Cleveland, Ohio estate planning and elder law attorney, Daniel A. Baron, offers the following information on the definition of ADL’s and IADL’s and how to plan on Long Term Care as part of your Estate and Medicaid Plan: As we are all well aware, there is only one alternative to aging. If you are fortunate […]
Cleveland, Ohio estate planning attorney, Daniel A. Baron, offers information on the differences between and Grantor and a Non-Grantor Trusts and further considerations to as part of your Tax and Estate Plan:
Understanding tax benefits and pitfalls of a trust and putting together a trust which is most beneficial for your personal situation is best left to an experienced trust attorney who can explain the differences in trusts and customize your Estate Plan.
Consequently, understand that the term used; Grantor Trust and Non-Grantor Trust are important. These terms mean very different things but are both associated with tax implications.
The Grantor is the party who establishes the trust and maintains control while living and mentally capable.
Some examples of Grantor Trusts
When setting up your trust as part of your Estate Planning, tax planning is an integral part of each and every plan and is as individual as you are.
Planning for Tax implications
How is the trust going to be taxed? Does the American Tax Relief Act of 2012 (ATRA) affect the taxes of your trust? By setting up a Grantor Trust you can realize a number of tax advantages. Some of these advantages are but not limited to:
Plain and simple, the assets of the trust grows, which in turn benefits the beneficiaries without paying income tax. Essentially this is a tax free gift.
Non Grantor Trust
A Non-Grantor Trust is where the donor of the assets relinquishes all control within the trust. The donor of the trust funds is not a beneficiary or a trustee and has no input on how the funds are disbursed or controlled. When the donor establishes a Non-Grantor Trust (aka irrevocable trust) they give up their rights to amend, revoke, or terminate the trust as this now becomes the functions of the trustee(s) either acting by themselves or with a Trust Protector.
Although the assets used to establish the trust were once owned by the donor, they are now owned by the trust. Any income being generated from the assets now is the sole responsibility of the trust. As is with the Grantor Trust, any distribution to a beneficiary must now the proper IRS forms issued and provided to the recipient.
When a non-grantor trust is established it becomes a taxable entity and a Federal Employer Identification Number is issued. This also means that an income tax return needs to be filed on behalf of the trust each year.
Understanding tax benefits and pitfalls of a trust and putting together a trust which is most beneficial for your personal situation is best left to an attorney who can explain the differences in trusts and customize your Estate Plan. Contact Daniel A Baron of Baron Law Cleveland, Ohio at 1-216-573-3723.
Cleveland, Ohio estate planning attorney, Daniel A. Baron, offers the following regarding living wills:
Before you can answer this question you must first understand what a Living will is and what purpose it serves.
A Living Will is one form of Advance Directive which clearly defines your wishes for medical care should the following occur:
A Living Will clearly states your health care intentions. This document allows you to make decisions while still cognitive such as:
The Living Will document also allows you to list any further specific instructions for your care if you become fully incapacitated.
Another form to consider securing in conjunction with a Living Will is a Health Care Proxy which is a specific Power of Attorney. A Health Care Power of Attorney authorizes a specific person you have chosen to act on your behalf to make all medical decisions (or to make sure that your medical wishes in your Living Will that you have set forth are followed), in the eventuality that you are no longer able to make these decisions yourself.
It might be in your best interested to have both a Living Will and a Power of Attorney which will set forth comprehensive guidance when it comes to your medical care in the end stages of life.
Things to consider when completing these documents:
Having a Living Will is only one part to a comprehensive estate plan. For information regarding living wills, trusts, power of attorney, or a pour-over will, contact Dan Baron of Baron Law to make an appointment at 216-573-3723.
Whether you’re planning for retirement or the life of your business after your death, it’s imperative to develop a business succession plan to sooner rather than later. There is no “one plan fits all” when it comes to developing a succession plan for your business. And given that the economy is constantly changing, it isn’t surprising small business owners focus their energies on business survival, future growth, and even remaining active in business after retirement.
Business succession is about three things (1) Estate planning; (2) Retirement; and (3) Risk Management.
Estate Planning
Your estate plan should be incorporated into your business succession plan. What will happen to your company assets after you die? Who will run your business? If you want to provide for your family using your business assets, you should consider at the very least having a last will and testament. Carefully drafting your will allows you to select desired beneficiaries, elect an executor, and transfer your assets through probate. Your family will be going through a difficult time. Setting up a last will and testament in advance helps your family during that difficult time.
Retirement
When thinking about retirement, it’s important to consider your options when selling your business. Will you sell with a lump sum, installments, mix, employee buy-out, or merger? There are numerous options when planning for your retirement and taking advantage of the business you built. Thus, business succession is about planning for your exit strategy. To learn more about your options, visit this article.
Risk Management
Business succession is about limiting your risk. If you have partners within your company, you should be aware of the risks involved. For example, if your partner gets divorced, their spouse is entitled to the partner’s share in the business through the divorce proceedings. If your partner dies, you can now be partners with their spouse or estate. One option to avoid this potential risk is to create a buy-sell agreement through a cross purchase agreement or entity purchase agreement.
Business succession is an important idea that every business owner should consider. Contact your Cleveland, Ohio business succession and estate planning attorney for more information on how to set up your plan. You may also consider contacting Cleveland, Ohio law firm Baron Law LLC at 216-573-3723.
Cleveland, Ohio Estate Planning Dan A. Baron Explains the Difference Between an Executor and Trustee:
Estate planning can be complicated and sometimes difficult to bear when charged with the responsibility as executor or trustee of an estate. If you have minor children, then you probably have set up some form of testamentary trust coupled with your will and power of attorney. Within these estate planning documents, there are designated executors and trustees that have been carefully selected to administer your estate after you pass. It’s important to talk with your executor and trustee and let them know their responsibilities after your’re gone. Below is a quick summary of the difference between executor and trustee of a testamentary trust.
The Executor’s responsibility is to liquidate or otherwise gather all estate assets, pay any outstanding bills and then transfer assets from the name of the decedent to the beneficiaries named in the Will (most often the decedent’s children). They also make any necessary filings with the court and attend any court hearings. Most Executor’s elect to use an attorney to help them with this so the process runs smoothly. Once all assets are in the name of the beneficiary, the Executor’s job is done. The complexity of the estate will determine how long the Executor is needed.
In comparison, a Trustee receives the assets from the Executor and then, with court approval, invests the trust assets in savings account, investment accounts, or whatever they deem appropriate. Most importantly, the Trustee manages the funds and makes distributions to the trust beneficiary (usually children) when needed (i.e. to pay school tuition, living expenses, doctor bills, etc.). Most clients set a maturity age of 25. When the children reach the age of 25, the trustee distributes the balance of the trust funds and that particular child’s trust is terminated. The Trustee will be required every two years to make reports to the court as to the value of the trust. As you can imagine, the length of time the Trustee will be needed will depend upon the age of the children.
If you would like to learn more about the responsibilities and an executor and trustee, or have questions, contact our office at 216-276-4282. You will speak directly with an Cleveland, Ohio estate planning attorney who can help you set up a trust, will, power of attorney, medicaid planning, and more. If you would like to attend one of our FREE seminars, please visit this link.
There are many estate planning tools out there. But simply put, a trust is an estate planning tool that allows you to plan in advance. A trust allows you to control your assets even after your death and may allow for certain tax advantages as well as privacy and the avoidance of probate.
There are many different types of trusts and each is used under specific circumstances. For example, a charitable trust is a unique tool used to establish your legacy with a charity while saving on your income taxes. Revocable and irrevocable trusts are another form that might help provide protection against creditors, Medicaid, and law suits. And finally, special needs trusts might help protect your special needs child or family member.
The main difference between a will and trust is that only a will passes through probate. However, through a trust, your assets will pass to your loved ones privately and does not involve the probate court. Through a will the probate court oversees the administration of the will and ensures the will is valid. The court will then also administer the property making sure it gets distributed the way you intended. One disadvantage of a will is that all information and transfers through a will are public, and are reported with the state.
If the court authenticates your will, it will pass through probate reaching your intended beneficiaries. If the will is not authenticated, your money might end up with the state, instead of your loved ones. Comparatively, courts do not need to oversee the distribution of a trust, which can sometimes save time and money.
Another benefit of having a trust is that a trust takes effect as soon as it is created. Comparatively, a will takes effect only after you die. Through probate, a will determines who will receive your property at your death and it appoints a legal representative to carry out your wishes. This person is called the Executor. In comparison, a trust may be used to distribute property before death, at death or afterwards. A will covers any property that is only in your name when you die. It does not cover property held in joint tenancy or in a trust.
In sum, if you want to effectively save time, money, and headache for your loved ones then you might consider establishing a trust. A trust avoids the probate process and protects your assets against creditors and lawsuits. Most importantly, a trust ensures the right people inherit your estate, and that nothing is left with the State. Contact Cleveland, Ohio estate planning attorney Dan A. Baron for a free consultation. Contact our Cleveland, Ohio office today at 216-573-3723.
Cleveland, Ohio Estate Planning Attorney
If your retirement portfolio contains a Simple Employee Pension (“SEP”), or Simple IRA, you need to know how the minimum distribution system works. Cleveland, Ohio estate planning attorney Dan Baron provides the following remarks.
One major attraction to IRA’s and other estate planning tools is the ability to accumulate funds inside the plan on a tax-deferred basis. The minimum distribution rules dictate when this tax-sheltered accumulation must start coming out of a retirement plan, and, when they end. Congress enacted the minimum required distribution rules to compel annual distributions from your retirement plan beginning typically at age 70 ½. Estate planning and tax attorneys need to know the minimum required distribution rules because these rules set the outer limits on plan accumulations; moreover, failure to comply with rules results in penalties.
Is Your Retirement Plan Subject to the Rules?
Minimum required distributions apply to “Qualified Retirement Plans.” IRA’s and 403(b) plans fall under the rules of qualified retirement plans. However, Roth IRA’s are subject to the IRA minimum distribution rules only after the participant’s death.
Timing of a Minimum Required Distribution
If your retirement plan contains one of the above mentioned funds, there are many things to understand. First, the starting point for lifetime required distributions is approximately age 70 ½ (or upon later retirement in some cases). The starting point for post-death distributions is measured from the participant’s death. Once the distributions start, the beneficiary must take distributions no later than December 31. However, there are several exceptions to this rule including the “5 year exception” and rollovers. Contact a tax attorney or estate planning attorney to learn more.
How is the Minimum Distribution Determined?
Each year’s minimum required distribution is determined by dividing the prior year-end account balance by a factor from an IRS table. The amount is computed by dividing an annually-revalued account balance by an annually-declining life expectancy factor. Taking more than the required amount in one year does NOT give you a credit you can use to reduce distributions in a later year. Further, the distributions you elect cannot exceed 100 percent of the account balance. Contact Cleveland, Ohio attorney Dan Baron to learn more on how this minimum distribution affects your retirement plant.
As you can see, there are numerous rules that affect your retirement and taxes. Contact a Cleveland, Ohio attorney who can help you understand more about minimum required distributions or other estate planning rules. Cleveland, Ohio estate planning Dan Baron can help you with your tax planning and estate planning goals. Contact Cleveland, Ohio attorney Dan Baron at 216-573-3723.
This blog will help you understand some of the core differences between a will and trust, but it is not intended to provide legal advice. If you’re planning for your estate, contact Dan Baron at Baron Law LLC. Call and speak directly with an attorney at 216-573-3723.
Most people have heard the terms “will” and “trust,” but not everyone knows the unique differences between the two. Both trusts and wills are useful estate planning tools, but can serve different purposes. Most importantly, both can work together to create a complete estate plan.
The main difference between a will and trust is that only a will passes through probate. (Visit here for additional information on understanding probate). Generally, probate is a process that involves the court who oversees the administration of the will and ensures the will is valid. The court will also administer the property making sure it gets distributed the way the deceased wanted. Thus, an authenticated will will pass through probate while a trust most likely will not. Courts do not need to oversee the distribution of a trust, which can sometimes save time and money. In addition, many people favor a trust because they can be very private. On the contrary, a will can sometimes become public record.
A trust is a legal arrangement where one person (or an institution, such as a bank or law firm), called a “trustee,” holds legal title to property for another person, called a “beneficiary.” A trust usually has two types of beneficiaries — one set that receives income from the trust during their lives and another set that receives whatever is left over after the first set of beneficiaries dies.
Another difference between a will and a trust is that a living will goes into effect only after you pass, while a trust takes effect as soon as it is created. Through probate, a will determines who will receive your property at your death and it appoints a legal representative to carry out your wishes. This person is called the trustee. In comparison, a trust may be used to distribute property before death, at death or afterwards. A will covers any property that is only in your name when you die. It does not cover property held in joint tenancy or in a trust.
Both wills and trusts each have their advantages and disadvantages. For example, a will allows you to name a guardian for children and to specify funeral arrangements, while a trust does not. On the other hand, a trust can be used to plan for disability or to provide savings on taxes. (See elderlawanswers.com for more information).
Hopefully this blog has helped you understand some of the differences between a trust and a will. If you are planning for your estate, or would like additional information, contact Dan Baron at Baron Law LLC. Call today at 216-573-3723. You will speak directly with an attorney who can help you decide whether a will or trust is best for your estate planning needs.