Beachwood Estate Planning and Elder Law Blog

Planning now could prevent abuse by guardian in later years

Ohio residents often avoid thinking about what could happen if they become physically or mentally vulnerable in old age. If a person has not set up a durable power of attorney and medical power of attorney during healthy times, then an abusive agent might step in and become a guardian or conservator who uses an elder's finances for personal gain.

An elder might not get to choose a guardian if sickness or mental incapacity strikes. Relatives fighting for control of the person or a nursing home that needs payment might convince a judge to appoint a guardian. The situation in which a supposed friend of an elder gains the person's trust and becomes the guardian also creates the potential for exploitation.

Most adults don't have a will

Most Ohio adults don't want to think about the possibility of dying, and that may be one of the reasons why so many people don't write a will. According to a survey that was taken by Caring.com, almost 6 out of 10 adults in the United States haven't created a will or a living trust.

A will dictates where a testator's assets should go after death and who will be responsible for disbursing those assets. If a parent leaves behind children that are under the age of 18, the children's legal guardians may be named in the will. Although wills can be so important for parents of young children, the Caring.com survey found that only 36 percent of parents with minor children have created an end-of-life plan.

How to gift to children responsibly

Parents in Ohio and throughout the nation may want to gift assets to their children. However, it is generally a good idea to be strategic about how and when such gifts are made. For instance, it may be better for a parent to wait until he or she passes away to gift shares of stock or other appreciated assets to a child. This is because the child gets a step-up in basis.

In other words, the child's cost basis would be the value of the asset now as opposed to when it was purchased. If the asset is gifted while the parent is still alive, the child would have the same cost basis as the parent. Another issue to consider when gifting children is that minors cannot own property on their own. Therefore, it may be best to put assets into a trust that benefits the child.

Preparations for managing an elder's assets and health

People with elderly relatives in Ohio might need to step in and manage their assets and make decisions at some point. Some legal paperwork done before an aging parent becomes incapacitated will limit disruptions and the need to go to court to have the parent declared incompetent in order to obtain guardianship.

A discussion about a person's wishes about emergency medical care and living arrangements should take place before mental or physical problems take over. This gives the elder a chance to designate someone to have control of medical care and financial matters.

Prince's lack of planning leads to large tax bill

Since Prince passed away last year, the pop superstar's estate has gone through various legal woes. Ohio residents may have heard that Prince left behind assets estimated at $200 million. However, his six heirs will receive much less than this amount due to taxes and other fees.

After federal estate taxes, Minnesota state taxes and other probate costs, only about $88 million will remain for heirs. While this is still a large amount, it is less than half of the late star's total estate. Prince had no estate planning documents that established how his fortune should be divided. Therefore, the remainder of his estate will pass equally to his six surviving siblings.

Multiple deaths in a family could undermine an estate plan

For the most part, people draw up estate plans only considering their own deaths. However, some tragedies may affect multiple loved ones at once. If heirs die at the same time as the testator, the estate plan could unravel. An analysis of Ohio estate tax laws and the insertion of specific language could head off legal complications and prevent a court from directing assets to a distant relative.

A simultaneous death clause could make legal determinations that ease the way for asset distribution according to an existing will or trust. This clause establishes who died first, which could be essential if a married couple dies together. If each partner had named the other as the primary beneficiary, then determining what to do if they die at the same time becomes difficult. With the clause in place, the estate plan can follow a death order that allows an estate to pass to the person deemed to have died second, and then that person's estate plan can come into effect.

Record of account passwords essential for estate plans

Most people in Ohio have some type of financial account that requires a password for online access. When someone dies suddenly and the relatives have no idea how to log in to bank accounts, email accounts or a personal computer, difficulties can arise. A person might be blocked from getting the specific information necessary for probate court, or no one will have any way to access and manage investments. Lawyers and financial planners recommend that people write down and securely store critical information like passwords and personal identification numbers for bank accounts, cell phones, email and online records.

Due to the sensitive nature of this information, a person needs to consider carefully who will be entrusted with the list of passwords and security codes. One approach is to create a storage account under a master password that provides access to all passwords. Half of the master password could be given to one party, such as a spouse, and the remainder of the password could be given to an attorney.

Estate planning errors made by celebrities

There are several errors that Ohio residents sometimes make with their estate planning. Errors can be made by people of all types and socioeconomic levels, including celebrities. Learning from the mistakes that have been made by celebrities in planning their estates may help others to avoid making the same ones.

Heath Ledger and Francis Griffith Joyner both had wills, but they each made different errors with them. Ledger had his done when he was young and single. He never updated it after he had his daughter. This meant that everything he had went to his siblings and parents after his death, and his daughter received nothing. Francis Griffith Joyner never told anybody where to find the will that she had written. This led to her family's battling one another in court for four years before reaching a settlement.

Bequeathing assets unequally but fairly

Some Ohio parents may not want to leave their children equal inheritances in their will. However, just because a parent chooses to leave one child more money than another child does not mean that the parent wanted to be unfair. There are many different reasons for not splitting assets equally that have nothing to do with favoritism.

Not wanting to create conflict, some parents choose to split their assets equally between their children regardless of their children's financial needs. While doing this may be the best way to avoid sibling disputes, it is not always in the best interests of the heirs. In some cases, it may be better for a parent to leave one child more money than their siblings because they have a greater need. For example, one heir might have more children to take care of or may have a disability that causes great expense. If one child is a doctor and one child is a schoolteacher, it could make sense to leave more money to the one who earns far less money.

Including an ethical will in an estate plan

Ohio residents may communicate a lot of their values in the way that they set up their estate plan. For example, they may leave a portion of their assets to a charity or set up a trust that only makes distributions when beneficiaries graduate from college. While a lot can be said with a standard will, people who want to send a message with their estate plan may also want to create an ethical will.

An ethical will is an informal estate planning document that is becoming more and more popular. Though ethical wills are not legally binding, they often take more time to write than financial wills. Also referred to as a legacy letter or a love letter to family, an ethical will is used to explain a testator's values to the people who mean the most to them. The testators may explain how they want loved ones to use their inheritance, or they may simply write down some of the most important lessons that they have learned in their lifetime.

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