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Baron Law Cleveland Ohio

How Do I Force A Trustee To Tell Me What’s In A Trust?

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Baron Law LLC, Cleveland, Ohio, offers information for you to reflect upon while you are setting out looking for an estate planning attorney to help protect as much of your assets as you can.  For more comprehensive information contact Baron Law Cleveland to draft your comprehensive estate plan to endeavor to keep more of your assets for your heirs and not hand them over to the government by way of taxes.

Trusts are one of the most useful tools in the estate planning tool box. Special needs trusts ensure vulnerable children and beneficiaries can receive bequests or inheritances without being knocked off of critical state and federal benefits while a simple family trust can guarantee income and assets placed within it last for generations and are, for the most part, protected from creditors and litigants. The lynchpin of any trust, however, besides the trust documents themselves, is the trustee. The agent in charge of managing trust assets and carrying out trust instructions.

A lot of faith and trust are placed within trustees. Unfortunately, not all trustees are up to the task and some even use their position for ill gain. Some trustees are lazy, some are disinterested. Other trustees are combative, others are downright criminals. Trustees come in all types. The process for removing a trustee, seeking civil or criminal action against a trustee, or simply finding out what a trustee knows all start at the same spot. A trust beneficiary, or other interested party, must force a trustee to tell them what they know and Ohio law has provided a process to do just that. The process is called a petition to compel an accounting or sometimes a citation to a fiduciary to file an account.

This process, naturally, is often the route of last resort when something has gone horribly wrong with a trustee or fiduciary. For example, failure of an executor to file a notice of admission for will to probate, or a failure render an account of an executor’s or administrator’s estate administration, or failure to file the first estate accounting within the 3-month time limit without good cause shown. Basically, citations to compel accounting are used when those entrusted to look after the money don’t follow the rules or tell anybody what they are doing. Again, getting a probate court involved with a difficult or non-responsive fiduciary should always be a last resort. As such, always consult an experienced Cleveland estate planning attorney to find out your best course of action in the circumstances.

How do I compel a trustee accounting?

Generally, to get a court to do anything, there has to be statutory language on the books that give you the authority/right to do something. Ohio law provides that particular qualified people can petition the court to force a fiduciary or trustee to appear and tell what they know and bring evidence to back it up.

“If a fiduciary neglects or refuses to file an account, inventory, certificate of notice of probate of will, or report when due,… the court at its own instance may issue, and on the application of any interested party or of any of the next of kin of any ward shall issue, a citation … to such fiduciary …. to compel the filing of the overdue account, inventory, certificate of notice of probate of will, or report.” O.R.C. § 2109.31(A).

What does a citation for accounting contain?

The citation or motion to compel is a legal document filed with a particular probate court that asks the court to use its authority to force a fiduciary or trustee to appear at a certain time in a certain place or face the consequences. Ohio law specifies that such a request must be a proper form so the court knows exactly what you’re asking the court to do and so the trustee or fiduciary knows exacts what to do to satisfy the court’s request and avoid any adverse consequences. So, what information does your request actually need to contain. Per O.R.C. § 2109.31(B):

(1) A statement that the particular account, inventory, certificate of notice of probate of will, or report is overdue;

(2) An order to the fiduciary to file the account, inventory, certificate of notice of probate of will, or report, or otherwise to appear before the court on a specified date;

(3) A statement that, upon the issuance of the citation, a continuance to file the account, inventory, certificate of notice of probate of will, or report may be obtained from the court only on or after the date specified…

A motion to compel accounting is a particular legal document that should be prepared by a licensed attorney. Nonconformity with the state and local rules of form and filing can waste a lot of time and money and frustrate a judge and their support staff, not ideal when your asking for the court’s help. Hiring a knowledgeable Ohio estate planning attorney will ensure your filing is accepted and in proper order.

What if a trustee doesn’t appear?

If a citation to compel accounting is issue from a probate and a fiduciary or trustee fails to file the requested documents or personally report prior to the appearance date specified in the citation, a probate court may resort to one or more of the following:

The removal of the fiduciary or trustee;

A denial of all or part of the fiduciary fees;

A continuance of the time for filing the requested documents;

An assessment against the fiduciary of a penalty of one hundred dollars and costs of twenty-five dollars for the hearing, or a suspension of all or part of the penalty and costs; or

That the fiduciary is in contempt of the court for the failure to comply with the citation and that a specified daily fine, imprisonment, or daily fine and imprisonment may be imposed against the fiduciary, beginning with the appearance date, until the account, inventory, certificate of notice of probate of will, or report is filed with the court;

Furthermore, if a fiduciary or trustee fails to appear in court on the specified date on the citation, a probate court can even go as far as ordering them to be taken into custody by a sheriff and forcibly brought to court.

The potential consequences facing non-compliant fiduciaries are severe, however, utilizing the court should only be used in extreme circumstances or as a last resort. As such, consult experienced Cleveland estate planning attorney before doing anything so serious. Doing so will ensure that the process is done correctly and expediently.

Helping You And Your Loved Ones Plan For The Future

About the author: Mike E. Benjamin, Esq.

Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at mike@baronlawcleveland.com.

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.


Baron Law Cleveland Ohio

What If My Trustee Is Concealing Trust Assets?

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Cleveland, Ohio, estate planning law firm, Baron Law LLC, Cleveland, Ohio, offers information for you to reflect upon while you are setting out looking for an estate planning attorney to help protect as much of your assets as you can.   For more comprehensive information contact Baron Law Cleveland to draft your comprehensive estate plan to endeavor […]

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Probate Lawyer Baron Law LLC

What is Probate?

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Cleveland, Ohio, estate planning law firm, Baron Law LLC, Cleveland, Ohio, offers information for you to reflect upon while you are setting out looking for an estate planning attorney to help protect as much of your assets as you can.   For more comprehensive information contact Baron Law Cleveland to draft your comprehensive estate plan to endeavor […]

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Baron Law Cleveland Ohio

You Have Been Appointed Executor, What Do You Do?

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Cleveland, Ohio, estate planning lawyer, Daniel A. Baron, Ohio, offers the following information on what your duties are as an executor of an estate.  Contact Daniel A. Baron of Baron Law to answer all your questions on what your duties are and to help guide you through the events that will be taking place and how to navigate through them.

An executor appointment is bittersweet. It is heartwarming that your recently deceased friend or loved one had faith enough in your abilities to trust you with the administration of their estate, however, fulfilling the duties of an executor is no simple matter. For the next six months, at minimum, you “stand in the shoes” of the dearly departed. You ensure their debts are paid, their affairs are closed in orderly fashion, and their final wishes are communicated to and followed by grieving friends, family, and business associates.  

Most individuals have little prior experience with executorships. Often people agree many years before the faithful day to be an executor and do little preparation or research for when the time arrives. Executor appointments are serious matters with serious consequences. A failure to perform the duties of an executor satisfactorily can result in estate assets being squandered, the infliction of additional stress and trauma upon grieving survivors, and, in extreme cases of misconduct or neglect, personal liability for the executor. Thankfully, executors have been a common reality in estate law for many centuries. As such, what you need to do, how to do it, and when you need to do it are all spelled out in the laws of Ohio. Naturally, the best adviser to seek out if one is appointed an executor is an Ohio estate planning attorney. A Cleveland estate attorney can walk you through the do’s and don’ts and ensure filings are proper in form and timely in submission.  

  1. Open the Estate

As an executor, the first thing you need to do is to open the estate. There is a myriad of probate proceedings available to open an estate, each with its own filing requirements and hurdles. Some may even be able to avoid probate all together, saving time and stress for an executor. Again, an estate attorney is in the best position to advise the best way to probate an estate, if there is a need at all.   

II.Inventory the Estate  

Once an estate has been opened, an inventory of the probate assets is required to be filed with the probate court within 3 months of the executor’s appointment. Only probate assets are inventoried. Non-probate assets pass to beneficiaries or owners outside of the will and, as such, are not considered a part of a decedent’s estate. Your estate attorney will know which estate assets are subject to probate. Practical tip, it is good practice for those with an estate plan to keep a comprehensive accounting of all assets in a centralized location to assist an executor in locating assets and keeping track of values and amounts of assets. Additionally, telling your executor that this accounting exists is just as important as doing it all. All too often executors are completely in the dark regarding the composition of an estate and the location of critical documents.     

To take the actual inventory of decedent’s estate, you will use the series “6” standardized forms from the Ohio Supreme Court website in conjunction with the relevant local probate court forms. There are 88 probate courts in Ohio, each with its own way of doing business, as such, each probate court has particular forms they prefer. Initially, use the local forms, when in doubt, the Ohio Supreme Court forms are always acceptable.  

An inventory itself is a detailed description of all probate estate assets along with their values. Detailed information regarding the assets, such as account numbers, serial numbers, stock certificate numbers, and book, plat, and parcel numbers for real estate are denoted in the inventory. The inventory, at the most basic level, consists of two forms: 1) the Inventory and Appraisal form and 2) the Schedule of Assets form. The Schedule of Assets contains the detailed information regarding the estate. Basically, a list of asset identifiers and information, i.e. the who, what, and where of assets. The Inventory and Appraisal form is the summary of the probate asset information that is detailed on the Schedule of Assets form. It recaps the values of the tangible and intangible personal property and real estate owned by the estate. During the drafting of these documents, appraisals and valuations of assets take place. Naturally, there are particularized rules and procedures for such, but that is a discussion for a later date.  

After all the assets are located and relevant investigations completed, the inventory is submitted to the court and a hearing date is set. Per the laws of Ohio, a probate court is required to set all inventories for hearing not less than 10 days and not more than 30 days after filing of the inventory. During this time notice is required to be sent to all interested parties of the estate, e.g. next of kin, devisees, legatees, and creditors of the estate. An inventory hearing cannot be undertaken unless receipt of formal notice for all interested parties is confirmed or waivers for those interested parties are signed and filed with the court. The notices themselves are standardized forms assessable via any probate court website.  

While waiting for the notice period to expire and for the hearing date to arrive, interested parties can file exceptions to the inventory. Exceptions, generally, are claims to particular estate assets and whether they have been properly included or excluded from an inventory. The important thing is filing of an exception to an inventory triggers an inventory exception hearing which, in turn, continues the inventory hearing. Thus, an inventory cannot be approved until the exceptions are addressed and the probate process stalls.   

If there are no exceptions filed, or the exceptions have been resolved, and after the notice period has been observed, the court will conduct an inventory hearing and enter an Entry Approving Inventory. This Entry, in essence, states going forward, the approved inventory will be the presumptive valuation and appraisal of estate assets. Thus, distributions of estate assets according to the laws of Ohio or the last will and testament of decedent can begin.  

At this point in the process, a significant part of the legwork for an executor is finished. The major hurdles remaining deal with will-contests, asset distribution, and closing of the estate. An upcoming article will flesh out the remainder of the duties and obligations of executors going forward past the inventory hearing and the probate court’s Entry Approving Inventory. If you’ve been appointed an as executor and have questions regarding what you need to do and when you need to do it, contact an Ohio estate planning attorney. Spending a little time now can save you a lot of time later.   

You don’t have to be rich to protect what you’ve spent a lifetime trying to build. To find out whether a trust is right for your family, take the one-minute questionnaire at www.DoIneedaTrust.com. There are a number of different trusts available and the choices are infinite. With every scenario, careful consideration of every trust planning strategy should be considered for the maximum asset protection and tax savings. For more information, you can contact Mike Benjamin of Baron Law LLC at 216-573-3723. Baron Law LLC is a Cleveland, Ohio area law firm focusing on estate planning and elder law. Mike can also be reached at mike@baronlawcleveland.com.  

 Helping You and Your Loved Ones Plan for the Future.

About the author: Mike E. Benjamin, Esq.  

Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at mike@baronlawcleveland.com.   

 

 

Baron Law Cleveland Business Attorney

How Do Businesses Collect a Debt?

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Cleveland, Ohio, business law firm, Baron Law LLC, Cleveland, Ohio, answers questions on the laws which need to be followed when attempting to collect a debt.  For more comprehensive information contact Baron Law Cleveland to schedule an appointment if you have found yourself in a situation where you are unable to collect a debt.

Unfortunately, people don’t pay their bills on time, sometimes not at all. This is just a reality of business. Tenants fail to pay rent, purchasers don’t pay in full, and business associates don’t uphold their end of the bargain. Naturally, the human reaction is to immediately go after wrongful parties and get what you’re owed. In reality, however, debt collection is not a simple and straight forward process. That is why third-party collectors are often used. However, over the many decades and centuries of business, whether a legitimate debt was owed or not, these collectors went too far in attempting to right a wrong.  In response, nowadays there are rules and regulations governing debt collection practices to prevent misconduct. As such, cavalier or aggressive debt collection practices can, ironically, make a legitimate debtor liable for more than the debt they are trying to collect on. This is why contacting the services of a local Cleveland area business attorney is so critical. A single lawsuit over debt collection misconduct can ruin a quarter, but longtime or routine debt collection misconduct can lead to bankruptcy via litigation.   

  1. What laws apply when I’m trying to collect a debt? 

The three main laws that every third-party debt collector should be aware of when collecting debts is 1) the Fair Debt Collection Practices Act, 2) the Ohio Fair Debt Collection Practices Act, and 3) the Consumers Sales Practices Act.   

  • FDCPA – this federal law limits the behavior and methods of third-party debt collectors who are trying to collect a debt for another, whether a real person or otherwise. Within are rules regarding timing, method, and form of contact, causes of action for misconduct, and duties of specialized debt collection personnel.  

 

  • OFDCPA – This Act primarily concerns the legal conventions and guidelines that must be observed when a debt is assigned for collection by another, i.e. a third-party creditor. The Ohio FDCPA adds additional safeguards to the Federal FDCPA in order to ensure assignees of debts are legitimate businesses with legitimate credit claims.   

 

  • CSPA – this law primarily provides causes of action for deceptive trade practices, of which debt collection is regularly a context. Various Ohio courts have said that various violations of the FDCPA constitute a violation of the CSPA in that the purpose of both acts is to prohibit both unfair and deceptive acts and any violation of the FDCPA is necessarily an unfair and deceptive act or practice in violation of the CSPA. 

 

What are the things I can’t do when collecting a debt? 

Simply, a third-party debt collector cannot engage in deceptive trade practices. What is a deceptive trade practice is a much litigated issue. However, the particulars of what conduct constitutes a deceptive trade practice are too numerous to go over here, but a local Ohio business attorney will be more than happy to fill you in on the details and makes sure you’re not violating State and/or Federal law.  

The short answer though, in the context of debt collection, is that a deceptive trade practice is an activity by an individual or business that is meant to mislead or lure a debtor into paying a debt that isn’t owed, paying more than is owed, attempting to collect in an aggressive, harassing, offensive manner or failing to follow proper form when communicating with a debtor. Within the FDCPA, OFDCPA, and CSPA, there are sections which explicitly state that a violation or one or more provisions of the law is conclusively a deceptive trade practice thus justifying damages.  

How much lability could I be facing for improper debt collection?  

Just under the FDCPA alone, any debt collector who fails to comply with any provision of this law with respect to any person is liable to such person in an amount equal to the sum of 

(1) any actual damage sustained by such person as a result of such failure; 

 (2) additional damages up to $1,000; and/or 

 (3) reasonable attorney’s fees if the court finds them justified. 

 

How do I make sure I’m not breaking the law when trying to collect?  

State and federal law must be followed to the letter when attempting in collect on a third-party debt. An Ohio business attorney can create a compliant debt collection program, complete with compliant forms and communications, to ensure any legitimate debt isn’t consumed by legal damages.  

There are, however, some standard methods to remain compliant under state and federal law. 

  • Mini Miranda Notice – the law requires that any debt collector inform a debtor in the initial communication that “this communication is from a debtor collector. This is an attempt to collect a debt and any information obtained will be used for that purpose.” This is commonly called the mini-Miranda and puts the debtor on notice of who they are speaking with and why. If the first communication with the debtor is oral, this notice must be given orally and included in the first written communication. Regardless of who initiates communication, this notice must be given.

 

  • Debt Validation Notice – every third-party collector must within 5 days of the initial communication send the debtor written notice containing the following:  

1) the amount of the debt,  

2) name of creditor that’s owed the debt,  

3) statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector, 

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector, and 

 (5) a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.  

 The purpose of this notice is to inform debtor of important rights, timing deadlines, and authenticity of the debt being pursued.  

 It is never fun for either the debtor, creditor, or collector to pursue an outstanding debt. Feelings get hurt, lives are disrupted, and valuable business resources and time is wasted. Therefore, it is wise to ensure that state and federal laws are not being broken on top of all that. Throwing potential litigation in with the contentious profession of debt collection begs for trouble.  As such, wise debt collectors retain the counsel and guidance of experienced business attorneys to enable them to focus on recovering debts, not worrying about compliance with government rules and regulations.  

 You don’t have to be rich to protect what you’ve spent a lifetime trying to build. To find out whether a trust is right for your family, take the one-minute questionnaire at www.DoIneedaTrust.com. There are a number of different trusts available and the choices are infinite. With every scenario, careful consideration of every trust planning strategy should be considered for the maximum asset protection and tax savings. For more information, you can contact Mike Benjamin of Baron Law LLC at 216-573-3723. Baron Law LLC is a Cleveland, Ohio area law firm focusing on estate planning and elder law. Mike can also be reached at mike@baronlawcleveland.com.  

Helping You And Your Loved Ones Plan For The Future

About the author: Mike E. Benjamin, Esq.  

Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at mike@baronlawcleveland.com.   

 

Baron Law Cleveland Estate Planning Attorney

Spousal Rights – Are You Forced To Take What Is Bequeathed?

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Cleveland, Ohio, estate planning law firm, Baron Law LLC, Cleveland, Ohio, offers the following information on how to handle your spouses will after they pass.   Are you forced to take what is left to you?  Contact Baron Law Cleveland to answer this question and any other questions you may have on wills and probate.

 

Humans are material creatures, it’s just how we’re wired. We all like stuff, we all want stuff. The only difference between people is the target of that want and the severity of that desire. Though the passing of a friend, loved one, or spouse is a mournful event whose significance shouldn’t be understated. At the end of the day, the most common question I hear when a person comes into the office with a will of a recent decedent is, “what do I get?” More often than not, the next question after that is, “what else can I get?”  

Whether its due to genetics, environment, habits, or just dumb luck, women live, on average, seven years longer than men. So naturally, women are more often responsible for probating their husband’s will and receiving distributions under it. Regardless of sex, however, under Ohio law, surviving spouses are granted the ability to elect either 1) to receive the surviving spouse’s testamentary share as provided in the decedent’s will, “taking under a will;” or 2) to take against the will. This “taking against the will” is called an election to take under the law. Which option to take is a momentous decision that can affect the total windfall of the surviving spouse, the distributions to beneficiaries and heirs, and temperament of surviving friends and family. A local Cleveland estate attorney is in the best position to calculate the options and spell out the pros and cons of each.  

If the surviving spouse elects to take against the will, the surviving spouse receives either one-half or one-third of the decedent’s net estate. The surviving spouse receives one-half of the decedent’s net estate unless two or more of the decedent’s children or their lineal descendants survive the decedent, in which case the surviving spouse receives one-third.  

So how does one elect to “take against a will?” After the appointment of an executor or administrator, the probate court will issue a citation to the surviving spouse to elect whether to take under the will or against the will. This election must be made within the five-month statutory period or else be forever barred. If you chose to take against the will, you return the form attached to the notice and the court sets a hearing.   

At the hearing to elect to take against a will, the probate judge or deputy clerk, who acts as a referee, will explain the will, the rights under the will, and the rights, by law, in the event of a refusal to take under the will. If the surviving spouse is unable to make an election due to a legal disability, the court will appointment an appropriate proxy to determine if an election to take against the will is the best course of action for the surviving spouse and, if it’s the best course of action, make the actual election.  

Unless a will expressly states otherwise, an election against a will results in the balance of the net estate being disposed of as though the surviving spouse had predeceased the testator. Furthermore, unless a trust says otherwise, if a will transfers property to a trust created by the testator during the testator’s life, such as with a pour-over will, and the spouse elects against the will, then the surviving spouse is considered for purposes of the trust to have predeceased the testator, and there shall be an acceleration of remainder or other interests in all property bequeathed or devised to the trust by the will, in all property held by the trustee at the time of the death of the decedent, and in all property that comes into the possession or under the control of the trustee by reason of the death of the decedent. Again, an election to take against a will can have serious ramifications for a decedent’s estate plan. An Ohio estate planning attorney will be better able to spell out the consequences of such an election and track which estate assets may be effected by an election and in what ways. 

It is important to note, however, that an election to take against a will does not alter or destroy the will for other beneficiaries. Upon an election against a will, the administrator or executor of the estate must still attempt to follow the testator’s intent and final wishes to the best of the fiduciary’s ability as to all others in a will except the surviving spouse.   

The only real ways to waive or eliminate the statutory right of the surviving spouse to elect to take against a will is either a valid prenuptial agreement or antenuptial agreement. These agreements, however, are not guaranteed effective and are only valid if 1) they have been entered into freely without fraud, duress, coercion, or overreaching, 2) if there was a full disclosure, or full knowledge and understanding of the nature, value, and extent of the prospective spouse’s property, and 3) if the terms do not promote or encourage divorce or profiteering by divorce. With the recent rise of divorce rates in America nuptial agreements are steadily gaining in popularity and use. As such, consult an Ohio attorney to find out if nuptial agreements are right for you or if the nuptial agreements you already have are either valid or actually fulfilling their intended purpose.   

Spousal rights were created to ensure that surviving spouses aren’t maliciously or wrongfully cut out from a will. Improper disinheritance from a will can result in a surviving spouse falling into poverty, being kicked out of a lifelong martial home, or becoming a burden on friends and family. Though it may seem unseemly to focus on material possessions when a spouse passes, the responsibilities and burdens of day to day living still persist regardless. You still need food in the fridge and a roof over your head. After all, as Langston Hughes said, “life is for the living.”  

You don’t have to be rich to protect what you’ve spent a lifetime trying to build. To find out whether a trust is right for your family, take the one-minute questionnaire at www.DoIneedaTrust.com. There are a number of different trusts available and the choices are infinite. With every scenario, careful consideration of every trust planning strategy should be considered for the maximum asset protection and tax savings. For more information, you can contact Mike Benjamin of Baron Law LLC at 216-573-3723. Baron Law LLC is a Cleveland, Ohio area law firm focusing on estate planning and elder law. Mike can also be reached at mike@baronlawcleveland.com.  

 Helping You And Your Loved Ones Plan For The Future

About the author: Mike E. Benjamin, Esq.  

Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at mike@baronlawcleveland.com.   

 

 

Baron Law Cleveland - Estate Planning Attorney

Knowledge Is Power – Why Knowing The Difference Between Irrevocable And Revocable Trusts Is Critically Important.

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Cleveland, Ohio, estate planning law firm, Baron Law LLC, Cleveland, Ohio, offers the following information on the differences between a Revocable Trust and an Irrevocable Trust.  Contact Baron Law Cleveland to ask and have answered your questions on what the differences are and what would suit your needs best.

Your estate plan consists of many documents and covers a lot of bases. From protecting assets from creditors and litigants to avoiding probate where desirable, a comprehensive estate plan protects you while you’re living and provides for loved ones after death. Because estate plans are, by design, comprehensive, a lot of legal jargon is thrown around and often it’s difficult to keep track of all the nuance and detail. You can put your faith in your financial adviser or estate planning attorney and trust them completely with little or no understanding of what they’re actually doing. That certainly is an option, however, the better course is to ask questions and endeavor to remain informed as possible.  

That said, one of the most common questions posed during an initial estate planning consultation is, what is the difference between a revocable and irrevocable trust? Since trusts represent one of the most utilitarian estate planning tools, they have the ability to do many useful and advantageous things in regards to estate planning, understanding the difference is critical to providing context to advice dispensed by Ohio estate planning attorneys.  

 

  1. Revocable Trusts

Revocable trusts, commonly referred to as living trusts, are trusts that the grantor/settlor can change or cancel during their lifetime. The most significant aspect of living trusts is that the grantor usually keeps control over the assets placed in the living trust and, as such, receives no tax relief for those assets. Similarly, the grantor can also appoint themselves trustee of the living trust to dispense that control.  

To use a simple metaphor, a trust is a treasure chest. Putting assets in the chest, the trust, protects the assets from particular threats outside and establishes rules which govern what is placed inside. The major distinguishing characteristic of living trusts is that the grantor, owner of the trust, keeps control of the key that unlocks the treasure chest and can get at what’s inside.  

So, naturally, the next question after what is a revocable trust is, why would I want one? The advantages of living trusts are numerous but are highly particular to individual circumstances. An Ohio estate planning attorney is in the best position to judge what an individual’s needs are and the best ways to meet them. Generally, however, the primary advantages of using living trust are avoiding probate, directly providing for distribution of assets through trust beneficiary designations, privacy, trust inventories are not public record, and maintaining control of assets trusts during life and post-death.   

  1. Irrevocable Trusts  

Irrevocable trusts are trusts in which the grantor relinquishes all control and ownership over the trust and the assets used to fund the trust. Thus, the trust cannot be changed or canceled without the beneficiaries’ permission. Prior to trust formation, grantor can dictate whatever terms they desire to govern the trust, but after formation, those terms control independent of grantor’s wishes and desires.  

So, again, why would anyone give up control and chose irrevocable trusts? As mentioned previously, with living trusts, grantors keep the key to the treasure chest. With irrevocable trusts, however, the grantor gives the key to another, namely a trustee. Since grantor no longer has the key, grantor can no longer get what’s inside the chest. Since the assets in an irrevocable trust no longer belong to grantor, at least in the eyes of the law, this has major tax and legal implications. 

These tax and legal consequences are the primary advantages of irrevocable trusts, and what distinguishes revocable from irrevocable trusts. First, since control over trust assets is relinquished, the IRS does not consider trust assets to be in grantor’s taxable estate. Thus, estate, income, or gift taxes may be avoided or reduced in certain circumstances. Further, assets within an irrevocable trust enjoy protection from creditors and litigation. Of particular importance for seniors, assets within this type of trust are not counted as an asset for eligibility in Medicaid or other government assistance programs. A common tactic is to place a martial home, usually the largest asset, in trust. Thus, eligibility is maintained but the house can still be lived in. This sheltering of assets while still maintaining use is at the core of irrevocable trusts. Even though direct control is relinquished, grantors dictate the terms of the trust. Such terms often mandate to the trustee that such trust assets are used for the health, support, and maintenance of the grantors. Thus, grantors still get to enjoy and profit from assets but get the benefits of not, technically, owning such.  

Naturally, the question everyone asks is which one is best. Unfortunately, as with most things financial and legal, there isn’t a straight answer. Dependent on the circumstances, such as estate planning goals, family structure, available estate assets, either or both types of trusts may be advantageous to use. A Cleveland estate planning attorney is in the best position to judge what is most appropriate for a given situation.  

Regardless of which is most appropriate, the most critical part is funding your trust. Picking what type or types of trusts is best is the easy part. The hardest part, and the one most often overlooked, is properly funding a trust. More often than not, people think after creating the trust the work is done. This is patently false. A trust without proper funding isn’t worth the paper it’s printed on. If you’re asking yourself how do I fund my trust or is my trust funded, please contact an Ohio trust attorney as soon as possible. The security you though you bought with your trust is likely imaginary.   

You don’t have to be rich to protect what you’ve spent a lifetime trying to build. To find out whether a trust is right for your family, take the one-minute questionnaire at www.DoIneedaTrust.com. There are a number of different trusts available and the choices are infinite. With every scenario, careful consideration of every trust planning strategy should be considered for the maximum asset protection and tax savings. For more information, you can contact Mike Benjamin of Baron Law LLC at 216-573-3723. Baron Law LLC is a Cleveland, Ohio area law firm focusing on estate planning and elder law. Mike can also be reached at mike@baronlawcleveland.com.  

 

Helping You and Your Loved Ones Plan for the Future.

About the author: Mike E. Benjamin, Esq.  

Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at mike@baronlawcleveland.com.   

 

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.  

 

 

Baron Law Cleveland

Estate Planning – Documents I Should Provide My Attorney

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Cleveland, Ohio, estate planning lawyer, Daniel A. Baron, Ohio, offers the following information on what documents are necessary for you to provide your attorney when sitting down to establish your comprehensive estate plan.

“Be prepared.” Boy Scouts of America

A recent survey taken by the AARP found that 3 out of every 5 Americans have no estate-planning documents, not even a simple will. Thus, money and assets they’ve spent a lifetime earning and saving are at risk from creditors, litigation, and state and federal taxation. Further, none of their friends or family know how to handle their affairs or last wishes. Even though the majority of people have not taken the necessary steps to formulate a plan when the inevitable comes, all can agree that leaving friends and family to scramble to pay your debts, settle your accounts, and divide your worldly possessions is not the best way. A time of mourning should be just that, for mourning, not for calling bankers, insurance agents, or accountants.

Hopefully, you’ve decided to take the first step and enter into the minority of Americans who proactively address what is left behind when they pass. However, a familiar question exists, how do I get started? That is, what do I need to start planning my estate?

Most, if not all, lawyers are traditional, they like things they can touch and read. So, before you meet with your attorney to plan your estate, you’re going to want to bring a few things. The following list is by no means exhaustive but will give you a good start. Collecting these documents before your meeting will save everyone time, allow your attorney to better comprehend your personal estate planning needs, and prepare you mentally so you can better communicate what you want and what your family needs out of your estate plan.

A General Accounting of your Estate

The word estate is a term that denotes all of the money, property, and debts owned by person, particularly at death. Naturally in order to plan an estate, it must be known what an estate actually encompasses. Therefore, on a piece of paper or computer spreadsheet, your going to write out your estate.

List out: your taxable accounts, your retirement accounts, any life insurance policies, any annuities, your personal residence, other real estate, any highly significant personal property (cars, furniture, artwork, jewelry, etc.), business interests, and any outstanding debts, liabilities, or obligations. For each category, split them up between those owned solely by you, those owned solely by your spouse (if married or part of a civil union), and those owned jointly.

This information is critical for tax projections and allows your attorney to take the necessary steps now, or at death, to ensure that the most property and money goes to where you want and not lost via government taxation, creditors, or litigation. There is a multitude of ways your attorney ensures estate preservation, however, knowing exactly what you have and what you want to do with it is critical. Note that this list only serves as an estimate of your estate, not an exact accounting. Your attorney will be able to advise and guide you on obtaining an accurate picture of your entire estate but this list will be the foundation for future calculations.

Life Insurance Policies

Life insurance is a common tool people use to guarantee their surviving family won’t be left in an untenable financial position in the event of death. The lump sum that life insurance proceeds guarantee can fill critical gaps in an estate plan and ensure that your loved ones are taken care of and your affairs are handled in a respectable manner. This is only possible, however, if the proper beneficiaries are designated. If not, who knows how your proceeds are spent. Therefore, ensuring the proper beneficiaries are denoted and/or updated on your insurance policies is of utmost importance. Make sure to have your attorney review your beneficiaries and file any change of beneficiary forms you desire.

Of further note for seniors, some life insurance policies, such as whole life or universal, accrue cash value which may affect Medicaid eligibility. The accumulation of cash value under particular life insurance policies counts as an asset, which if exceeds $2,000 may disqualify a person from Medicaid. Again, this is something to bring to your attorney’s attention so your estate plan can be more personalized to your needs.

Additionally, life insurance policies are often part of your taxable estate. As such, proper steps during estate planning must be undertaken to lower or avoid the tax burden on the estate. Named beneficiaries of life insurance proceeds may also face significant tax consequences from a sudden influx of cash. As such, bringing your life insurance policies to your estate attorney allows him to understand the type of insurance you possess and avoid issues with regard to beneficiary designations, Medicaid eligibility, and estate tax consequences.

Investment Portfolio

You’re also going to bring your investment portfolio to your attorney. That is, anything evidencing your 401k, owned annuities, stocks, bonds, or mutual funds, and other retirement accounts such as IRAs and Roth IRAs, regardless of whether the IRS classifies them as qualified or unqualified plans. Your investment portfolio is likely a major asset that is a significant part of your taxable estate and whose constituent parts each often have their own special rules regarding contributions, distributions, transfers, and inheritance. Bringing your investment documents to your attorney will allow him to plan your estate accordingly and inform you of the special rules, privileges, and schedules applicable to the particular investment instruments you’ve chosen.

A List of Important Property with Bequests

Generally, this is what most people think of when talking estate planning, who gets the house and who gets grandma’s heirloom necklace. In order to avoid any conflict and confusion between surviving family members over who gets what when you pass, write out a list of the biggest and most important bequests of personal and real property.

Most people list out vehicles, real estate, business interests, family heirlooms, expensive electronics, art work, etc. Pretty much anything that has high sentimental or financial value. Obviously for each item on the list write who gets what and in what way. For simple property, like jewelry, usually an individual gets a direct bequest and the item is theirs when you pass. For other property, such as real estate or business interests, usually these are split up in particular ways. For example, a business being split equally between surviving children or a house passing only to children of a first marriage. Your attorney will inform you of the multitude of ways bequests may be structured in order to satisfy your particular estate planning needs.

Thinking about and writing out your property bequests ensures your final wishes are followed and avoids familial infighting. On top of bringing this list to your attorney, bring any deeds, titles, or other ownership documents. This will expedite an estate accounting after your death for your executor and makes sure you actually own what you think you do. Far too many times families are taken by surprise by a faulty title or hidden lien or claimant on a deed. Your attorney can easily check a chain of title or confirm the validity of a deed and avoid any question of ownership down the line.

A “Managed Care Plan”

This is not to be confused with the private insurance plan you sign up for, or Ohio picks for you, when you apply and are approved for Medicaid. Managed care plans within the context of Medicaid private insurance isn’t the subject here, however, it is an important subject that should be discussed and planned for with your attorney.

Within this context, your managed care plan means a coherent idea of where and how you want to spend the last years of your life, especially in the event of deteriorating health or debilitating disease. That is, the logistics, finances, and questions surrounding issues of hospice care, managed care facilities, nursing homes, and general living as one advances in age.

For example, planning out your senior living situation will likely enable you to stay with your primary care physician and specialists longer. Often the accessibility of physicians and medical specialists are subject to geographic restriction, insurance coverage, or out-of-pocket cost. A proper estate plan can guarantee the funds exist to support continued care in the manner you’ve grown accustomed to and communicate to friends and family your medical wishes far in advance of when those questions arise. Never underestimate the value of spending the autumn of your years in clean and comfortable healthcare facilities with treatment from doctors that have an established relationship. As such, bring any contracts, agreements, or marketing materials of any health or senior living facilities you wish to go to. Every piece of information allows further personalization of your estate plan and more clearly communicates what you want to your family many years down the road.

Further, bring important legal documents such as designations for durable, health, or financial powers of attorney, any do not resuscitate orders (DNRs), and executor and administrator elections. If you don’t have any of these documents prepared, these can easily be drafted by your attorney during your estate planning.

Americans are living longer than ever before and having a plan to confront advancing age is important to ensure comfortable living and piece of mind for the family. Granted this is not an enjoyable or fun aspect of life to think about and plan out, but it is something you and your family will never regret.

Conclusion:

Bringing the listed documents and gathering up your thoughts according to the issues highlighted will give you a good head start in preparation to planning your estate with your attorney. Again, this list is not exhaustive and only touches on a fraction of the issues that addressed during estate planning. Major issues such as surviving spousal support and guardianship of minor children, among many others, must be handled too, so think about these issues as well. Estate planning is a complex process but taking a little time to gather documents and think about the future will pay big dividends to you while you’re here and make life much easier for your family when you’re not.

You don’t have to be rich to protect what you’ve spent a lifetime trying to build. To find out whether a trust is right for your family, take the one-minute questionnaire at www.DoIneedaTrust.com. There are a number of different trusts available and the choices are infinite. With every scenario, careful consideration of every trust planning strategy should be considered for the maximum asset protection and tax savings.

For more information, you can contact Dan A. Baron of Baron Law LLC at 216-573-3723. Baron Law LLC is a Cleveland, Ohio area law firm focusing on estate planning and elder law. Dan can also be reached at dan@baronlawcleveland.com.

Helping You and Your Loved Ones Plan for the Future.

About the author: Mike E. Benjamin, Esq.

Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at mike@baronlawcleveland.com.

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.
“He who is always his own counselor will often have a fool for his client.” Old English Proverb est. circa 1809.
Baron Law Estate Planning Attorney

Probate Is Expensive And Time-Consuming. Here Are Ways To Avoid Probate

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Cleveland, Ohio, estate planning law firm, Baron Law LLC, Cleveland, Ohio, offers the following information on you can avoid probate when you are thinking of establishing your comprehensive estate plan.

All too often people draft a last will and testament, shove the document in a safety deposit box at the local bank, and never give it another thought. Granted, a cavalier attitude towards one’s estate plan is a bold strategy but at best it’s costing thousands of dollars down the line, at worst the will isn’t worth the paper it’s printed on and the surviving family is left the deal with a tangled mess of who gets what. A comprehensive estate plan drafted by competent counsel will cost is a little now but save you a lot later.

A last will and testament is primarily meant to memorialize instructions for the distribution of assets, obligations, and wealth when someone dies. The process in which a will is read, followed, and, if necessary, contested is called probate. This process also applies if someone dies intestate, that is, without a will, but state law is followed instead of explicit instructions given in a will. Probate isn’t a necessarily evil process but it is labor intensive and costly. Probate is a legal process undertaken in state court under the watchful gaze of the assigned probate judge. As such, probate often takes many months to complete during which court costs continue to accrue. Even after a moderate probate process, probate costs can reach as much as 10% of the gross estate. Money better spent on more pressing concerns like funeral expenses or lingering medical costs. Further, during probate, beneficiaries don’t have access to the property bequeathed to them until probate is finished, regardless of whether the will is contested or not.

Since everyone prefers to preserve the most amount of assets to leave to surviving friends and family and provide access to such assets quickly, avoiding probate whenever possible is advantageous. Below are the most common ways probate is avoided.

Beneficiary Designations

Some major assets such as life insurance policies and retirement accounts, like IRAs and 401(k)s, are inherently outside of probate due to their mandated beneficiary designations. The owner of these assets at creation is required to denote primary and contingent beneficiaries in the event of death. Thus, these assets transfer directly and immediately to listed beneficiaries without the need of court intervention.

Though not as straight forward as simple beneficiary designations, other assets such as bank accounts and non-retirement investment accounts can utilize payable-on-death or transfer-on-death beneficiary designations. To enable payable-on-death beneficiary designations for bank accounts or transfer-on-death beneficiary designations for non-retirement investment accounts, contact the relevant brokerage firm or bank and request the standardized forms. Such designations are becoming more common, as such, all major financial institutions have standardized forms available upon request. The major hurdle is actually requesting the forms, completing them properly, then returning them to the institution. Retaining a local Cleveland area estate attorney can guarantee these forms are completed timely, properly, and in the correct circumstances.

For real estate, Ohio uses transfer-on-death designation affidavits as an avenue to avoid probate. Since 2009, real estate can transfer outside of probate if an affidavit is drafted with the following:

  • It describes the property and denotes its instrument number.
  • It describes the portion of property subject to transfer.
  • It denotes whether the owner is married. If married, the spouse must sign as well.
  • It names one or more beneficiary.
  • It is signed, notarized, and filed before the death of the owner.

Beneficiary designations serve as explicit instructions regarding transfer of ownership upon death. Probate fundamentally exists to ensure a decedent’s assets go where the decedent wanted them to. So, if a decedent left explicit instructions in the form of beneficiary designations, there is little reason to subject the applicable asset to probate.

Joint Ownership

Joint property by its very nature avoids probate. Joint property, for example, joint and survivor deeds or a joint tenancy with a right of survivorship, passes to the surviving joint owners when one owner dies. The transfer occurs immediately and no probate process is undertaken in regards to the joint asset. This type of ownership is mostly commonly associated with martial homes and assets obtained during marriage. Though marriage is the most common circumstance of joint ownership, it is not exclusive.

Forming a joint ownership relationship is relatively simple in most instances, however, these methods of ownership can present issues regarding trust and control of the property. Namely, there must be mutual trust and confidence between joint owners to upkeep and manage the property. Furthermore, the rights of ownership of joint property depend on the type of joint ownership created. Depending on the type of joint ownership, the use, control, and financial and legal responsibility assigned to each joint owner can vary. Some individuals are uneasy depending upon another to take care of a significant asset. The last thing anyone wants is to get locked into ownership over something expensive with an unstable, lazy, or irresponsible co-owner.

Joint ownership in certain circumstances is practical way to avoid expensive probate costs and lengthy holds on the transfer of ownership in the event of death. There are, however, significant considerations and potential negatives as well. Concerns of concurrent ownership during life may eclipse any probate avoidance benefits down the line. A local Cleveland area estate attorney is in the best position to analyze your estate planning needs and can tell you if joint ownership is advantageous to your situation.

Trusts

Trusts are a commonly recommended estate planning vehicle which affords unparalleled estate planning flexibility. Any quick internet search will illustrate, at length, about the numerous advantages of using trusts during estate planning. Whether looking to avoid probate, control assets pre or post death, or reduce or avoid estate and inheritance taxes, trust utilization is a highly effective option that should always be investigated. Contact a local Cleveland area estate attorney to find out how trusts can benefit you and your family.

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. Within the context of this discussion, however, the critical aspect of trusts is that the assets housed within them usually avoid probate. 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. Thus, when the owner dies, the assets are not in the owner’s estate and subject to probate. The assets in question pass via the beneficiary designations set down when the trust was created. As mentioned previously, conveyance via beneficiary designation is much simpler, quicker, and cost-effective then the probate process.

The best way to avoid probate and preserve the most amount of money and property for surviving family is situational and based upon individual need and preference. A person may want to avoid probate for Medicaid qualification reasons, privacy concerns, or just to ensure as much money as possible passes to heirs. As such, a visit with a Cleveland area estate planning attorney can the provide proper guidance and evaluation of potential estate planning strategies. An hour with an estate attorney can answer any questions you might have and set you on the path to dealing with some of life’s most critical issues.

For more information, you can contact Mike Benjamin of Baron Law LLC at 216-573-3723. Baron Law LLC is a Cleveland, Ohio area law firm focusing on estate planning and elder law. Mike can also be reached at mike@baronlawcleveland.com.

Helping You and Your Loved Ones Plan for the Future.

About the author: Mike E. Benjamin, Esq.

Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at mike@baronlawcleveland.com.

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.
“He who is always his own counselor will often have a fool for his client.” Old English Proverb est. circa