GST: Generation Skipping Transfer Tax

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.  

How to Lower Your Property Tax – Fighting Overvalued County Appraisals

 

What: Property Value Appraisal

Ohio operates on a system in which county auditors reappraise every piece of land and every building located in their county every six years. These base appraised values are then multiplied by local tax rates. This value is what is shown on local county auditor’s website and is often used as a base line when determining potential real estate taxes.

This reappraisal occurs in different counties at different times. Naturally, it is just too much for every local government to reappraise everything all at once. So, Ohio uses staggered reappraisal with different groups of counties undergoing reappraisal or updating during different tax years.

The following counties recently have either finished reappraisals or recently undergone updates:

Update Counties

 

Allen Coshocton
Guernsey Sandusky
Vinton  

 

Reappraisal Counties

 

Belmont Brown Crawford Cuyahoga Erie
Fayette Highland Huron Jefferson Lake
Lorain Lucas Morgan Muskingum Ottawa
Portage Stark Warren Williams  

 

Why: Property Reappraisal and Updating can result in a Bigger Tax Hit

Most importantly with reappraisal and updating, is that they can result in increased property values and consequently increased tax liability. Property owners in particular counties subject to reappraisal or update will see new property values reflected in their property tax bills that arrive in the mail either December or January.  This is an often-overlooked tax consequence that many people fail to plan for and can eat up an otherwise expected, and critical, tax refund. As such, many people desire to keep their property values low, at least in regards to taxation, and want to challenge their county auditor’s assessment of their property value. This is where experienced Cleveland legal attorneys come in.

How: Filing a Complaint to Challenge Property Valuation

The period for filing formal challenges to a county auditor appraisal generally begins January 1 and ends March 31 so contact an attorney sooner rather than later if you want to challenge a recent change in your property value. Generally, property owners can only challenge an assessment one time every three years.

How you challenge an improper auditor valuation is with a complaint filed with your local county board of revision where the property under dispute is located. This complaint is sometimes referred to as a “complaint against valuation” and asks 14 boilerplate questions. Questions such as has the property been sold within the last 3 years, have you made any improvements to the property, and your justifications for requesting a change in value.

This form is found on every county auditor’s website as well as the Ohio Department of Taxation’s website. A lot of individuals challenge land valuation so the process, at least in some ways, is streamlined. Note, however, if the property owner challenging valuation is a business, an attorney must almost always sign the complaint.

The most common reasons property values are challenged include declining market values in a depressed area, functionally and/or economically obsolete properties, declining rents in tandem with vacancies, and damage caused by non-human agency, such as fire, flood, earthquakes, or mold. Further, those who recently purchased a property in an arms-length transaction for less than the county auditor’s value, often have a strong case. Note, however, recent Ohio Supreme Court rulings adjusted the evidentiary rules for property owners looking to use a recent arms-length transaction as a basis to challenge the value of real property. The important takeaway from recent legal rulings is that appraisal evidence must be carefully considered before presentment to the board of revision. As such, experienced legal counsel should be retained before filing any tax appeal.

Once the complaint is filed and received by the board of revision, the board sets an evidentiary hearing. The hearing usually lasts between 15 to 30 minutes and takes place in front of a panel of decisions makers, usually the county auditor, county treasurer, and the president of the Board of County Commissioners. At this hearing, an attorney appears on your behalf and presents arguments, evidence, and witness testimony to prove the actual property value. Depending on the value or discrepancy of the value under dispute, other interested parties, such as local school districts, will appear via their own counsel and argue in favor of the higher value.

After the hearing, the board of revision makes its decision of the value of the real property. If you took the proper steps, gathered the right documents, and hired the right attorney, your property value should be changed to reflect the real value and you can avoid any significant tax hit in the near future.

When: When should I challenge?

As with every legal question asked of every attorney, the answer is always going to be, it depends. But as rule of thumb, if it seems like no rational buyer would purchase your property for what the auditor appraised it, calling your local Cleveland business attorney is probably a good move.

Another critical factor in assessing when to challenge is the sufficiency of evidence currently in your possession. This is where good legal counsel comes in. Attorneys are well-versed in hiring qualified appraisers to determine the initial overvaluing of the property, generating presentable reports for the evidentiary hearing, and identifying the relevant purchase transaction documents. If you are asking for a significant change in value, it is highly likely opposing attorneys will come out of the woodwork to counter your appeal. As such, experienced local counsel is often the difference between a waste of time and money and significant tax saving.

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.

Helping You and Your Loved Ones Plan for the Future

House in Trust with Mortgage

Can I Put My House In A Trust If It Has A Mortgage?

More and more people are becoming ever more concerned with either protecting their assets, maintaining eligibility for Medicaid, or leaving as much as possible to children and future grandkids. As such, more and more people are realizing the remarkable utility of trusts within their estate planning. One’s residence often represents the most significant asset an individual or couple possesses, and for many, financial assistance is needed to purchase it, that is mortgages. A common question presented to Cleveland estate planning attorneys is, can protect my house with a trust if it has a mortgage? As with any legal question, the answer is not black and white. 

  • What is trust? 

To understand how the what, when, and how of funding your trust with a mortgaged house, we must start with the basics, what is a trust? A trust, to put it simply, is a private agreement that allows a third party, a trustee, to manage the assets that are placed inside the trust for the benefit of trust beneficiaries. There are innumerable types of trusts, each with own its respective legal conventions and purposes. A critical aspect of trusts is that the assets housed within them usually aren’t counted as a part of the trust creator’s taxable estate. Thus, when the owner of the trust creates the trust and properly funds it, the assets go from the owner’s taxable estate to the trust. Afterwards, when the owner dies, the assets are not in the owner’s estate and subject to probate, and if the trust is drafted properly, are further ignored for the purposes of Medicaid eligibility. Further, trust assets pass via the beneficiary designations set down when the trust was created. These conveyances via beneficiary designation are much simpler, quicker, and cost-effective then going through probate and can be halted or expedited when circumstantially advantageous depending on the terms of the trust.   

  • When can a mortgage be called?  

The next basic to understand is when can your bank come after your house, i.e. a bank calling on a mortgage. A mortgage being called is when a financial institution/holder of the mortgage demands that the full amount of a mortgage be paid. When this can occur is conditional and which events will trigger are often denoted within the mountain of legal documents that physically make up your mortgage. In the context of funding a trust with a mortgaged house, your “due-on-sale clause” is what your estate planning attorney will be concerned about.    

A “due-on-sale clause” is a contract provision which authorizes a lender (your bank), at its discretion, to collect on the loan, i.e. declare it immediately due and payable if all or any part of the property, or an interest therein, securing the real property loan is sold or transferred without the lender’s prior written consent. This is fair because banks depend on mortgages getting paid off, or at least foreclosed, and the mortgage contract is between you and the bank, not the potential buyers and the bank.  

  • How can a mortgaged house in placed in trust without having the mortgage called?  

Any “due-on-sale clause” facially seems to be a death nail to any thought of funding trust with a mortgaged house, I mean, not many people have thousands, if not hundreds of thousands, of dollars in liquid assets to immediately pay off a house. This is where the Garn-St. Germain Depository Institutions Act of 1982 comes into play and your estate planning attorney earns his money. The relevant part of the Garn-St. Germain Act in the context is 12 U.S. Code § 1701j–3, subsection d, as follows:  

(d) Exemption of specified transfers or dispositions.  With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon— […] 

(8) a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; … 

So, to bring everything back down to Earth, this subsection possesses the two “prongs” of the Garn-St. Germain test, occupancy and beneficiary status for the trust makers for the mortgaged house. When there is a mortgage, a trust must be properly drafted to include specified reserved occupancy language in the trust to satisfy the occupancy prong of Garn-St. Germain. Simply, the trust makers, you, must specifically reserve the right to live in the house. Further, in some way, the trust makers, must be a trust beneficiary. The beneficiary status prong usually isn’t an issue with self-settled trusts given their nature, i.e. trusts made with the intent to provide some tangible benefit to the trust makers. An argument can be made that the reservation of occupancy rights inherently makes the settlors beneficiaries, however, more cautious estate planning attorneys further make trust makers income beneficiaries as well.  

Facially, drafting a trust to satisfy the prongs of the Garn-St. Germain test appears straight-forward, however, care must be taken when making your trust. The interplay between the actual language of a trust can have profound effects on taxation, ownership, inheritance, and eligibility for state and federal assistance programs whose admittance guidelines are based on income and asset thresholds.    

Now it is important to note that the issue of a mortgage is an issue apart from Medicaid eligibility, though often the two are interrelated. Addressing both concerns requires the same solution, precise drafting of trust language that is statutorily compliant.  Under the Garn-St. Germain Depository Institutions Act of 1982, placing the home in the MAPT does not trigger the “due on sale clause” contained in most mortgages provided certain steps are taken and legal standards are satisfied. Thus, with a knowledgeable estate planning attorney, you can remain Medicaid eligible and avoid Medicaid Estate Recovery, while still living in your home and paying the mortgage as you always have.  

Helping You And Your Loved Ones Plan For the Future

Advanced Directives and Your Estate Planning

What are Advanced Directives?

Advance directives are a set of documents where you are appointing another individual to make medical decisions on your behalf. Typically, we have in these documents a living will, HIPPA authorization, and then health care power of attorney.

How Are These Documents Used?

Living Will- A living, will not to be confused with the last will and testament, is used where you are telling the world that you do not want to be kept on life support in the event that you have little to no brain activity. Instead of leaving that decision on your loved ones, you’re making the decision for yourself that you don’t want to be kept artificially alive.

Healthcare Power of Attorney- The agent of your healthcare power of attorney can make decisions about your health, such as a risky surgery.

HIPPA Authorization- You are giving your loved ones or your agent the ability to obtain medical records as well as something as simple as attending a doctor’s meeting.

How Can You Obtain These Documents?

There are a few ways that you can obtain these documents. One way is through the Cleveland Clinic or Metro Health; any big hospital has standard forms that you can complete.

However, we recommend you discuss these options with an attorney so you can discuss what you want and make sure that is carried out in the right manner.


If you are unsure if you have these advanced directives in place, if you know you need these documents, or if you are putting together some estate planning, this is a really important step. Contact us today to get a free consultation or visit us online to learn more.

Estate Planning Attorney Baron Law

D.I.Y. Estate Planning: Saving a Dollar Now, Lose a Thousand Later

D.I.Y. Estate Planning:  Legal Zoom, Rocket Lawyer, and Youtube has granted an unprecedented amount of legal information to the public. Online forums, blogs, and television allow people to converse at any time and anywhere about pretty much anything. Nowadays ordinary people can undertake their own legal research, legal drafting, and, if necessary, personal representation.  Just because you can do something, however, doesn’t mean you should. Google searches and online videos are not a substitute for the advice and guidance of an experienced Ohio attorney and many people put themselves in a bad position after they convince themselves that an attorney is simply not necessary.

At the end of the day, do-it-yourself legal services is all about saving money and time. People don’t want to spend hundreds if not thousands of dollars on legal services and spend the time conversing and meeting with an attorney. Online legal materials, at least the cheap or free ones, are great at providing a false sense of security, that everything is straight-forward, do X and you’ll get Y.

Law firms hear the same problems and fix the same issues from self-representation every day. People who, after a quick google search, start drafting their own wills, LLCs, and contracts. People who put their faith in a disinterested corporation and a handful of document templates. Legal Zoom and Rocket Lawyer are not law firms and they do not represent you or your interests, they explicitly say so on their websites. They cannot review answers for legal sufficiency or check your information or drafting. An experienced Cleveland estate planning attorney, however, properly retained and with your best interests in mind will accomplish everything you expect, and often more.

Hired attorneys are under legal and professional obligations to do the best job possible. They don’t want to get sued for malpractice, they want you to pay your legal bill, and they want you to refer your friends and family. A particular client is concerned with a tree, while the attorney pays attention to the forest. A proper attorney will draft documents correctly with established legal conventions in mind, legalese isn’t something done for attorneys own benefit, it has a definitive and beneficial purpose. A lot of trouble is caused by D.I.Y. legal drafters and estate planners due to typos or the inclusion of legalese for legalese sake. Further, a knowledge of federal, state, and local law along with local procedure and jurisdictional customs is necessary to obtain a proper outcome with minimal cost and stress. At the end of the day, the legal system is made up of people, knowing who to talk to and when is a large reason why attorneys are retained.

We live in a brave new world, never before has so much legal information been so readily accessible to so many. In the same vein, never before has our lives been so complex and estate planning matches this. Attorneys do more than drafting and research, they advise you on the best ways to protect your family and assets in light of an ever-changing legal landscape and your own personal life and dreams. Often do-it-yourself legal services are simply not worth the risk and lull you into a false sense of security. Ultimately, you need your estate planning documents to do what you expect them to. As such, call of local Ohio estate planning attorney and make sure yours are done right.

Guardianship and Your Estate Planning

What is Guardianship?

A guardianship is where a person has the legal authority to care for another.

Are There Different Types of Guardianships?

Minor Children-The most common type of guardianship is with minors. If something happens to children under the age of 18, then you need someone to act as a parent. A misconception is that if you appoint someone as a godparent over your child, this does not give that person legal authority over your child.

Elderly- As we get older, we may need someone who can watch after us and make sure we are getting what we need and doing what we need to as well.

Adults with Special Needs- Guardianship is also needed for adults with special needs so that they have someone to watch over them.

How do I Establish Guardianship?

With planning, there are three ways to appoint someone as a legal guardian, through:

  • Power of Attorney
  • Will
  • Trust

Without planning, you have to go through a court order which is far more expensive and gives you less power.

When Should You Establish Guardianship?

Anyone with children should immediately establish guardianship. The thing is, you never know what is going to happen, and that is why it is best to plan for the future just in case. If it is on your mind, do it now.


If you need to establish guardianship over your children, an elderly loved one, or a loved one with special needs; you can also learn more by visiting our website or by contacting us at Baron Law today.

power of attorney

Financial Power of Attorney | Baron Law | Cleveland, Ohio

Financial power attorney (POA) is a set of documents that you’re giving your agent the ability to act and make financial decisions on your behalf. They’re most commonly used in an elder law scenario. They can also be used in a crisis scenario, if you are overseas, a business owner, and you need to elect someone to make those decisions on your behalf.

Are There Different Types of Powers of Attorneys?

General and Limited:

A general power of attorney gives your agent the ability to govern any part of your estate plan. Whereas, a limited power of attorney is restricted from having control over certain aspects of your estate that you deem fit.

Springing and Current:

A springing power of attorney only allows your agent to act when a certain offense occurs. Whereas, a current power of attorney can act at any time. We recommend that clients have a current power of attorney because it can be difficult to really point out a point time when the springing power returning comes into effect.

How Do I Know if My Financial POA is Up-To-Date?

Financial power of attorney laws changed in 2012, so if you have not updated your power of attorney since then, you’ll want to get it updated as soon as possible.

In addition, you’ll want to look for hot powers in your financial power of attorney, which are:

  • Gifting Powers
  • Powers Over Beneficiary designations
  • Powers Over Retirement Accounts
  • Ability to Make Trusts
  • Safety Deposit Boxes

These are the hot powers, and if you don’t have those, then financial institutions may not warrant your financial power of attorney. It’s really important that you look for these in your document.


Estate planning can seem like a big hassle because they are so many levels which require close detail. If you want to make sure your financial POA is up-to-date and can really act on your behalf, contact us at Baron Law today.

Baron Law Estate Planning Attorney

Preventing Children From Blowing Through Their Inheritance

Blood is thicker than water and we get to pick our friends, not our families. There are a lot of pithy and whimsical sayings that have been passed down through the generations that attempt to explain and characterize the complex and often contradictory nature of family relations. When it comes to deciding who gets the money and stuff after a family member dies, often, tragically, the baser natures of our family members are on full display.

Trusts are an ubiquitous estate planning tool that a lot of people have heard about but not a lot of people know the details of how they work. Trusts afford privacy for trust assets, control over how, when, and if trust assets are distributed, and potential protection against creditors, litigants, divorce, and greedy family members. All these benefits associated with trusts sound great but how exactly is all this accomplished? Once again, consulting with an experienced Cleveland estate planning attorney is always the quickest and best way to get your estate planning questions answered.

  • What are spendthrift trusts/provisions?

A common concern for estate planners is, how do I prevent my descendants from wasting their inheritance? A quick look at any one of the innumerable stories of multi-million dollar lottery winners who end up broke and destitute a few years later illustrates how most who come into vast sums of money quickly tend to spend that money unwisely. Now, if you decide using a trust is right for you and your family, within the structure of your trust, you can write in terms that will lower the opportunities for named beneficiaries to squander their trust distributions. Though not %100 foolproof, spendthrift trusts and spendthrift provisions are very common tools for trust makers to use to protect their trust and protect trust beneficiaries from themselves.

In Ohio a spendthrift trust is a trust that imposes a restraint on the voluntary and involuntary transfer of the beneficiary’s interest in trust assets assigned to that particular beneficiary.

Under Ohio law, specifically the Ohio Trust Code, spendthrift provisions are terms within a trust which restrain the transfer of a trust beneficiary’s interest. Spendthrift provisions block both voluntary transfer of trust assets stemming from the beneficiary action and volition and involuntary transfer of trust assets, usually from creditors or assignees whose claims are usually traceable back to a named trust beneficiary.  See O.R.C. § 5801.01 (T).  As a general rule, a spendthrift provision is valid under the UTC only if it restrains both voluntary and involuntary transfer.

For illustration purposes, here is an example of a bare bones spendthrift provision. Note, an experienced estate planning attorney would not solely rely on the follow language to protect you.

“A. Spendthrift Limits. No interest in a trust under this instrument shall be subject to the beneficiary’s liabilities or creditor claims  or to assignment or anticipation.”

How do they work?

Looking at the legal definition for spendthrift trusts and spendthrift provisions, it may be difficult to understand how these operate and, consequently, how they may be beneficial. In a nut shell, if a trust is or has a spendthrift provision, in most circumstances, trust assets are not subject to enforcement of a judgment until it is distributed to the beneficiary. This means that a trust beneficiary cannot use trust property that is assigned to them as collateral for a loan or to pay off a civil judgment.

 Thus, spendthrifts can prevent creditors, litigants, or the beneficiaries themselves from reaching into the trust to take assets contrary to the terms of the trust. This “reaching in” usually stems from beneficiary misconduct. Note, however, in some circumstances, spendthrift can be circumvented. Namely, in the case of certain child support obligations and claims of the State of Ohio or the United States. Whether spendthrifts can be circumvented depends highly on the nature of the claim against the trust and the nature and language of the trust. An experienced Ohio estate planning attorney is in the best position to determine if and when a particular creditor can reach past a spendthrift and get at trust assets.

Why do I need them?

Put bluntly, no one likes having their money or property taken from them. Or in this instance, by creditors, litigants, or claimants of beneficiaries uncontemplated by the language of the trust. A primary reason for any grantor in making a trust is to ensure control of trust assets. So, if unknown third parties reach into a trust due to a beneficiary doing something unwise, it goes contrary to express wishes of the grantor and all the effort that went into making a trust.

Further, premature distributions of trust assets can have serious consequences for trust management. The “internal finances” of a trust are often based upon assumptions regarding the amount of money/assets within trust accounts and predetermined distribution times. So, if money/assets are taken early this can lead to premature exhaustion of trust funds which may affect the whether future trust distributions can occur at all, in that trustees can’t distribute what isn’t there. Further, premature distribution may leave trustees with insufficient assets to pay trust taxes or administrative costs. There is also the unfairness of premature distribution, why should beneficiaries who followed the terms of the trust get their distributions later or in a lesser amount than the beneficiary who has creditors, civil judgments, or owes back child support.

The importance of comprehensive and effective drafting a trust terms cannot be understated. Often it is what is left out of trust documents which end up hurting grantors and trust beneficiaries. Spendthrift trusts and spendthrift provisions can come in a variety of forms to match the needs and desires of a particular grantor. The utility of spendthrifts, however, can only be enjoyed by grantors if a competent Ohio estate planning attorney is used in the formulation and drafting of a trust. Never underestimate the importance of matching good legal counsel with comprehensive estate planning.

Helping You and Your Loved Ones Plan for the Future.

Essentials of Estate Planning

Estate Planning Essentials in Cleveland, Ohio

In a nutshell, estate planning is the most basic form of asset protection for you and your children. Over the years, estate planning has evolved into much more than just the protection of your assets, but it also discusses your preferences for long term care, probate avoidance, and efficiency.

What Should I have as Part of My Estate Planning?

Essentials of Estate PlanningWill

A will is the bare minimum you want to have for your estate plans. Your will names an executor and distinguishes how your assets are dispersed.

HIPPA Authorizations

HIPPA Authorization is the ability for your loved ones to obtain your medical records on your behalf.

Guardians

You want to establish guardianship not only for your minor children, but you also want to establish guardianship in your plan for you. As you get older, you may not be able to take care of yourself, and you may need to have somebody to make decisions for you

Living Will

A living will is different than a will. A living will does not designate where your assets go but rather a living will is you legally stating that in the event that you are unable to live without machine assistance, and you can’t make decisions then and there, that you wish to be taken off life support. This takes away the ability for anyone but you to make the decision on whether you are kept alive or not.

Healthcare Power of Attorney

The ability for your loved ones to make health care decisions on your behalf.

Durable Power of Attorney

The ability for your loved ones to make financial decisions on your behalf.

What if You Do Not Have an Estate Plan?

If you do not have an estate plan, your assets will be dispersed according to the state’s plan for you. This is not an ideal way to handle your estate because you and your loved ones have no control over the estate.

How Often Should You Review Your Estate Plan?

We recommend that you review your estate plan every three years. However, we do an annual review of your plan and reach out to you to check in on how you feel about your current plan.

In addition, you want to make sure you’re keeping all of your contacts current in your estate plans. The average person moves 11.7 times in their lives so not only may your address and phone number change but so could your executor, health care power of attorney, or any other person mentioned in your plan.

Trusts and Family Trusts Go a Step Further

Trusts take your estate planning to the next level. Trusts give you more power over your estate even after you have passed. Trusts also more efficient, and they help you avoid probate.

Contact Baron Law

Whether you have an estate plan or not, Baron law can help you make sure your assets are protected. Visit us at our website or contact us to schedule a free consultation about your estate planning today.

What is the Difference Between a Trust and a Will in Estate Planning?

What is a Will?

A will is a basic document outlining your wishes for your estate. It identifies an executor of your estate and provides the opportunity to divide your assets among your beneficiaries. This tool allows you to control the future care for any minor children and division of your assets. Without a will, the laws of your state will determine how your assets are divided. Therefore, a will is the minimum estate plan you need to care for your family and your assets. However, the purpose of a will is to guide the probate court to act in accordance with your desired plan.

What are the limitations with a will?

Probate

A will does not avoid probate court, and the average time to administer a will through probate is 18 months, while the minimum is six months. The length of this process can place a burden on the family left behind, and it allows creditors to make claims on any debts you owe.

Cost

Probate requires a number of fees–on average 5-7% of the value of the estate.

Public Transaction

Anything that goes through probate is public information. This means that both your assets and the way you choose to divide them become public, able to be found online in detail.

What is a Trust?

A trust is another form of estate planning that allows you to divide your assets as you desire. While this is similar to a will, a trust allows greater control and bypasses the limitations of a will as seen above.

A trust avoids probate, thus freeing your assets and your family from the court system. As such, probate fees are also avoided, and your personal information (assets and beneficiaries) is kept private.

What are other benefits of a trust?

Taxes

Saving on taxes is one benefit of a trust. However, given current tax laws, this is not an advantage unless your estate’s value is over 10 million dollars. Note, though, that this exemption is subject to change, and tax benefits may become more valuable.

Asset Protection

This is the biggest reason people use trusts over wills. Trusts allow for greater protection of the estate in case of something unexpected such as a beneficiary who develops a credit issue, or the possibility of a divorce.


If you are realizing that estate planning is more important and less simple than you thought, Baron Law will walk you through every step to ensure that your family and your assets are protected. To learn more about the difference between a will and a trust, or to begin planning for your future, contact the estate planning attorneys at Baron Law today.