an inexperienced surgeon or worse yet, may have been paralyzed for life.  Additionally, had I not uploaded these precious documents with my local hospitals, I would not have had my healthcare agent’s phone number.

When I preach to clients about maintaining updated advanced directives I am preaching from experience.  I didn’t need them, until I needed them! Advanced directives are easy to obtain and require minimal effort to have them uploaded to local hospitals.  I implore you to have them drafted by an attorney or at the very least, complete them the next time you’re at your family care physician. For more information or to learn how Baron Law can help you complete your advanced directives, contact us at 216-573-3723.

 

Estate Planning Attorney

COVID-19 Funeral Reimbursement

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Did you know that you can be reimbursed for the funeral expenses of a lost loved one that passed from COVID-19? COVID-19 has affected the lives of many Americans and their families, reimbursement of funeral costs is a little way to ease the grief of losing a loved one from this pandemic.

The Federal Emergency Management Agency (FEMA) has started a program to reimburse those families that have lost someone due to the coronavirus. The application process starts April 12, 2021 and currently does not have an end date. To qualify you must meet the following requirements:

• The death must have occurred in the United States, this includes U.S. Territories and the District of Columbia
• The death certificate must indicate that the death was attributed to COVID-19
• The applicant must be a United States citizen, non-citizen national, or qualified alien who incurred funeral expenses after January 20, 2020
• There is no requirement for the deceased person to have been a United States citizen, non-citizen national, or qualified alien

Additionally, the following documentation should be gathered and kept for submission:
• An official death certificate – that attributes the death directly or indirectly to COVID-19 and shows that the death occurred in the United States, U.S. Territories, or District of Columbia
• Funeral expenses documents – (receipts, funeral home contract, etc.) that includes the applicant’s name, the deceased person’s name, the amount of the funeral expenses, and the dates the funeral expenses happened
• Proof of funds received from other sources – specifically for use toward funeral costs. We are not able to duplicate benefits received from burial or funeral insurance, financial assistance received from voluntary agencies, government agencies, or other sources
If approved, you will receive your funeral assistance through a check by mail or direct deposit, depending on the option you choose when applying for assistance.

Unfortunately, there are some people who cannot apply for assistance if they fall under one of the following categories:
• A minor child cannot apply on behalf of an adult who is not a U.S. citizen, non-citizen national, or qualified agent
• There are several categories of aliens that are lawfully present in the United States, but do not qualify for FEMA’s Individual and Households Program assistance, including this funeral assistance program. These include, but are not limited to:
o Temporary tourist visa holders
o Foreign students
o Temporary work visa holders
o Habitual residents such as citizens of the Federal States of Micronesia, Palau, and the Republic of the Marshall Islands

Please keep in mind there is no online application, this is through the FEMA funeral assistance hotline 844-684-6333. Once your application has been submitted via phone, you will be provided an application number and will need to submit your supporting documents (death certificate, funeral expense receipts, etc.). The supporting documents can be submitted the following ways:
• Upload documents to your DisasterAssitance.gov account
• Fax Documents
• Mail Documents

If you were responsible for the funeral expenses of more than one person lost to coronavirus you may claim each funeral on your application. The limits for assistance are up to $9,000 per funeral and up to $35,500 per application per state, territory, or District of Columbia.

This is a great program for families looking for assistance in the unexpected death of a loved one caused by COVID-19. For more information, please visit the link below. To schedule and appointment with one of our estate planning attorneys, contact Baron Law at 216-573-3723

Sources:
https://www.fema.gov/disasters/coronavirus/economic/funeral-assistance#eligible

family sitting around elder

Benefits Of A Family Trust As Part Of My Estate Plan

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Many people think trusts are for the affluent, but in actuality, family trusts are a powerful planning tool for individuals and families across the wealth spectrum.

We encourage you to carefully consider the differences between a will and a trust when crafting your estate plan. A will distributes assets outright upon your death. A trust allows you more customization and control over when and how your assets are distributed.

Here are a couple examples:

  • In a will, you can state that you’d like a certain sum of money to be given to each of your grandchildren. They will receive that sum upon your death. In a trust, you can state that your grandchildren only receive the sum once they turn 18 and that it may only be used for technical school or college tuition.
  • In a will, you can dictate that each of your children receive a portion of your assets. They will inherit those assets upon your death.
  • In a trust, you can control how and when the assets are received. For example, you can dictate in your trust that children receive payments in thirds after reaching the ages of 30, 35 and 40.
  • In a will, you might leave assets to a sibling. If that sibling is in a nursing home, the home could end up with your assets or they could kick your sibling off federal benefits. If you establish a trust, you can dictate that the assets will not be distributed if your sibling is in a nursing home or receiving Medicaid.

In This Article:

What Is A Family Trust?

Put simply, a family trust is a set of instructions that tell others what you want to happen to your assets after you’ve passed, and in some cases, while you’re still living.

A family trust is different from other types of trusts in that the beneficiaries are limited to family members, like a surviving spouse or children.

Whether a family trust is right for you will depend on your financial situation, your family’s unique needs and your goals.

How Does A Family Trust Work?

To protect, manage and distribute assets, there are three key roles.

  1. A grantor establishes the trust.
  2. A trustee (an individual or third-party fiduciary) manages the trust and makes decisions or hires someone to make decisions about investments, distributions and other financial matters. Trustees are bound by legal obligations to act in the best interest of the beneficiaries. They distribute assets or income generated from the trust’s assets to the beneficiaries based on the terms of the trust.
  3. Beneficiaries – in this case family members – benefit from the assets in the trust.

What Are The Types of Family Trusts?

There are two main types of family trusts: revocable and irrevocable.

Revocable family trusts are often used as living trusts to document how you want your assets to be managed and distributed both while you’re living and after you’re gone. They allow you to retain more control because you can change the trust’s terms at any time and can add or withdraw assets.

With a revocable trust, you can serve as trustee and name a successor trustee to take over when you are no longer able to. This can be especially helpful to your family if you reach a point in your lifetime where you become ill or are unable to manage your assets. Your successor trustee can make distributions on your behalf, pay bills, file tax returns and more.

An irrevocable family trust cannot be changed once created. It is often used as an estate planning tool to reduce estate taxes or protect assets from creditors.

There are many additional types of family trusts for specific purposes or benefits. Some common types include:

Testamentary trusts are created in the grantor’s will and take effect after he or she dies. They can be used to distribute assets to beneficiaries according to the grantor’s wishes and to help protect assets from creditors.

Special needs trusts help parents or grandparents ensure that children with disabilities have the financial resources they need to maintain their quality of life without jeopardizing their eligibility for government benefits.

Asset protection trusts help protect assets from creditors and lawsuits. They are often used by individuals and families at a high risk of being sued, such as business owners.

If you are considering setting up a family trust, an estate planning attorney can help you determine which type of trust is right for you.

They will evaluate your needs and goals to not only set up the trust, but also to maintain it properly over time.

What Are The Benefits Of A Family Trust Vs. A Will?

Family Trusts Avoid Probate

Having a will is better than having no plan at all; however, a last will and testament does not avoid probate. Probate is a court system designed to administer your will and pay creditors. All of the assets controlled by your will go through probate to be verified and distributed according to your wishes.

The probate court can be costly and time consuming. According to the AARP, the average estate will lose 5-10 percent of assets when administered through probate. For example, if you have a five hundred thousand dollar estate, at a minimum, you’re going to spend twenty-five thousand dollars administering it through probate.

Not only is it costly, but also it is time consuming. The minimum time to administer a will in probate court is six months, but the average time in most counties is eleven months.

If established properly, a family trust can transfer assets to your heirs while avoiding probate. There will be no probate fees and no no minimum administration time.

Family Trusts Minimize Federal or State Taxes

Without a family trust, an individual who finds themselves over the federal exemption limit could face 40-45% in estate taxes. A family trust can significantly reduce or eliminate these taxes by allowing a surviving spouse to make certain tax elections. This is commonly known as “marital deduction planning.”

A family trust allows the surviving spouse to set aside a portion of the estate, including the growth, tax free. For example, if the federal exemption were $1 million, and a surviving spouse is left with $5 million, with the trust, he or she could set aside $4 million in trust and the entire balance (including growth) after the death of the second spouse, would be tax free. Without the trust, the heirs would be paying 40% on $4 million in estate taxes.

Family Trusts Protect & Preserve Your Assets

If you have minor children, then establishing a family trust becomes a must. A minor child cannot legally inherit your assets.

Family trusts provide asset protection by holding assets in trust for your children’s benefit. Even when your children become adults, the trust still provides asset protection against creditors, litigation, and divorce. For example, if you passed away leaving a large sum to your forty-five-year-old child who has spending issues, a pending litigation, or a divorce in process, the trust would hold the assets until your child is in a better place in life.

Another common asset protection measure occurs when individuals are in their second marriage. In this scenario, there is nothing preventing the remaining spouse from disinheriting children from a prior marriage. For example, a husband and wife in their second marriage care for two children the wife has from her prior marriage. The wife passes away and leaves everything to her husband, and the contingent beneficiaries are her two children. Five years later, the husband remarries and creates a new estate plan naming his new spouse as primary beneficiary of his estate and his two step-children as contingent beneficiaries. When the husband dies, the new spouse inherits everything and the children are accidentally or intentionally disinherited.

Family Trusts Offer Privacy

When you go through probate, all of your information – assets, beneficiaries and more – become public record. Establishing a trust will allow you to avoid probate and maintain your privacy.

Family Trusts Are Cost-Efficient

Having a trust is more cost- effective than a will. Because the trust allows you to avoid 6-18 months of probate costs, more of your legacy is preserved for your family.

How Do I Set Up A Family Trust?

The exact process varies, but the following are key steps that your family trust attorney will walk you through.

  1. Decide what assets will be placed in your trust. While you might already have an idea of what you’d like to include, your attorney may help you uncover some additional assets that would benefit from being placed in a trust. Assets can range from cash and investments to real estate and other property.
  2. Choose your beneficiaries. They might include your spouse, your children, grandchildren or other close family members.
  3. Establish the rules of your trust. For example, will assets be distributed with age requirements or terms for how the assets may be used?
  4. Determine who will manage the trust. The manager of the trust, called the trustee, could be yourself, someone you know or a third party, such as a financial institution.

Once you are confident in these decisions, your family trust attorney can draft the trust document.

To learn more about how to set up a family trust with Baron Law or to schedule a free consultation, call 216-573-3723 or submit your request online.

Probate Attorney

Top Reasons Why You Should Avoid Probate

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Whether it was a gathering for a joyous wedding or the passing of a loved one, we’ve all heard about Probate Court at some point or another. We are going to dive into what probate is and why you want to avoid it when it comes to your estate, if you have no plan.

First, what is probate? Probate is the legal process of administering a person’s estate after their death. You’re probably wondering “OK, but what does that mean?” It means:

The court will determine your assets at the time of your death.

The court will determine the value of those assets.

The court will distribute the assets to those that are entitled to them by law.

Probate court, during the process will also appoint someone to supervise the administration of your estate.

Why would I want to avoid this process? The main reasons to avoid probate are the extensive timeline and astronomical expense that are both required for probate. The minimum amount of time that is required by probate court is 6 months, but in actuality this process takes 14 – 18 months on average. The reason for this extensive timeline is to give creditors a chance to make a claim on your estate, this in turn reduces the inheritance intended for your loved ones.

The probate process is very expensive. The average cost for probate court is between 5 – 10% of the estate’s total value. This means if your estate is valued at $500,000 you can expect an average cost of between $25,000 – $50,000.

The probate court appoints someone that they deem “suitable” to administer your estate, if you have no plan. This means that your wishes will not be heard and your assets, including your personal property and belongings will be distributed by the court to whom is legally entitled.

Lastly, probate court is public record. This means that all of your assets, your heirs, and your debts are available for anyone to see. Privacy is something that should be valued during this sensitive period of bereavement.

This costly and lengthy process can be avoided with a proper estate plan put in place. Your assets should be distributed according to your wishes, not to who is just legally entitled to them. Your heirs should have the ability to access the inheritance you intend on leaving them, and your loved ones deserve the privacy and time it takes to mourn your loss.

If you have not previously considered an estate plan or have questions about how to get started on planning, contact us at Baron Law today. You can go to our website for a free consultation to start planning for the future for yourself and your loved ones.

 Helping You And Your Loved Ones Plan For The Future

 

About the author: Kristy Gross

Kristy is a Legal Assistant at Baron Law LLC kristy@baronlawcleveland.com.

Hot Powers

Does Your Power of Attorney Contain the “Hot Powers?”

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Who will manage my finances and investments if I am sick or incapacitated? Who will pick what doctor treats me or if a risky but potentially lifesaving procedure should be performed? What if I am put on life sustaining medical support? These are the sorts of questions and issues typically handled by your power of attorney. As they suggest, these are critically important decisions that shouldn’t be taken lightly. Fundamentally, however, these issues can only be handled by your power of attorney if they possess authority, given by you and in writing, to do so. This is why ever since 2012, when Ohio law changed, “hot powers” are a significant topic for you to discuss with your estate planning attorney.

I. Durable Power of Attorney

To understand what hot powers are, you must understand what a power of attorney is. A financial power of attorney, also known as a durable power of attorney, is a legal document that a person can use to appoint someone to act on his or her behalf, i.e. an agency appointment. A power of attorney comes in many forms, but its primary purpose is to grant authority to one or more responsible parties to handle financial or health decisions of a person in the event of illness or other incapacity. Life, and its associated obligations and burdens, tend to continue regardless of one’s physical or mental health. Powers of attorney are protection that ensures affairs are handled and medical wishes are followed even if you are lacking capacity in mind or body.

As stated, powers of attorneys come in many forms. A financial power of attorney, as the name suggests, grants your agent the authority to make financial decisions for you. Managing investments, buying selling land or property, representing you in business negotiations, etc. Healthcare power of attorney works the same way but with healthcare decisions. If you are incapacitated or otherwise can’t decide for yourself, your agent will decide who your doctor is, what treatment you undergo, what medication should be administered, etc.

As always, the terms, powers, and limits for your agents are decided by you in the documents that appoint your agent. If you want to add limits on how long they are appointed, what issues they can or cannot decide, or when exactly their powers manifest, you can do so. Furthermore, you always possess the authority to dismiss them outright or appoint someone new.

Powers of attorney are important to have because surviving spouses or family members will face difficulty and frustration gaining access to things like bank accounts and property that is in your name only. This can be especially damaging within the context of business or professional relations in which the “gears of industry” must keep moving. Alas, if an individual trusted to handle the business if something happens doesn’t possess the authority to so, significant or even fatal business consequences may result. The same goes for medical decisions, often treatment decisions must be made right there and then. Hesitation may mean permanent damage or death to you and if someone doesn’t have express authority to make those decisions, things get confusing, messy, and take a lot longer.

II. “Hot Powers”

So, where do “hot powers” fit in all this. Effective March 22, 2012, Ohio adopted the Uniform Power of Attorney Act, or UPOAA, which was focused on preventing financial elder abuse. Now, powers of attorney must include a statutory language designed to help prevent agents from abusing their power. Put simply, the law now demands power of use more specific drafting and specific denotation “hot powers.”

“Hot powers” grant extraordinary powers to your agent and often these powers can have the effect of altering your estate plan. As such, these powers must be expressly granted per statutory guidelines before they are used by your agent. The most popular of them is the power to gift money or property. “Hot powers” are often used to continue a plan of gifting, sheltering money or property from costs of late life healthcare. Specified gifting “hot powers” can gift anywhere from a limited dollar amount or unlimited, dependent on the scope of the “hot powers” granted and the goals of your estate plan. Further, this power can also be limited to a class of people, such as spouse or children.

Since this new law, third parties such as a financial institution are not required to honor a general power of attorneys. Now, the law asks that a power of attorney include specifically which types of assets and accounts the agent is allowed to control. The spirit of this change is to 1) ensure individuals specifically know and agree to the powers they are giving, and 2) there will no longer be agents running around with “golden tickets” that allow them to do whatever they want to under the sun.

III. Should you give “hot powers”

Like every question in estate planning, whether you should give “hot powers” is circumstantial. The main consideration is who will be given the powers and under what terms. As stated above, “hot powers” are extraordinary powers meaning in the wrong hands they are really screw up your life and a well-crafted estate plan.

Regardless of whether you give these powers or not, it is probably wise to have your Cleveland estate planning attorney look at your powers of attorney if it has been more than five years. The law and your personal circumstances change quite often. Note, a power of attorney created before the 2012 law change will still be valid, however, it may be deficient in expected ways, ways that could hurt you down the line. In sum, the 2012 change means agents are prohibited from performing certain acts unless the power of attorney specifically authorizes them. Because financial power of attorney documents give significant powers to another person, they should be granted only after careful consideration and consultation with experienced legal counsel.

 

living trusts and estate planning

Ohio Irrevocable Trusts

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What is an Irrevocable Trust?

Irrevocable trusts cannot be changed or terminated during the grantor’s lifetime without all the beneficiaries’ permission or court approval. The grantor relinquishes control over the trust and the assets placed in the trust.

Revocable Trusts Vs. Irrevocable Trusts

Revocable trusts can be changed or terminated during the grantor’s lifetime as long as they are competent. This type of trust is attractive, compared to an irrevocable trust, because you can update your beneficiaries, change which assets are included in the trust, and update how assets will be distributed.

Learn more about the key similarities and differences of revocable and irrevocable trusts here.

Irrevocable Living Trusts Vs. Testamentary Trusts

An irrevocable living trust is created during your lifetime and goes into effect immediately (once properly funded). A testamentary trust is created within your will and goes into effect when you pass. While the living trust avoids probate, the testamentary trust does not.

Why should I set up an Irrevocable Trust?

An irrevocable trust can:

  • Protect your assets from creditors and litigation, which might be especially beneficial if you are a business owner or are in a high-profile career
  • Protect your access to government benefits and preserve your family’s wealth for future generations
  • Help you avoid or reduce estate taxes
  • Protect your assets from a nursing home or other long-term care expenses

More Specific Types of Irrevocable Trusts & How They Work

Asset Protection Trusts

The main goal of an asset protection trust is to insulate the grantor’s assets from creditors and/or litigation.

Marital Trusts

A Marital Trust, also known as an A Trust, is established to support a surviving spouse. It helps the surviving spouse to avoid estate taxes when the first spouse passes away and their assets are being transferred.

The surviving spouse is the sole beneficiary of the Marital Trust during the couple’s lifetime. He or she can do what they please with the assets, including withdrawing them, selling them or gifting them. At the second spouse’s death, the trust can be passed to other named beneficiaries such as children or grandchildren.

Most A Trusts are also Qualified Terminable Interest Property (QTIP) Trusts. In this case, the trust is required to pay all income generated by the trust to the surviving spouse annually. In addition, with a QTIP Trust, the grantor maintains control after death. This means that the surviving spouse receives income from the trust, but restrictions are placed on how much can be taken out of the trust, and what the funds are used for.

In many cases, when a spouse sets up an A Trust, they also set up a B Trust, or a Bypass Trust. When the first spouse passes, they can have assets passed to beneficiaries other than the surviving spouse without incurring estate taxes. They transfer the maximum amount of assets allowed by estate tax exemption to beneficiaries before transferring the remainder of the estate into the A Trust.
Together, the Marital Trust (A Trust) and Bypass Trust (B Trust) make up the AB Trust.

Generation-Skipping Trusts

Generation-Skipping trusts are often utilized by grandparents to transfer assets to their grandchildren, while avoiding estate taxes.

Spendthrift Trusts

Spendthrift trusts are often utilized when a beneficiary is young or has a history of being financially irresponsible. In a spendthrift trust, the beneficiaries do not have any direct access to assets. The trustee is able to give the beneficiaries assets and funds as they see fit.

Charitable Trusts

Charitable Trusts are established to benefit a charitable organization. In this type of trust, an organization is appointed trustee. As they invest funds within the trust, they can generate a regular stream of income for the organization. There are two main types of Charitable Trusts:

  • Charitable Remainder Trusts (CRT) give a set amount of income to beneficiaries, and the remainder goes to the charitable organization.
  • Charitable Lead Trusts (CLT) give a set amount of income to the charitable organization, and the remainder goes to beneficiaries or stays in the trust.

Life Insurance Trusts

The only asset within this trust is an insurance policy. This trust is utilized to avoid estate tax on money that comes out of the policy upon the grantor’s passing.

Grantor-Retained Annuity Trusts (GRAT)

This type of trust is typically utilized in estate planning to minimize taxes on large financial gifts to family members. After assets are placed in the trust, an annuity is paid out to the grantor every year. After the trust has expired and the last annuity payment has been made, the beneficiary receives the remaining assets with minimal tax liability.

Qualified Personal Residence Trusts (QPRT)

A QPRT allows the grantor to remove a personal home from their estate, reducing the amount of gift tax incurred when transferring assets to beneficiaries. The owner of the home is allowed to remain on the property for a period of time with retained interest. The value of the property during the retained interest period is calculated based on IRS applicable federal rates. Once the retained interest period is over, the remaining interest is transferred to the beneficiaries.

How To Set Up An Irrevocable Trust With An Attorney

It’s important to remember that an irrevocable trust is just one part of a comprehensive estate plan.

After it has been determined that an irrevocable trust should be part of your estate plan, an attorney can walk you through these key steps:

  1. Decide what assets will be placed in your trust. While you might already have an idea of what you’d like to include, your attorney may help you uncover some additional assets that would benefit from being placed in a trust. Assets can range from cash and investments to real estate and other property.
  2. Choose your beneficiaries. They might include your spouse, your children, grandchildren or other close family members.
  3. Establish the rules of your trust. For example, will assets be distributed with age requirements or terms for how the assets may be used?
  4. Determine who will manage the trust.

Once you are confident in these decisions, your estate planning attorney can draft the trust document and begin assisting you with funding the trust.

This blog is for educational purposes only; it is not intended to provide legal advice. If you’re planning for your estate and want to speak with an attorney, call 216-573-3723.

 

Daniel A Baron Estate Planning lawyer

What Is A Revocable Trust?

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Cleveland, Ohio estate planning lawyer, Daniel A. Baron, offers the following information as to whether or not you should have a Revocable Trust as part of your comprehensive estate planning.

When you decide it is time to do your estate planning, one decision to make is: Do I Need A Trust? If the answer is yes, then the next question is whether or not a Revocable or Irrevocable Trust is the right tool to use in your Comprehensive Estate Planning.  Although both of these are created to avoid probate, there are differences between the two.

A Revocable Trust means you can change things at any time such as;

  • Beneficiaries
  • Add items of value to the trust or remove items from the trust and so on.
  • Changing Trustees
  • Change what funds the trust
  • Eliminate the trust
  • Change amounts to be funded
  • Add Trustees

With a Revocable Trust – the Grantor or Settlor creates the trust AND can also act as the Trustee AND can be named as the beneficiary.

An Irrevocable Trust means no changes can be made (with a few exceptions) once the trust is created.

An Irrevocable Trust has three parties to the Trust; the Grantor or Settlor, the Trustee(s), and the beneficiary or beneficiaries.

  1. The Grantor or Settlor is the person who funds or establishes the Trust
  2. The Trustee is the person who oversees the trust, and
  3. The beneficiary reaps the rewards of the income generated by the investments of the trust. Although the Grantor / Settlor and the beneficiary can be the same, they cannot act as the Trustee

With a Revocable Trust you must remember if you are looking to keep investments, bank accounts, property, and any other such asset as part of the trust, the accounts must be set up in the trusts name and property must be titled to the trust.  Failure to do this while you are still living means that the assets still in your personal name at the time of your death will be subject to probate and a larger amount of estate taxes.

If you are having difficulty determining whether your situation calls for a Revocable or Irrevocable Trust, seek the advice of an experienced Estate Planning Lawyer. For more information on reviewing your goals for your Comprehensive Estate Planning, contact Daniel A. Baron of Baron Law today at 216-573-3723.

Helping You and Your Loved Ones Plan for the Future

My Trustee Isn’t Very Good At Their Job, Can I Get Rid Of Them?

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Baron Law LLC, Cleveland, Ohio, offers information for you to reflect upon while you are setting out looking for an estate planning attorney to help protect as much of your assets as you can.  For more comprehensive information contact Baron Law Cleveland to draft your comprehensive estate plan to endeavor to keep more of your assets for your heirs and not hand them over to the government by way of taxes.

Trusts are common estate planning tool. They are used to plan for retirement, provide for needed elder case, ensure Medicaid and other government aid eligibility, and provide for special needs children. A critical part of any trust is its trustee. The trustee is the primary agent responsible for managing trust assets and money and ensuring that the instructions and intent of the settlor are followed. At the end of day, if everything goes as planned, a trust will continue to exist and operate long after its settlor has passed. As such, the trustee is often solely responsible for the health of the trust and the welfare of trust beneficiaries.

With great power, comes great responsibility. Such is the case with trustees. In the same vein, however, most crime comes from opportunity. If there is nothing to steal, there is no chance of theft. The opposite also holds true. If you were left in an empty room with $300,000 dollars and no one was watching, how honest would you be? How honest could the ordinary man be? As such, tragically, too many trustees are found out too late to be lazy or untrustworthy and they must be removed and replaced. As with most things regarding trusts, Ohio law has set down rules and procedures to follow if you want to replace a trustee. Naturally, as with any legal question, always consult with an experienced Ohio estate planning attorney before you do anything.

Removal of a Trustee

Removal of a trustee requires serious consideration and appreciation for its consequences. Not only is it nuanced process requiring the learned help of an experienced Cleveland estate attorney, but it can also run counter to the express wishes and intent of the trust settlor. If the settlor is alive, and the trust revocable, replacing a trustee isn’t too big of a deal. But if the settlor is dead, and the trust irrevocable, now decisions have to be made that may subtract from the settlor’s goals.

A first trustee was an individual who the settlor had the utmost faith to carry out their wishes and guard their property. To go and replace them with another will affect how trust property is managed, how and when trust property is distributed, how much the trustee will demand as compensation, and the relationship between the trustee and beneficiaries. Since the power to replace a trustee shouldn’t be taken lightly, Ohio law placed rules and procedures on how and when it can be undertaken.

To start, the power to remove a trustee is primarily codified in O.R.C. § 5807.06(A). Wherein a “settlor, a cotrustee, or a beneficiary may request the court to remove a trustee, or the court may remove a trustee on its own initiative.” This by itself doesn’t say much, but evidently pretty much anyone with a legitimate interest in the trust may act to replace a trustee. The ability to do something, however, should always be paired with a valid reason why. This is where experienced Ohio estate planning counsel comes in handy. An attorney is in the best position when a trustee is just being difficult rather than derelict in their duties.

Why Remove a Trustee

Just because you can do something, doesn’t mean you should. Generally, replacing a trustee should only occur in a handful of circumstances, most of which are codified in Ohio law. Per

O.R.C. § 5807.06(B), a court may remove a trustee for any of the following reasons:

The trustee has committed a serious breach of trust;

Lack of cooperation among cotrustees substantially impairs the administration of the trust;

Because of unfitness, unwillingness, or persistent failure of the trustee to administer the trust effectively, the court determines that removal of the trustee best serves the interests of the beneficiaries.

All these reasons go to a trustee’s inability to carry out their duties effectively or downright committing crimes as a trustee. A surly or unpleasant trustee is not grounds for removal, regardless of how much you dislike them. Only in extreme circumstances of incompetence, dereliction, or illegality should an action for trustee removal be undertaken. Your estate planning attorney is in the best position to judge when and if this threshold has been reached.

Importance of Successor Trustees

So, you’ve successfully removed an unsuitable trustee, now what? Naturally, a new trustee must be appointed and, of course, Ohio law provides for this possibility. Per O.R.C. § 5807.04 (C), if there is a vacancy in the trustee position, new trustee is selected using the following order of priority:

(1) By a person designated in the terms of the trust to act as successor trustee;

(2) By a person appointed by someone designated in the terms of the trust to appoint a successor trustee;

(3) By a person appointed by unanimous agreement of the qualified beneficiaries;

(4) By a person appointed by the court.

This is why selecting appropriate successor trustees, or drafting adequate methods to select them, are so important, though it is often seen as a throwaway detail when drafting a trust. At the very end of this list, a probate court has the authority to appoint a new trustee if no other methods exist. This is not an appetizing prospect for most settlors. The last thing settlors want is a court taking control out of their hands and appointing someone they don’t want or don’t know. The whole point of going through the long process of trust creation is a guarantee control of money and assets in specific and delineated ways. To have everything go right out the window because of improper successor trustee appointments is foolish. As such, proper thought and planning must go into your trustee and successor trustee appointments.

Most people don’t expect their first, or even second choices, for trustee to die, refuse appointment, or just not be very good at the job. An experienced Ohio estate planning attorney can help with the vetting process and also provide much needed instruction and guidance to selected trustees to make sure they understand the gravity of the position and possess the knowledge to do the job correctly and efficiently.

Helping You And Your Loved Ones Plan For The Future

About the author: Mike E. Benjamin, Esq.

Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at mike@baronlawcleveland.com.

Disclaimer:

The information contained herein is general in nature, is provided for informational and educational purposes only, and should not be construed as legal or tax advice. The author nor Baron Law LLC cannot and does not guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable in a given situation may impact the applicability, accuracy, or completeness of the preceding information. Further, federal and state laws and regulations are complex and subject to change. Changes in such laws often have material impact on estate planning and tax forecasts. As such, the author and Baron Law LLC make no warranties regarding the herein information or any results arising from its use. Furthermore, the author and Baron Law LLC disclaim any liability arising out of your use of, or any financial position taken in reliance on, such information. As always consult an attorney regarding your specific legal or tax situation.

Baron Law Cleveland Ohio

How Do I Force A Trustee To Tell Me What’s In A Trust?

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Baron Law LLC, Cleveland, Ohio, offers information for you to reflect upon while you are setting out looking for an estate planning attorney to help protect as much of your assets as you can.  For more comprehensive information contact Baron Law Cleveland to draft your comprehensive estate plan to endeavor to keep more of your assets for your heirs and not hand them over to the government by way of taxes.

Trusts are one of the most useful tools in the estate planning tool box. Special needs trusts ensure vulnerable children and beneficiaries can receive bequests or inheritances without being knocked off of critical state and federal benefits while a simple family trust can guarantee income and assets placed within it last for generations and are, for the most part, protected from creditors and litigants. The lynchpin of any trust, however, besides the trust documents themselves, is the trustee. The agent in charge of managing trust assets and carrying out trust instructions.

A lot of faith and trust are placed within trustees. Unfortunately, not all trustees are up to the task and some even use their position for ill gain. Some trustees are lazy, some are disinterested. Other trustees are combative, others are downright criminals. Trustees come in all types. The process for removing a trustee, seeking civil or criminal action against a trustee, or simply finding out what a trustee knows all start at the same spot. A trust beneficiary, or other interested party, must force a trustee to tell them what they know and Ohio law has provided a process to do just that. The process is called a petition to compel an accounting or sometimes a citation to a fiduciary to file an account.

This process, naturally, is often the route of last resort when something has gone horribly wrong with a trustee or fiduciary. For example, failure of an executor to file a notice of admission for will to probate, or a failure render an account of an executor’s or administrator’s estate administration, or failure to file the first estate accounting within the 3-month time limit without good cause shown. Basically, citations to compel accounting are used when those entrusted to look after the money don’t follow the rules or tell anybody what they are doing. Again, getting a probate court involved with a difficult or non-responsive fiduciary should always be a last resort. As such, always consult an experienced Cleveland estate planning attorney to find out your best course of action in the circumstances.

How do I compel a trustee accounting?

Generally, to get a court to do anything, there has to be statutory language on the books that give you the authority/right to do something. Ohio law provides that particular qualified people can petition the court to force a fiduciary or trustee to appear and tell what they know and bring evidence to back it up.

“If a fiduciary neglects or refuses to file an account, inventory, certificate of notice of probate of will, or report when due,… the court at its own instance may issue, and on the application of any interested party or of any of the next of kin of any ward shall issue, a citation … to such fiduciary …. to compel the filing of the overdue account, inventory, certificate of notice of probate of will, or report.” O.R.C. § 2109.31(A).

What does a citation for accounting contain?

The citation or motion to compel is a legal document filed with a particular probate court that asks the court to use its authority to force a fiduciary or trustee to appear at a certain time in a certain place or face the consequences. Ohio law specifies that such a request must be a proper form so the court knows exactly what you’re asking the court to do and so the trustee or fiduciary knows exacts what to do to satisfy the court’s request and avoid any adverse consequences. So, what information does your request actually need to contain. Per O.R.C. § 2109.31(B):

(1) A statement that the particular account, inventory, certificate of notice of probate of will, or report is overdue;

(2) An order to the fiduciary to file the account, inventory, certificate of notice of probate of will, or report, or otherwise to appear before the court on a specified date;

(3) A statement that, upon the issuance of the citation, a continuance to file the account, inventory, certificate of notice of probate of will, or report may be obtained from the court only on or after the date specified…

A motion to compel accounting is a particular legal document that should be prepared by a licensed attorney. Nonconformity with the state and local rules of form and filing can waste a lot of time and money and frustrate a judge and their support staff, not ideal when your asking for the court’s help. Hiring a knowledgeable Ohio estate planning attorney will ensure your filing is accepted and in proper order.

What if a trustee doesn’t appear?

If a citation to compel accounting is issue from a probate and a fiduciary or trustee fails to file the requested documents or personally report prior to the appearance date specified in the citation, a probate court may resort to one or more of the following:

The removal of the fiduciary or trustee;

A denial of all or part of the fiduciary fees;

A continuance of the time for filing the requested documents;

An assessment against the fiduciary of a penalty of one hundred dollars and costs of twenty-five dollars for the hearing, or a suspension of all or part of the penalty and costs; or

That the fiduciary is in contempt of the court for the failure to comply with the citation and that a specified daily fine, imprisonment, or daily fine and imprisonment may be imposed against the fiduciary, beginning with the appearance date, until the account, inventory, certificate of notice of probate of will, or report is filed with the court;

Furthermore, if a fiduciary or trustee fails to appear in court on the specified date on the citation, a probate court can even go as far as ordering them to be taken into custody by a sheriff and forcibly brought to court.

The potential consequences facing non-compliant fiduciaries are severe, however, utilizing the court should only be used in extreme circumstances or as a last resort. As such, consult experienced Cleveland estate planning attorney before doing anything so serious. Doing so will ensure that the process is done correctly and expediently.

Helping You And Your Loved Ones Plan For The Future

About the author: Mike E. Benjamin, Esq.

Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at mike@baronlawcleveland.com.

Disclaimer:

The information contained herein is general in nature, is provided for informational and educational purposes only, and should not be construed as legal or tax advice. The author nor Baron Law LLC cannot and does not guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable in a given situation may impact the applicability, accuracy, or completeness of the preceding information. Further, federal and state laws and regulations are complex and subject to change. Changes in such laws often have material impact on estate planning and tax forecasts. As such, the author and Baron Law LLC make no warranties regarding the herein information or any results arising from its use. Furthermore, the author and Baron Law LLC disclaim any liability arising out of your use of, or any financial position taken in reliance on, such information. As always consult an attorney regarding your specific legal or tax situation.


Baron Law Cleveland Ohio

T.O.D. Designations to Avoid Probate

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Baron Law LLC, Cleveland, Ohio, offers information for you to reflect upon while you are setting out looking for an estate planning attorney to help protect as much of your assets as you can.  For more comprehensive information contact Baron Law Cleveland to draft your comprehensive estate plan to endeavor to keep more of your assets for your heirs and not hand them over to the government by way of taxes.

One of the more common topics posed to Ohio estate attorneys always concerns how to avoid probate and the accompanying costs of going through a probate administration. Namely, can an individual transfer property, particularly a martial home, and avoid probate without using more intensive estate planning tools? In many situations trusts afford more control and security over estate assets but for smaller estates, T.O.D. designations can fill a critical role and affording surviving family members partial peace of mind when a loved one passes. Talk to a local Ohio estate attorney to find out if a trust-based strategy or hybrid trust/T.O.D. plan would work best for your situation.  

What is a T.O.D. designation? 

At the most basic level, transfer on death “T.O.D.” designations are a way to transfer real and certain personal property to named beneficiates at the moment of death. The law construes the transfer as occurring just prior to death so the property is conveyed independent from the probate process. Thus, if the property isn’t a part of the probate estate, it normally isn’t subject to all the claims and debts of the decedent’s estate.  

T.O.D. designations are usually seen with bank accounts, real estate, and automobiles and, as such, the processes for using T.O.D.’s for these types of property are well established. Which is good, because usually these types of assets represent the lions share of an estate. Contract a Cleveland area attorney to find out if, and how, T.O.D. designations can be used to save you thousands in estate fees and administration costs.  

Why would I use a T.O.D. designation? 

As previously stated, the major benefit of using a T.O.D. is probate avoidance. Thus, the property usually isn’t subject to debts and creditors of the estate and the property isn’t tied up for months while the affairs and accounting of the estate are concluded. Most, if not all, beneficiaries and heirs want their property as soon as possible.  

It is important to note, however, that a T.O.D. designation has no effect on the present ownership of the associated property and any beneficiary of a T.O.D. has no rights or interest in the property during the owner’s lifetime.  

The owner of the T.O.D. designation can change or revoke such designation at any time by executing and filing/recording a new designation. A T.O.D. transfer, however, does not eliminate the need to pay applicable federal estate taxes. Further, beneficiaries of a T.O.D. should be aware of the tax consequences of accepting a T.O.D bequest. Contacting a knowledgeable Ohio probate attorney can appraise you of any unforeseen tax liabilities.  

How to do I do a T.O.D. designation? 

For Land: 

Per O.R.C. § 5302.222, “The transfer of a deceased owner’s real property or interest in real property as designated in a transfer on death designation affidavit…shall be recorded by presenting to the county auditor of the county in which the real property is located and filing with the county recorder of that county an affidavit of confirmation executed by any transfer on death beneficiary to whom the transfer is made. The affidavit of confirmation shall be verified before a person authorized to administer oaths and shall be accompanied by a certified copy of the death certificate for the deceased owner.” 

In normal language, fill out, sign, notarize, and record the T.O.D. affidavit with the desired number of beneficiary designations then fill with a county recorder in the county where the property is located. There is no limit to the amount of primary and contingent beneficiaries you can put on a T.O.D. affidavit. Naturally, the more you put, the less proportion each will receive, and type of tenancy conveyed, and primacy of conveyance can all be specified as well and is dependent on the type of beneficiary status and land interest conveyed. For example, if you put that beneficiaries take as joint tenants, all beneficiaries will have rights to the whole by virtue of being joint tenants, regardless if the affidavit further specifies proportional bequests.  

Model T.O.D. affidavits can be found online and on such forms, there is a predetermined section in which you can add any number of beneficiaries, respective ownership proportion, and type of ownership. However, in the absence of tenancy specification, named T.O.D. beneficiaries take as tenants in common. Per § O.R.C. 5302.23 (B)(1), “If there is a designation of more than one transfer on death beneficiary, the beneficiaries shall take title to the interest in equal shares as tenants in common, unless the deceased owner has specifically designated other than equal shares or has designated that the beneficiaries take title as survivorship tenants, subject to division (B)(3) of this section. A tenancy in common presents different issues regarding survivorship and concurrent ownership. Contact a local Ohio estate attorney to find out what type of tenancy fits bests for your property and family situation.   

For Cars:s: 

The Ohio BMV has its own process for T.O.D. designations. Individuals who are the sole owner of a motor vehicle, watercraft, or outboard motor can elect to designate one or more beneficiaries to an Ohio title. To do so, the owner fills out, signs, notarizes BMV form 3811, Affidavit to Designate a Beneficiary, then files such with the county title office where the vehicle is located. Beneficiaries can be individuals, corporations, organizations, trusts, or other legal entities. After the form is properly filed and accepted, a new title is issued with the T.O.D. designation on record. An Ohio estate attorney can assist you in gathering the required forms and documents and make sure the are filled out and filed properly.      

To effectuate a T.O.D. transfer, the designated beneficiary brings to the title office, of the county in which the vehicle is located, the Ohio title, a certified copy of the death certificate, BMV form 3774, government-issued identification card, and adequate payment for title fees.   

T.O.D. designations are becoming a more popular tool in estate planning to save on estate administrating costs and simplify one’s estate. Granted, T.O.D. may potentially save on costs, however, they afford no protection against creditors and debts during the lifetime of the owner and afford no control after the death. Using T.O.D.’s may seem simple, however, in application transferring significant assets seldom ever is. A knowledgeable Ohio estate attorney is in the best position to advise on the costs and benefits of using T.O.D.’s in an estate plan.  

You don’t have to be rich to protect what you’ve spent a lifetime trying to build. To find out whether a trust is right for your family, take the one-minute questionnaire at www.DoIneedaTrust.com. There are a number of different trusts available and the choices are infinite. With every scenario, careful consideration of every trust planning strategy should be considered for the maximum asset protection and tax savings. For more information, you can contact Mike Benjamin of Baron Law LLC at 216-573-3723. Baron Law LLC is a Cleveland, Ohio area law firm focusing on estate planning and elder law. Mike can also be reached at mike@baronlawcleveland.com.  

Helping You And Your Loved Ones Prepare For The Future

About the author:

Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at mike@baronlawcleveland.com.   

 

Disclaimer:

The information contained herein is general in nature, is provided for informational and educational purposes only, and should not be construed as legal or tax advice. The author nor Baron Law LLC cannot and does not guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable in a given situation may impact the applicability, accuracy, or completeness of the preceding information. Further, federal and state laws and regulations are complex and subject to change. Changes in such laws often have material impact on estate planning and tax forecasts. As such, the author and Baron Law LLC make no warranties regarding the herein information or any results arising from its use. Furthermore, the author and Baron Law LLC disclaim any liability arising out of your use of, or any financial position taken in reliance on, such information. As always consult an attorney regarding your specific legal or tax situation.