Estate Planning Lawyer - Cleveland Ohio - Baron Law LLC

Do I need a Trust?

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Exploring whether you need a trust may be answered below visiting this questionnaire: DoIneedaTrust.com.   In addition, you may find the following information written by Cleveland, Ohio estate planning lawyer Daniel A. Baron useful.

Even if your name isn’t Bill Gates or Warren Buffet, it does not necessarily mean that the need for you to establish a trust does not exist. If your Net Worth is greater than $100,000* and you have very specific desires as to how you would like to disperse your assets after you pass away, you should consider creating a trust.  Although you would have a will in place as well, by establishing a trust you will maximize your tax benefits.  In addition this will also protect your assets from creditors and ensure that your heirs receive the items you would like to pass onto them.  This not only pertains to liquid assets such as cash and your investments but property as well.

There are a number of different trusts available to you to create which can protect your assets and minimize your estate taxes at the end. Each of us has our own needs when it comes to protecting our assets for the next generation and to make sure that your wishes are followed after your passing.

Some of the different types of trusts you may want to discuss to see what best suits your needs:

  • Revocable
  • Irrevocable
  • Credit Shelter / A-B Trust
  • Generation Skipping
  • QPRT
  • Irrevocable Life Insurance Trust
  • Children’s Trust
  • Medicaid Trust
  • Life Estate Trust
  • Medicaid Asset Protection Trust
  • Intentional Defective Grantor Trust

To see what trust is best suited for you, contact an Estate Planning Lawyer. These are some of the topics you should be prepared to discuss:

  • Do your investments name a beneficiary or do they have a POD (payable on death) or a TOD (transfer upon death) form attached to them?
  • Do you have a child with special need that you need to have cared for after your passing?
  • Do you own any real estate out of state?
  • Do you have a unique plan of how you would like your estate divided?

*To determine your Net Worth take the sum of your total assets (cash, property, investments, etc.) and subtract your total liabilities (mortgage balance, credit card debt, etc.). Plain and simple take what is OWNED and subtract what is OWED.

To get answers to your questions as to what type of trust is best suited for your specific needs you should speak with an experienced Estate Planning lawyer. Contact Daniel A. Baron of Baron Law today at 216-573-3723 to answer any questions you may have on creating your trust.  We welcome the opportunity to work with you and recommending the best solution for your estate planning needs.

Helping You and Your Loved Ones Plan for the Future

 

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What Is A Credit Shelter Trust?

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Cleveland, Ohio estate planning lawyer, Daniel A. Baron, of Cleveland, Ohio, offers the following information on what a Credit Shelter Trust is and should it be part of your comprehensive estate planning.

If you are married and an investor, for example, consider establishing a Credit Shelter Trust. This can also be referred to as an A-B Trust and is an Irrevocable Trust.

The benefits of a Credit Shelter Trust is, that it allows the assets of the trust (up to a predetermined amount, i.e. $500,000) to transfer to the beneficiaries specified within the trust, typically your children, without any estate taxes being assessed.    Also, your spouse continues to have all rights to the assets of the trust and any income generated until the spouse passes away.

If you are a blended family, a Credit Shelter Trust might be the right tool for you as part of your comprehensive estate planning. If at the time of death of the first spouse the assets of the deceased spouse to immediately into the Credit Shelter Trust.  If the assets transferred are larger than the predetermined amount (we used $500,000 as the example), the excess assets go into a trust which qualifies for the Marital Deduction.  Since the Credit Shelter Trust is irrevocable, it has great estate tax liability advantages as well as making certain your assets are passed along to your beneficiaries, typically your surviving spouse and your children.  Establishing a Credit Shelter Trust insures that the worry of the step-parent now getting all the assets, your assets will now be distributed to the beneficiaries as you intended them.

In the event your spouse is still living and would need to dip into the trust’s assets that were set aside for your children, it would be up to your Trustee to assess the necessity of the transfer of funds. The step-parent would not have carte blanche to the funds.

For answers to any questions you may have on a Credit Shelter Trust and making it a part of or your Comprehensive Estate Planning, contact Daniel A. Baron of Baron Law today at 216-573-3723. Let’s work together to see what the best Trust is for your situation.

Helping You and Your Loved Ones Plan for the Future

 

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Why Do I Need A Guardianship?

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Cleveland, Ohio, Estate Planning and elder law attorney, Daniel A. Baron, offers the following information on creating a Children’s Testamentary Trust for your loved ones. Is it the best option for you when creating your estate plan?

Most people understand and realize that they should name a Legal Guardian for their minor children. However, many people don’t take the necessary step further to consider the financial aspects of guardianship after a parent passes away. Creating a testamentary trust can alleviate this worry and for the most part is inexpensive to create.

Consider Establishing a Children’s Trust. 

Establishing a Children’s Trust, aka a Testamentary Trust, in your will, now creates a way for you to take care of your minor children after you have passed away. By naming a Trustee to oversee the trust allows them to take care of your children’s financial needs for everyday living and any health issues which may arise, as well as their future education needs.

What happens to your property should you pass and have minor children?

Unless specifically noted otherwise in your will, when you pass and your children are of legal age, they will automatically inherit all your property. But what happens if your children are minors?  When a Children’s Trust is established you can appoint a Trustee, or ‘Property Manager’ to oversee the property to make certain your minor children have a place to live and are cared for.  In the absence of a Property Manager being named, the courts will appoint a Property Custodian.  Depending on your individual circumstances, you may want to consider creating a Life Estate.

Should I create a trust for each of my minor children?

Upon your passing any children of legal age will automatically inherit your assets unless otherwise specified in your will. Let’s assume you have minor children, then it would be wise to set up a trust for each child and name a trustee to oversee the trust to make certain that the funds and property are used for the child’s needs and in their best interest.

If you do not wish to establish a trust for each child, consider a revocable living Trust or  Family Trust.  The Trustee(s) would handle this single trust in the same manner as if you were to set up individual trusts for each child.

When creating your Comprehensive Estate Plan you need to speak with an experienced Estate Planning lawyer. Contact Daniel A. Baron or Baron Law today at 216-573-3723 to answer any questions you may have on a creating a Children’s Trust.  I welcome the opportunity to work with you and help recommend the best solution for your needs.

Helping You and Your Loved Ones Plan for the Future

AN AB Trust – What are the benefits for your estate?

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Cleveland, Ohio estate planning attorney, Daniel A. Baron, offers information on an AB Trust and the benefits realized from including this as part of your Tax and Estate Planning:

For Tax and Estate Planning purposes, as a married couple, maximize the use of your Federal Estate Tax Exemptions through the utilization of an AB Trust.

There are two vehicles available in which to set up an AB Trust

  • Living Will and Last Testament
  • Revocable Living Trust

The “A Trust” also referred to as the

  • Marital Trust
  • Marital Deduction Trust
  • QTip Trust

The “B Trust” is also known as the

  • Family Trust
  • Bypass Trust
  • Credit Shelter Trust

In 2011, the Federal Estate Tax Exemption   was made transferrable between married couples.  Should one pass away in 2011 or after, their entire Federal Estate Tax Exemption is not needed to avoid Estate Taxes.

If you are on your second, third, or additional marriage and have different beneficiaries, it is in your best interest to explore the benefits of the AB Trust.

The AB Trust can only function if you secure them while both spouses are alive. Don’t put off securing this beneficial part of your estate and tax planning as once you become a widow or widower, it is too late.

Below is an example of how the AB Trust works to your benefit:

For more information on setting up an AB Trust as part of your Estate and Tax Planning, contact Daniel A. Baron of Baron Law to maximize your Federal Estate Tax savings upon your passing. Contact us today at 216-573-3723.

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The Marital Deduction – What are the benefits?

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Cleveland, Ohio estate planning attorney, Daniel A. Baron, offers information on The Marital Deduction as well as other Tax Planning Advice and what to make part of your Estate Planning.

What are the benefits?

The most important deduction a married couple has is the The Marital Deduction.  The amount of assets which can be passed upon death from one spouse to the other is unlimited and is also used to defer ALL estate taxes until the surviving spouse passes.  Current tax laws allow one spouse to give the other spouse assets where there is little to no tax imposed upon the transfer of these assets.  No matter what the value of the assets which are being transferred, whether it is $50,000 or $50,000,000.

What if there is a divorce?

If you happen to be divorced from your spouse, you can still pass assets to the ex-spouse after you pass with little or no tax being imposed if it is stated in the divorce decree.

My spouse is not a U.S. Citizen – Do the same tax laws apply?

The Marital Deduction is unlimited as long as both spouses are U.S. Citizens. So what happens when one of the spouses is not a US Citizen?

Should the first spouse to pass away be a U.S. Citizen and the surviving spouse a noncitizen of the U.S., unfortunately the unlimited marital deduction for Federal Estate Taxes is not available.

However, the taxes can be deferred by setting up a Qualified Domestic Trust (AKA QDOT), and having the assets pass through this specialized trust.

Should you own real property, consider adding this to the trust as the taxes will be deferred until the noncitizen spouse passes away.

For more information on The Marital Deduction and implementing other tax savings ideas as part of your Estate and Tax Planning, contact Daniel A. Baron of Baron Law to maximize tax savings upon your passing.  Contact us today at 216-573-3723.

Estate Planning Attorney

QDOT – What is it and should I have one?

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Cleveland, Ohio estate planning attorney, Daniel A. Baron, offers information on a Qualified Domestic Trust and the benefits realized from including this as part of your Tax and Estate Planning:

 

 

The specific goal of a Qualified Domestic Trust (or QDOT) is to defer Federal Estate Tax on assets which are transferred from a spouse who is a US Citizen upon their death to the other spouse who is not a citizen of the US. If your marriage consists of both a US Citizen and a non US Citizen and your assets are minimally several million which the non US Citizen spouse has the possibility of inheriting,  it would be wise for you to secure a Qualified Domestic Trust.

What are some of the tax issues for spouses who are not US Citizens?

In the absence of Qualified Domestic Trust the non-citizen spouse now has to pay Federal Estate Tax on any assets transferred from the US Citizen spouse into the non-citizen spouse’s name, just as any other party who inherits assets from any other person when they pass.

 

What happens when no Qualified Domestic Trust exists and the spouse who is the

US Citizen passes away first?

If the surviving spouse is a non-citizen of the US, then as stated previously, Federal Estate Taxes will need to be paid on any assets which transfer to the surviving spouse. The surviving spouse would not have the unlimited Marital Deduction as it is should both spouses be US Citizens.  Paying the Federal Estate Taxes is the government’s way of collecting taxes so that the non-citizen spouse does not take all the assets back to their native country and avoid paying the necessary taxes.

There are two avenues which could be taken to avoid paying any inheritance tax:

  • Become a US Citizen
  • Set up a Qualified Domestic Trust

There are a number of requirements however set forth for set up a Qualified Domestic Trust after the spouse who is a US Citizen passes away, but it can be done. If your family situation is such that one spouse is a US Citizen and the other is not and has no intention of becoming one, it would be most advantageous for you to contact an Estate Planning Attorney to set up a Qualified Domestic Trust while you are both still living and of sound mind.

For more information on setting up a Qualified Domestic Trust as part of your Estate and Tax Planning, contact Daniel A. Baron of Baron Law to maximize your Federal Estate Tax savings upon your passing at 216-573-3723.

Cleveland Probate Attorney

Is Probate Necessary?

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As an estate planning attorney, many people ask me if probate is really necessary. The short answer is no, and I often advise my Cleveland, Ohio estate planning clients to avoid probate if at all possible. But what is probate? And, why should it be avoided? Here’s a quick synopsis to answer these questions.

What is Probate?

Probate is the legal process required to transfer certain assets at a person’s death. Probate becomes mandatory and necessary when a person dies owning assets in his or her name that do not pass to a survivor or beneficiary by operation of law or contract. An example of one of these ‘contracts’ might be a payable on death account (“POD”) or beneficiary designation. Through probate, claims, expenses and taxes are paid and property is distributed.

The assets subject to probate administration are referred to as “probate assets” while assets that pass outside probate to a survivor or beneficiary by operation of law or contract are called “non-probate assets.”

Probate is not the same as tax. Both Probate and non-probate assets may be subject to income and/or wealth transfer tax at a person’s death.

A will enables a person to choose how his or her probate assets are to be distributed following death. Without a will, the Ohio Statute on Descent and Distribution (Ohio Rev. Code § 2105.06) dictates how a decedent’s assets will be distributed.

Reasons to Avoid Probate
I often tell my Cleveland, Ohio clients to avoid probate for several reasons. First, probate is public. For a number of reasons, you may not want others to now the value of your assets being transferred to your decedents. The creation of a trust or other instrument is private and can avoid the public display of your assets. Second, the probate process is often time consuming.   When dealing with the loss of a loved one, you don’t want to be caught up in court which is costly and often ends up prolonging the grieving process.  Next, there may reason for wanting to control your assets through a trust; moreover, creating asset protection.  Finally, there may also be certain tax advantages for avoiding probate by placing your assets in trust.

For most clients, I will often weight the pros and cons of creating a will versus a trust and explaining the benefits of avoiding probate.  Often it comes down to the cost versus the value of avoiding probate.  If you would like more information regarding probate, trusts, wills, or other estate planning tools, please contact my office at 216-276-4282.    Baron Law LLC provides estate planning advice for the Cleveland, Ohio area.    Call estate planning attorney Dan Baron today for a free consultation.