Estate and Succession Planning for Business Owners: Protecting Your Company, Family, and Legacy

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Estate planning for business owners is not just about distributing assets after death—it’s about ensuring business continuity, protecting your family’s financial security, minimizing taxes, and preserving the legacy you worked so hard to build. Unlike individuals whose wealth may be concentrated in retirement accounts or personal investments, entrepreneurs and small business owners often have a significant portion of their net worth tied directly to their company. Without a comprehensive estate and succession plan, your business could face probate delays, leadership disputes, tax burdens, and operational instability at the worst possible time.

Below are the key steps every business owner should take to protect their company, family, and long-term legacy.

Step 1: Inventory Business and Personal Assets
Step 2: Define Your Business Succession Plan
Step 3: Establish a Trust to Protect Business Assets and Avoid Probate
Step 4: Create or Update Buy-Sell Agreements
Step 5: Plan for Estate Taxes and Business Liquidity
Step 6: Align Estate Planning Documents with Corporate Agreements
Step 7: Communicate Your Estate Plan to Key Stakeholders
Step 8: Review and Update Your Estate Plan Regularly

 

Step 1: Inventory Business and Personal Assets

A comprehensive estate plan begins with a clear inventory of both business and personal assets. For small business owners, this includes ownership interests in LLCs, corporations, partnerships, and sole proprietorships, along with related governing documents.

Business assets—such as equipment, intellectual property, real estate, and contracts—should be evaluated alongside personal investments, retirement accounts, and insurance. Proper titling and ownership alignment are essential for effective trust funding and tax planning.

Step 2: Define Your Business Succession Plan

A well-designed business succession plan is central to estate planning for business owners. Succession planning answers a crucial question:

Who will take control of the company if you are no longer able to lead it?

Some business owners intend to transfer ownership to children or family members. Others prefer to sell the company or allow business partners to buy out their interest. In certain situations, owners want to separate economic benefits from management control—allowing heirs to receive income from the business without participating in day-to-day operations.

Clearly defining your succession strategy:

  • Prevents family conflict
  • Protects business continuity
  • Ensures capable leadership
  • Preserves the value of your company

Step 3: Establish a Trust to Protect Business Assets and Avoid Probate

One of the most effective estate planning tools for entrepreneurs is a trust.

A revocable living trust allows business owners to maintain control during their lifetime while ensuring seamless transfer of ownership upon death. By transferring business interests into the trust, the company can avoid probate and continue operating without court intervention.

For business owners concerned about estate taxes, creditor protection, or long-term asset preservation, irrevocable trusts may offer additional benefits:

  • Reduce estate tax exposure
  • Protect assets from creditors
  • Preserve wealth for future generations

For many entrepreneurs, trust-based planning offers the flexibility and control necessary to protect both family and business interests.

Step 4: Create or Update Buy-Sell Agreements

For business owners with partners, a buy-sell agreement is a critical component of both estate planning and business succession planning.

This legally binding agreement outlines what happens to an owner’s interest in the event of:

  • Death
  • Disability
  • Retirement
  • Voluntary departure

A properly structured buy-sell agreement can:

  • Establish a valuation method
  • Restrict ownership transfers to outside parties
  • Require remaining partners to purchase the departing owner’s shares

This prevents unwanted third parties—including heirs who may not be involved in the business—from gaining control.

Many small business owners fund these agreements with life insurance, providing immediate liquidity so surviving partners can purchase the deceased owner’s interest without disrupting business cash flow.

Step 5: Plan for Estate Taxes and Business Liquidity

Estate tax planning is particularly important for high-value businesses. Even profitable companies can face liquidity challenges if a significant estate tax bill becomes due.

Without proper planning, heirs may be forced to sell business assets—or the entire company—to satisfy tax obligations.

Advanced estate planning strategies include:

  • Lifetime gifting
  • Valuation discounts for business interests
  • Use of irrevocable trusts
  • Life insurance to provide liquidity

These tools help ensure your business remains intact while meeting financial obligations.

Step 6: Align Estate Planning Documents with Corporate Agreements

A common mistake in estate planning for business owners is failing to coordinate legal documents.

Operating agreements, shareholder agreements, and partnership contracts often contain transfer restrictions or succession provisions that may conflict with estate planning documents.

Coordination between estate planning counsel and corporate advisors ensures that all documents work together seamlessly. This reduces the risk of litigation, delays, or unintended ownership transfers.

Step 7: Communicate Your Estate Plan to Key Stakeholders

Even the most well-designed estate plan can fail without proper communication.

Business partners, successors, trustees, and immediate family members should understand the general structure of your plan and their roles and responsibilities within it.

Transparency reduces uncertainty and prevents disputes that could threaten business stability after your passing. You don’t need to share every detail – but clarity around expectations is critical.

Step 8: Review and Update Your Estate Plan Regularly

Estate and succession planning for small business owners is not a one-time event.

Your plan should evolve as your business and personal life change. Key triggers for updates include:

  • Business growth or sale
  • New partners or ownership changes
  • Tax law changes
  • Marriage, divorce, new children

Reviewing your documents every 2 to 3 years—or after major life or business events—ensures your strategy remains aligned with your goals.

Final Thoughts: Building a Comprehensive Estate and Succession Plan

For business owners, estate planning is about far more than asset distribution—it is about business succession, tax efficiency, asset protection, and legacy preservation.

A comprehensive estate plan that includes a trust provides clarity, stability, and peace of mind. Taking proactive steps today safeguards your company’s future tomorrow—and ensures that your hard work continues to benefit your family and community long after you are gone.

To schedule an appointment to analyze your business, contact our office at 216-573-3723 or email me at dan@baronlawcleveland.com.

The Transfer of Your Home to A Trust: Potential Insurance Issues

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Written by Carter Bednar, Esq.

Transferring one’s home into a trust is a key step in estate planning. It allows control over who inherits the home and avoids probate upon the homeowner’s death, a primary goal of estate planning. However, failing to properly insure one’s home could lead to an insurance provider denying a claim, rendering all the hard work put into planning worthless.

What is a Trust?

A trust is a legal agreement in which property is transferred to a trustee, who manages the property for the benefit of beneficiaries designated by the trust’s creator, also known as the grantor. Trusts can take various forms, including revocable trusts that can be amended and modified, or irrevocable trusts that cannot be changed. When property is transferred into a trust, regardless of the type, the trust becomes the legal owner of the property.

The Risk of Trust Ownership

The hidden risk of transferring home ownership is that an insurance provider may deny a claim because the legal owner and named insured do not match. Since insurance providers base their coverage decisions on legal ownership, they may deny a claim if the insurance policy does not properly reflect the change in ownership.

How to Properly Insure a Home in Trust

The first step is to contact your insurance provider. Informing your agent as soon as possible of the new ownership structure can help avoid any potential gaps in coverage. The next step is to request that your trust be listed as an additional insured or named insured. This step is crucial as it provides your trust with an insurable interest in the property. The last step is to review your insurance policy and ensure that your liability coverage is sufficient.

Key Considerations

Placing one’s home into a trust is an invaluable estate planning tool, but it is essential to update this change in ownership on one’s insurance policy. Waiting too long to make this update can create a gap in coverage and potentially lead to a claim denial. It is also important to correctly name the trust on the policy, and working with your estate planning attorney can help ensure the trust is listed properly.

The One Big Beautiful Bill Act (OBBBA): What It Means for Estate Planning in 2026 and Beyond

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The One Big Beautiful Bill Act (OBBBA): What It Means for Estate Planning in 2026 and Beyond

After months of negotiation and speculation, Congress has passed the One Big Beautiful Bill Act (OBBBA), a sweeping tax reform bill that significantly reshapes estate planning, trust taxation, and alternative minimum tax (AMT) policy. Building on the framework of the 2017 Tax Cuts and Jobs Act (TCJA), the OBBBA introduces permanent changes with far-reaching implications for high-net-worth individuals, families, and estate planners.

There are certainly a lot of provisions in this “big” bill so I’ve created a breakdown of which specific parts are most likely to affect your estate plan:

Expanded and “Permanent” Estate, Gift, and GST Tax Exemptions

Perhaps the most consequential change in the OBBBA is the permanent increase to the estate, gift, and generation-skipping transfer (GST) tax exemptions. Under the 2018 Tax Cuts and Jobs Act (TCJA), the exemption was set at $13.99 million for individuals and 27.98 million for married couples; now, beginning January 1, 2026, the exemption increases to $15 million for individuals and $30 million for married couples, indexed annually for inflation. Contrary to what some believe the exemption is not permanent, however, there is no set expiration for these amounts at this time. Thus, even if your net worth isn’t over $15 million, you should always consider implementing tax planning strategies within a trust because congress could reduce the exemption at any time.

SALT Deduction Expansion and Trust “Stacking” Strategy

In a move aimed at alleviating the tax burden in high-tax states, the OBBBA increases the State and Local Tax (SALT) deduction cap from $10,000 to $40,000 starting in 2026. The cap phases out for taxpayers with adjusted gross income (AGI) above $500,000 and is fully eliminated at $600,000.

While this provision sunsets in 2030, it opens the door to advanced planning opportunities. One strategy is trust “stacking,” or using multiple non-grantor trusts to claim multiple $40,000 SALT deductions. Each trust is treated as a separate taxpayer and may be able to pay and deduct its own state and local taxes, potentially offering significant federal income tax savings. However, the IRS closely scrutinizes aggressive implementations of this tactic, so careful structuring is essential.

Charitable Giving and Private Foundations

The OBBBA leaves much of the charitable giving landscape intact, but introduces a few notable changes. The 60% AGI limit for cash contributions to qualified public charities is now permanent. Additionally, a new 0.5% AGI floor means only contributions exceeding that threshold are deductible, encouraging “bunching” strategies to maximize tax benefit in a given year.

New “Trump Accounts” for Minors

The bill introduces government-seeded investment accounts for U.S. citizens under 18 with Social Security numbers. Eligible children born between 2025 and 2028 will receive a $1,000 government contribution, with up to $5,000 per year in additional contributions allowed (plus a $2,500 employer contribution exemption from gross income). These funds grow tax-deferred and are unavailable for withdrawal until the child turns 18. The initial $1,000 grant is certainly advantageous, but unless you have already maxed out your child’s 529 savings plan, that remains a better place to park additional funds dogeared for future educational expenses, as they come with more flexibility and better tax advantages for parental contributions.

The Alternative Minimum Tax: Relief for Many, But Not All

The Alternative Minimum Tax (AMT), a parallel tax system aimed at ensuring higher-income taxpayers pay a minimum amount, was substantially curtailed by the TCJA. The OBBBA makes permanent many of those AMT reforms, preserving higher exemption amounts ($88,100 for single filers and $137,000 for joint filers) and reducing the number of individuals affected.

However, the phaseout thresholds for AMT are set to revert to 2018 levels: $500,000 for singles and $1 million for joint filers. That means fewer people will pay AMT, but some higher earners may still be caught in its net, especially those in high-tax states or with complicated income profiles. Importantly, these AMT changes do not affect trusts and estates, which continue to be subject to more stringent AMT thresholds.

Beyond the Big Bill

Estate planning is crucial for protecting your family’s future, regardless of legislative changes. While tax laws may shift, your personal goals and family needs remain constant. Estate planning ensures your assets are distributed according to your wishes—not left to the default rules of probate courts. It allows you to name guardians for minor children, appoint someone to manage your affairs if you become incapacitated, and provide clear instructions for your care and financial matters. Even if your estate is well below the taxable threshold, having a plan in place helps prevent family disputes, costly delays, and unintended outcomes.

Beyond taxes, estate planning is about protecting the people you care about and preserving your legacy. Ultimately, estate planning is not about how much you have, but what you want to happen with what you have. A changing tax landscape may require updates, but it should never be a reason to delay or dismiss planning altogether. The true purpose of estate planning is to provide clarity, control, and peace of mind for you and your loved ones.

Key Takeaways

When new laws take effect, it is always a good reminder to review any existing documents to make sure they are still working for you and your family. Don’t forget that almost any legal provisions regarding taxes and estate plans can be changed over time through additional legislation by current or future administrations. Additionally, these changes are only regarding federal laws – it is still important to stay informed about Ohio’s state-specific laws regarding trusts, estates, and tax-advantaged planning. And, as always, your best bet for maintaining a strong plan that will provide stability and security for your loved ones is to consult regularly with a team of qualified professionals including your estate planning attorney, financial planner, and CPA.

Estate Planning Discussions

Using the Holidays to Discuss a Difficult Topic

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Charitable Estate Planning

Leaving a Legacy While Saving on Taxes Through Charitable Gifting

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Leaving a legacy to charity is a great way to support your community, make an impact, and save on taxes. There are many charitable estate planning strategies to consider and each one comes with a careful consideration. Who you’re donating to, your financial goals, the type of asset you’re donating, tax objectives, and amount of control are just a few of the many considerations every charitable estate plan must contemplate. Using the following strategies, you can design and implement a comprehensive plan.

First, Don’t Do This…

Do not name a charity as the beneficiary of a retirement or bank account. Simply do not do this! Since big banks and financial institutions can only generate revenue based on the assets under their management, they don’t always have your best interest in mind if they lose that revenue in bequeathing your estate to your selected charity.  Leaving your wealth to a stranger at a mega-corporation can cause delay and there’s no guarantee your wishes are met.  Instead, it’s best to have a trusted estate “quarterback,” a.k.a. an executor and/or trustee who will ensure your plan is properly administrated.  You can name your children, sibling, attorney, or trusted friend. Pick someone you trust as opposed to letting the bank pick a stranger.

Donating Through Your Will

A last will and testament is one method of donating to charities; however, it is the least efficient and most time-consuming. This option is better than naming a charity as a beneficiary of a retirement account, however, because here you at least have an executor overseeing and administering the estate.  You can specify certain dollar amounts (e.g., $10,000 to XYZ church) or percentages (e.g., 10% to XYZ Church), within your will and both methods would allow your charitable beneficiaries to receive their bequest.  Keep in mind that your last will does not avoid probate. Moreover, any debts against the estate would be paid first through the probate process, reducing the amount of the bequest. Nonetheless, this method is effective and acceptable.

Basic Charitable Trust Planning

Whether you already have a family trust or want to amend your current one, leaving a bequest to charity through your trust is a great way to leave a legacy.  The trust will avoid probate and also provide more control.  Unlike a last will, here you can spread out payments to your charity, leaving a legacy for years to come.  For example, you might leave $10,000 to the OSU scholarship foundation, every year, in your family name, until the funds are depleted. Moreover, since a trust would avoid probate, the assets are also protected from creditors and the estate would remain private. Finally, you once again have a “quarterback,” known as a trustee to oversee and administer the estate.

Charitable Remainder Trust

Being able to observe the organizations you’re helping is a major benefit of an irrevocable charitable remainder trust, or “CRT.” Additionally, unlike the strategies we have discussed thus far, CRTs allow you to attain an immediate tax deduction while also creating a cash flow. The trust can be funded by real property, stock, cash, or any other type of asset. However, the tax deduction and cash flow you receive will vary depending on what type of asset you’re contributing. After funding, you receive payments over time from the revenue generated from the trust. For example, your CRT might be funded by rental properties that you not only received a tax deduction for, but now you’re receiving payments from for the rest of your life.  After death, the remaining assets are given outright to the charities you’ve named.

Who’s a good fit?  The CRT is a good option if you want an immediate charitable deduction but also have a need for an income stream for yourself or another person. If you set instructions to establish a CRT at your death, it is also a good option to provide for heirs, with the remainder going to charities of your choosing.

Charitable Lead Trust

A charitable lead trust, or “CLT” is the inverse of a CRT.  It’s an irrevocable trust that generates a potential income stream for the named charitable beneficiary, with the remaining assets eventually going to family members or other beneficiaries. Donors choose the term of the trust and the amount distributed, at least annually, to charity.  The assets used to fund a charitable trust are removed from your gross estate and may not only reduce the amount of tax your estate has to pay upon your death, but may also preserve funds for your heirs. Charitable lead trusts are not tax-exempt, and you will need to decide the tax treatment of the trust when it is created.

Who’s a good fit? This is ideal if you want to pass appreciated property to heirs and reduce gift and estate tax consequences and are also comfortable with parting with the income for a number of years in return for estate and gift tax savings.

Where Do You Start?

No matter the size of your estate, developing a charitable estate plan that will be carried out according to your wishes requires three things: (1) a Certified Public Accountant (CPA) who has experience with tax and gifting; (2) a Financial Planner; and, of course (3) an Estate Planning Attorney. The combination of utilizing these three professionals could mean the difference between a significant tax break or your estate ending up in court.  For more information or to schedule a free consultation, contact Baron Law 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

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.

Baron Law LLC Now Hiring Paralegals and Office Admin.

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Baron Law LLC is currently hiring paralegals and office management.  Details for this position are detailed below.

Hours: 20-30 per-week

Pay: $20.00 – $32.00 per-hour depending on experience.

Remote Workplace: Applicant would be able to work remotely most of the time while coming into the Independence office as needed. During the temporary pandemic, the office would only be utilized once or twice a week. This position is expected to be full-time once COVID has settled down with benefits. This position is currently a 1099 position.

Experience: Ideal applicant would have some paralegal experience (greater than one year) in estate planning, probate, and/or elder law.

Skills: Detail oriented individual who is a self starter and able to manage multiple tasks. Must have ability and experience to use Microsoft word and excel. Must have ability to work remotely and manage office tasks such as drafting, coordinating with clients, writing letters, managing software systems, completing probate forms and filing, ect. Although not required, experience with Quckbooks Online and Clio would be greatly considered.

Education: High School diploma or greater.

To apply, submit your resume to dan@baronlawcleveland.com. 

Covid-19 Photo

COVID-19 and the Continuing Importance of Powers of Attorney

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Certainty in this uncertain time is peace of mind many families are finding themselves without. The Covid-19 pandemic is highlighting harsh realities of life all of us were aware of but chose to ignore. One such reality is the importance of comprehensive and up-to-date estate planning. Many parents, grandparents, established business owners, and seasoned professionals are all awaking everyday to the potential of expensive and long-term hospitalization with the chance of persisting and life-changing health consequences. One can’t fight Covid-19 directly, it isn’t a person or thing to combat with force or wit, however, mitigation and foresight are always available. Estate planning will allow you to proactively get your affairs in order and, worst case scenario, if you become infected, allow you to rapidly and intelligently respond in a way that meets you and your families unique needs. Whether you have no estate plan or are looking to update an existing plan, where should you start? Given the current health crisis, taking a look at your powers of attorney, or POAs, is a good place to start.

Power of Attorney

A comprehensive estate plan provides the instructions necessary for estate administration, via a will, while tax relief and flexibility with asset distribution can be accomplished via trusts. Critical issues and decisions during life, however, must be addressed separately. That is where your powers of attorney come into play. 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. As many families are finding out, the bills keep coming due regardless of COVID-19. 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.

In your estate plan you will want both a financial power of attorney and a healthcare power of attorney. Both are agency agreements that grant another individual the authority to make decisions, within a certain sphere of decisions whose terms you dictate, on your behalf. 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 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. Regrettably, 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.

If you decide not to draft one or more powers of attorney and you end up incapacitated, then, in certain situations, a court is forced to appoint either a guardian or conservator and the family is effectively cut off from independently managing the relevant affairs of the incapacitated family member. Further, if a court is forced to action, the entire process will take longer, cost more, be public knowledge, and is immensely more complex than it otherwise should be. Having an experienced Ohio estate planning attorney draft the appropriate POAs can avoid a lot of headache and save a lot of money down the line.

Even with the uncertainly pandemics bring, certain estate planning questions always linger. 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? In what situations and for how long will I remain on such support, if I want to be on it at all? These types of issues and questions also must be addressed and accounted for by your estate plan. That is why finding and working with experienced Cleveland estate planning attorneys are so critical. These types of decisions and potential consequences for your life and wellbeing are not things that should be done on the fly or with doctors and stressed out family members demanding a decision. Unfortunately, with COVID-19 cases becoming more and more prevalent with each passing day, the necessity of proper POAs is crystal clear and those without these documents are scrambling to find estate planning attorneys who are open and still taking clients. If your estate planning documents, especially POAs are out of date or incomplete, contact a local estate planning attorney right away. Courthouses and government agencies are closing daily, and you don’t want to find yourself without the stability of critical legal documents during this most unstable time.

COVID-19, for good or ill, has and will continue to change how we live, work, and survive. Fortunately, one aspect of life that has largely gone untouched is estate planning. Estate planning was smart to do before Covid-19 and it still is. Northeast Ohio has felt the touch of this disease like every county in the world has. Cleveland estate planning attorneys are working around the clock to meet the historic demand for quick and immediate estate planning and are currently utilizing more teleconferencing and remote legal services than ever before to make their existing and new clients comfortable and secure. Social distancing and stay-at-home orders are all proactive protection measures that the majority of Americans are following, even if they cause financial hardship or social strain. Estate planning also represents a proactive protection measure, however, it seldom causes any financial or social pain, it actually prevents them. As such, it’s strange that 50% of people don’t even have a simple will. Considering the ongoing crisis, make sure you and your family are in the 50% that protects, not the 50% leaving everything to chance.

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.

GST: Generation Skipping Transfer Tax

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Staying abreast of current tax changes is critical to getting the most “bang for your buck” when it comes to estate planning. 2018 had significant, albeit likely temporary, increases in the federal estate, gift, and generation-skipping transfer tax exemptions. For example, individuals who previously used their previous lifetime gift tax exemption amounts can now effectively double the amount of assets and money that can be transferred without incurring any federal gift tax consequences. As such, it is a good idea to reevaluate your current estate planning to determine if your estate planning goals are being met and if there are now unexploited taxation opportunities with the recent changes in law. For example, many people, in light of the increased lifetime gift tax exemption amount and generation-skipping transfer tax exemption amount, are making gifts to children, grandchildren, or close family friends with either outright distributions or through new or existing trusts. The first step, however, in manipulating recent changes in federal law to your personal benefit is understanding the underlying tax structures. One significant theory of taxation is the generation-skipping transfer tax. This tax, however, is only one of many which may affect your estate, as such, contact an experienced Ohio estate planning attorney to make sure the most goes to your friends and family.     
 

  • What is the GST Tax? 

First question is the most common, what is the generation-skipping transfer tax? The generation-skipping transfer tax or, “GST”, is a flat, 40% tax on transfers to specific persons, sometimes called “skip persons,” such as grandchildren, other family members more than one generation from you, nonfamily members more than 37.5 years younger than you, and also certain trusts. Whether or not transfers to a particular trust are subject to GST taxation is primarily focused on who are named as beneficiaries and their generational status to the grantor(s). Avoiding GST taxation and preserving the most amount of your money and assets is one of the primary goals for you and your estate planner.     

  • How is it triggered? 

GST taxation can be triggered either intentionally or unintentionally via transfers of assets or money. Intentional transfers, such as purposefully leaving bequests, trust distributions, or inheritance to “skip persons.” Unintentional transfers, such as children predeceasing grandchildren and an estate plan failing to take this possibility into account when calculating future distribution structures.   

When a particular transfer is deemed to trigger the GST tax, the next step is to calculate whether it falls into any exemption categories and if there is any money left in any of those categories to shield the transfer from GST taxation. The two major exemptions are the annual gift tax exclusion, currently $14,000 per recipient; $28,000 for married couples, and the Unified Tax Credit, approximately $11.8 million lifetime exemption and approximately double that amount for married couples.   

  • How do I use exemptions to avoid GST?  

Utilizing tax exemptions to avoid GST essentially boils down to properly documenting and earmarking transfers that may trigger GST taxation and filing any appropriate paperwork with the IRS. Again, regardless of whether these transfers are made during the grantor’s lifetime or at their death, as long as transfers either skip a generation or are made in trust for multiple generations, GST taxation must be considered and addressed.  

Estate planners take the transfers you want to make, then plot different tactics for transfer dependent on your overall goals and realities for your particular estate. Many, few, or no options may be available to avoid GST in your circumstances. Sometimes certain gifts are not applied toward the exemption, such as “annual exclusion” gifts and direct payments for medical or education purposes, thus these can be made completely tax-free. Other times decisions have to be made to temporary hold off on a transfer or to shift a transfer to another spouse to use their tax exemption amounts. Furthermore, the estate planner must decide whether to file a gift tax return or plan the transfer so it appears as an incomplete gift. Just because a transfer looks like it falls within the bounds of a taxation exemption doesn’t mean the transfer magically is ignored by the IRS, your estate planning still has a lot of paperwork and legal leg work to do.    

  • How to Avoid GST with trusts 

Trusts provide a multitude of estate planning benefits, one of the most popular uses for them is minimizing or avoiding estate taxation, in this context, GST taxation. A-B trusts, bypass trusts, and dynasty trusts are all examples of trust vehicles that can mitigate or completely avoid any concerns you might have with generation-skipping transfers. Trust use here primarily concerns manipulating trust funding and available exemption amounts in conjunction with the practical needs of you and your family. Each trust type, however, has their own benefits and disadvantages. As such, it is important to talk with an Ohio estate planning attorney to find out the pro’s and con’s of using a trust in your circumstances.  

Regardless of whether a trust is right for your estate planning goals, now is the time to review your current estate planning documents to ensure they remain in accordance with your intent and the recent changes in law. Often many estates are planned around and use trusts that are funded according to formulas tied to now changed federal estate exemption amounts. As such, with the recent increased estate tax exemptions, such trusts may be funded with significantly larger amounts than you anticipated when you originally met with your estate planner. Further, a comprehensive review of your trust and estate planning documents will allow you to assess their effectiveness in light of the changes to the law, changes in your personal life, and changes to your estate planning goals.    

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.