Beachwood Estate Planning and Elder Law Blog

How a trust may work better than a will for some

Many Ohio residents may feel as if a will is enough to conform to their final wishes. However, it may be better to create a trust as there are several things that a trust can do that a will cannot. For instance, if assets are intended to go to a minor child, that child cannot receive those assets on his or her own.

However, a trustee can oversee property placed into a trust without intervention from the court. If there is no trust, an individual needs to be appointed to oversee those items for the minor child. That could cause delays or other problems that may be avoided by keeping those assets in a trust. If a child or grandchild has special needs, the use of a trust may make it easier to allow that person to keep money or other property without losing access to government benefits.

Possible estate tax reforms on the horizon

Rumors of estate tax reform could create new questions for people in Ohio who have already set up an estate plan. Their plans would have been based on current tax laws, and many people create trust structures to control tax exposure to heirs. The potential repeal of estate taxes and generation-skipping taxes presents an opportunity to consider how to update an estate plan should the laws change. Such a proactive analysis could enable someone to quickly rework a plan in the event of tax reforms and limit the amount of time that an obsolete plan is in effect.

Currently, many estate plans are designed around funding exemption trusts so that people avoid some or all estate taxes. A marital trust might hold some assets while others send gifts to multi-generational trusts that benefit spouses, children, grandchildren and great-grandchildren.

Planning for retirement and long-term care

With the cost of long-term care at about $8,000 monthly, and the fact that most people live 20 to 30 years after they retire, Ohio residents may be wondering how to pay for this need should it arise. Annuities, living benefits and long-term care insurance are some dependable solutions to this expensive predicament.

According to information from the U.S. Department of Health and Human Services, there is a 70 percent chance most people will need long-term care at some point in their lives. One solution to paying for this expense is to invest in annuities. Annuities are similar to asset-based life insurance policies in that a person invests a one-time deposit into it and receives interest on top of it. Then, if the individual needs long-term care, the money multiplies and can be used to help pay for his or her long-term care expenses.

Duties in estate administration

Ohio residents who have been named the executor of a loved one's will might wonder what their responsibilities are. Usually, the first thing that must be done in such a situation is identifying and securing assets. They should obtain several copies of the death certificate since this will be necessary in some cases. Other types of assets may involve filing a claim or other actions.

It might also be necessary to hire an appraiser to assess the value of the decedent's property. If the decedent was a collector, it might be necessary to hire a specialist to appraise the collection. Real estate and businesses may also need to be appraised, and financial assets must be valued as well.

How a charitable trust may be preserved

Ohio residents who are creating an estate plan might be interested in setting up a charitable trust. There are several ways in which a charitable trust differs from other trusts. A charitable trust is not required to have a beneficiary but instead has a specific purpose that benefits the public. A charitable trust can also be perpetual. The Rule Against Perpetuities is intended to prevent the limited use of a piece of property, such as a family that wants to keep land in perpetuity, but it does not apply to charitable trusts.

In fact, laws governing charitable trusts are designed to increase the likelihood that the trust will last. The cy pres doctrine is aimed at helping charitable trusts continue by allowing courts to modify them if necessary. For example, a charitable trust set up to contribute to an education nonprofit that becomes defunct could be modified to contribute to a different education nonprofit. In one case, a trust that had been set up in 1899 for the benefit of orphans aged 6 to 10 was modified so that the upper age became 18.

Making the location of a will known

Ohio residents should be sure to inform their loved ones about the location of important estate-planning documents. According to a December 2016 survey from BMO Wealth Management, one-third of people have told their beneficiaries where to find their powers of attorney or will. An additional 10 percent have provided copies of the original documents to their heirs.

If heirs are unable to find a will, there is a legal presumption in several states that the decedent revoked and destroyed the document. As a result, state intestacy laws will determine how assets will be allocated. If an older version of a will is located, that may be the will that is used, even if the decedent's preferences had changed.

How to answer key estate plan questions

One issue that Ohio residents may face when creating an estate plan is who to turn to in case of an emergency. This question may prevent individuals from creating wills and trusts or granting potentially necessary powers of attorney. Making things more difficult is the fact that there are no set rules when it comes to choosing an agent under a power of attorney or a guardian for a minor child.

To help guide the decision making process, it may be a good idea to think about which people have the skills needed to fill a given role. For instance, someone who has been appointed as an agent under a financial power of attorney should be fiscally literate enough to make educated decisions on the principal's behalf. In many cases, individuals have already chosen a family member to fill such a role even if that person may be addicted to shopping or has gone through bankruptcy.

Learning about trusts

Certain estate planning tools can be used to specify conditions under which beneficiaries can receive their inheritance. Ohio residents may benefit from learning about trusts.

There are several types of trusts, including the revocable living trust, which is one of the most commonly used ones and can be revoked or modified at any time during the creator's life. Trusts have a trustee who is responsible for managing the trust assets. They are created with provisions that specify who the beneficiaries are and how and when they can receive the assets in the trust.

Legal guidance regarding long-term care planning

Representing clients throughout northeastern Ohio, our attorneys want to provide you with the knowledge you need regarding your long-term health care financial options. With more than two decades of experience, our team will work to help you select the long-term care financial plan that is most suitable to your circumstances.

Furthermore, with careful planning, our firm will do our best to help you protect your assets. Because many assisted living facilities, skilled nursing homes and other health care alternatives are expensive, you could be in jeopardy of losing your hard-earned assets to pay for them.

Points to remember in an estate plan

There are several aspects of an estate plan that Ohio residents may overlook. For example, in addition to a primary beneficiary, testators should name alternate beneficiaries. This is not just in case of the death of the primary beneficiary but also in the event that the beneficiary is a minor or is unable to manage their assets.

People often forget about digital assets when they are creating an estate plan. Digital assets may include online accounts and domain names. People might also want to include information for digital assets with no monetary value such as passwords for social media accounts.

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