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Estate Planning Attorney

What Recourse Do I Have if My Power of Attorney is Stealing From Me?

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Cleveland, Ohio estate planning attorney, Daniel A. Baron, offers the following helpful answers to Powers of Attorney:

Can the Power of Attorney be used by the agent to take my money or property without my permission?

Unfortunately, you can run the risk that the agent you choose to give your Power of Attorney could abuse the power by spending your money or taking your money without your knowledge or worse without your permission. Because the agent can use the Power of Attorney to access your bank account and sell your property, it is prudent  that you not give your Power of Attorney to anyone you do not trust.  If you happen to have an unscrupulous agent, it can be very challenging to get back funds or property taken by the agent, because the agent usually has no money left to return as they have used it all for their benefit.  The person acting as your Power of Attorney has the power to sell your property, or mortgage it.  It cannot be stressed enough that you chose your Power of Attorney very wisely.

 

If I think someone is using my Power of Attorney to steal from me, what can I do?

If you are suspicious that your agent is abusing their powers, revoke the Power of Attorney immediately.

Next, without delay, notify all banks, brokerage firms, or other financial institutions in which you have money that you have revoked the Power of Attorney.

Finally, go to the probate court. You may either by yourself or through an attorney.  Demand that the agent you suspect of absconding with your funds file a detailed account showing how your money was spent. A filing fee will need to be paid by you and you may need to possibly pay the agent for the cost of preparing the accounting documentation. Next, the court will hold a hearing at which time you can challenge the any or all of the information given in the detailed accounting. Ultimately, if the court finds the agent took your money without your authorization, you can sue the agent and/or possibly press criminal charges.

 

Can I revoke my Power of Attorney?

The Power of Attorney cannot be used unless the agent has it or it, or at least a copy and either you or they have given to banks, financial institutions, or others so that they think you want the agent to act on your behalf. If you have not given the Power of Attorney to anyone, you can revoke it by destroying the document.

If the eventuality the Power of Attorney has been given to the agent, an institution, or has already been recorded, you should execute immediately a revocation of the Power of Attorney that is witnessed and acknowledged in the same manner as the first Power of Attorney. Then; just as you distributed the Power of Attorney initially, you will need to furnish a copy of the Revocation to the banks, brokerage firm, or any other financial institution, and anyone else that may have a copy of the original Power of Attorney form that they know the Power of Attorney is no longer valid.

A Power of Attorney is only one of the many parts to a comprehensive estate plan. For information regarding living wills, trusts, power of attorney, or a pour-over will, or further questions on Powers of Attorney, contact Daniel A. Baron of Baron Law today at 216-573-3723.

 

Living Will

Do I need a Living Will?

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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:

  • Whether or not you wish to be put on life support, even if for a very short time
  • Would you would like to receive pain medication of any kind
  • Is it you desire to have any nutrition available by means of a feeding tube

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:

  • Who do I want and trust to make my health care decisions when I am no longer capable of making them on my own?
  • What kind of medical treatment DO I or DON’T I want?
  • How comfortable do I want to be when my life’s journey is coming to an end?
  • How do I want people to treat me?
  • What do I want my loved ones to know?

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.

Living Trusts & Estate Planning

Ohio Revocable Living Trusts

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What is a revocable trust?

Revocable trusts, commonly referred to as revocable living trusts, can be changed or terminated during a person’s lifetime as long as they are competent. The creator of the trust, referred to as a “grantor” is usually the initial trustee and maintains full control over the assets placed in the trust. A successor trustee is named to manage the trust assets if the grantor becomes incapacitated or passes away.

This type of trust is attractive because you can update your beneficiaries, change which assets are included in the trust, and update how assets will be distributed.

Revocable trusts avoid probate and allow you to maintain privacy. In addition to saving time and money associated with the probate process, you can protect your family’s documents from becoming part of public record.

Revocable Trusts vs. Irrevocable Trusts

Upon death, a revocable trust becomes an irrevocable trust and cannot be changed. At this point, the successor trustee must follow the instructions in the trust document to distribute the trust’s assets.

Learn more about the key similarities and differences of revocable and irrevocable trusts here.

Revocable Trusts vs. Testamentary Trusts

Revocable trusts are funded during the grantor’s lifetime, while testamentary trusts are funded after the death of a testator, or creator of a will.

Testamentary trusts are also called will trusts because they are created inside a will and do not take effect until you pass. Unlike a revocable trust, this type of trust will go through probate costing you time, money and your privacy.

Why should I set up a revocable trust?

A revocable trust can:

  • Avoid probate court and provide an efficient, seamless transfer of assets to beneficiaries
  • Protect your children’s inheritance if your spouse remarries after divorce or death
  • Protect the money and assets left to your beneficiaries from claims of their creditors or litigation
  • Protect the inheritance and government benefits of children with special needs
  • Make it easier to distribute specialty assets, such as real estate or artwork, to beneficiaries

More Specific Types of Revocable Trusts & How They Work

Joint Trusts

Joint trusts are often utilized by married couples to cover joint or individual assets and to specify what happens upon the death of each spouse. Typically, when the first spouse passes, the living spouse becomes the trustee and gains control over the trust. Then, when the surviving spouse passes, a successor trustee takes over management and distributions.

Bloodline Trusts

Bloodline trusts are created to ensure that spouses of intended heirs do not inherit in the event of divorce or death. Instead, if a child passes or divorces, their children (i.e. your grandchildren) would become the beneficiary.

Special Needs Trusts

Parents or grandparents of a disabled child can establish a special needs trust as part of their estate plan. This type of trust helps protect private funds for the disabled loved one without putting their eligibility for government-offered benefits at risk. There are three main types of special needs trusts:

  • Third-Party: A third-party sets up and funds the trust
  • Pooled: Managed by a non-profit organization
  • Self-Settled: The disabled beneficiary sets up and funds the trust

How To Set Up A Revocable Trust With An Attorney

It’s important to remember that a revocable trust is just one part of a comprehensive estate plan. For example, in many cases, a revocable living trust is created alongside a pour over will. The pour over will is designed to work together with your living trust, and acts as a backup plan to ensure all of your assets are directed into your trust.

After it has been determined that a revocable living trust should be part of your estate plan, an attorney can walk you through these key steps:

  1. Decide what assets will be placed in your trust. While you might already have an idea of what you’d like to include, your attorney may help you uncover some additional assets that would benefit from being placed in a trust. Assets can range from cash and investments to real estate and other property.
  2. Choose your beneficiaries. They might include your spouse, your children, grandchildren or other close family members.
  3. Establish the rules of your trust. For example, will assets be distributed with age requirements or terms for how the assets may be used?
  4. Determine who will manage the trust if you are not competent or once you have passed.

Once you are confident in these decisions, your estate planning attorney can draft the trust document and begin assisting you with funding the trust.

This blog is for educational purposes only; it is not intended to provide legal advice. If you’re planning for your estate and want to speak with an attorney, call 216-573-3723.

Baron Law LLC

Utilizing “QTIP” Trusts for Families in Second Marriages

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Utilizing “QTIP” Trusts for Families in Second Marriages

Estate planning in second marriages can be especially complicated when trying to secure the well-being of loved ones from a previous marriage. Much of the complexity arises from rights granted to a surviving spouse. In Ohio, spouses (male or female) are entitled to dower and elective share rights that often create tension between children from a prior marriage and your second marriage partner.

However, most of these uncomfortable tensions can be avoided through careful estate planning, which often includes a QTIP (or, Qualified Terminable Interest Property Trust). Such an arrangement is especially effective in providing for children from a previous marriage.

Consider the following example:

Let’s say Michael dies while married to his second wife, Kathy. Michael loved Kathy, but out of concern that she might not take the well-being of his children from a previous marriage into account, he established a will that left most of his estate (worth about $12 million including a marital home) to his children. He did, however, bequeath his $100,000.00 IRA entirely to Kathy.

And here is where things become complicated…

Unfortunately, Kathy then dies a week later intestate (without a will), so Michael’s hard-won IRA is automatically transferred to Kathy’s closest relative – her idiot brother, Frank. Because Kathy was entitled to the marital home through Ohio’s spousal rights, the marital home also transfers to Frank. The kids end up with hardly anything. Had Michael properly planned, he could have protected his children’s inheritance, provided income for his wife, and saved considerably on taxes.

QTIP Trusts

In the example above, Michael could have provided for both his children and Kathy had he created a QTIP trust or proper will.  Qualified Terminable Interest Property Trusts are commonly referred to as a “Family Trust”, or “Marital Trust.”  A QTIP Trust subdivides into (A) marital and (B) family Trusts: the B Trust preserves the children’s interest by restricting the spouse’s access.  The remaining spouse receives income and a life estate that satisfies Ohio’s spousal rights.   After the second spouse dies, the children receive the remaining assets in the B Trust.

Consider another version of the above example:

Instead of ignoring Ohio’s marital election, Michael plans ahead and created a revocable living trust with a QTIP election.   Upon Michael’s death, his trust is sub-divided into an “A” and a “B” trust.  Here, $5.43 million of his estate is diverted to his B trust.  Kathy is the beneficiary of this B trust, with limited access and receives income from the trust.   Because this trust is under the federal estate tax limit, Kathy’s estate tax is $0.00.  Over the next 20 years, because of robust growth, the “B” trust is now $17 million.  Upon Kathy’s death, trust “B” passes to the Michael’s sons entirely estate tax free.

The remaining $6.57 million in assets are diverted to the “A” trust.  Kathy again has restricted access, but can use these funds for her health, maintenance and support.  When Kathy has expenses, she uses the “A” trust and saves the “B” trust only for dire necessities.  Upon her death, the “A” trust has been reduced (or eliminated) and the tax is minimal, if there is any at all.  The remaining balance of the “A” trust passes to Michael’s sons.

QTIP trusts are very popular for people in second marriages.  As you can see, the trust provides income for the remaining spouse, yet it preserves your children’s assets.

Prenuptial Agreements

A QTIP trust may not fit under certain circumstances.  In cases where there is a disproportionate estate among spouses, a prenuptial agreement may be considered.  Certain statutory rights of a decedent’s surviving spouse may be waived by a valid prenuptial agreement.  In other words, people may contract for anything in life.  This includes signing away your inheritance.

It’s important to remember that a prenuptial agreement may often bring tension among couples.  Also, although Ohio recognizes prenuptial agreements to be valid, the state also does not allow you disinherit your spouse.   In that regard, oftentimes antenuptial agreements are coupled with estate plans to provide some form of financial security for the surviving spouse.

Prenuptial agreements are valid and enforceable (1) if they have been entered into freely without fraud, duress, coercion, or overreaching; (2) if there was 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.

Prenuptial agreement agreements are a great tool when coupled with a QTIP trust.  When combined together, the surviving spouse is provided income and preserved an estate for his or her lifetime.  In addition, the children’s inheritance is given extra protection in case of divorce.

Summary

QTIP trusts and prenuptial agreements are two of many ways to provide security for your spouse and children.   Through proper estate planning, you can provide a steady stream of income for your spouse and preserve your children’s inheritance.  It’s important to consider all options when preparing your estate plan.   For more information and or questions, contact attorney Dan Baron at Baron Law LLC – 216-573-3723.

 

 

 

 

 

 

Cleveland, Ohio attorney

Estate Planning Solution of the Week: Health Care Proxy

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Estate Planning Solution of the Week:  Health Care Proxy

What is a Health Care proxy?  How does that differ from a health care agent?  And what is the distinction between a health care proxy and a medical power of attorney?

The quickest answer is that all three terms are used to refer to someone who has the legal ability to make health care decisions on behalf of another.  However, the law varies by state as to what such a health care agent is called, what legal documents are needed, and what power is granted to that agent.

In Ohio, the term is “attorney-in-fact.”  In order to have someone make medical decisions on your behalf, you would name this person in a Durable Power of Attorney for Health Care.  Ohio does not have a standardized form to establish a power of attorney for health care.  However, there are specific requirements for a valid Ohio Health Care Power of Attorney:

  1. Your designation of an agent*
  2. Your designation of how your agent may act on your behalf
  3. Your signature and date
  4. Signature and date of two witnesses*

*Specific regulations exist as to who you may designate as your agent and who can serve as witnesses.  An attorney from Baron Law can give you the current specific requirements for the state of Ohio.

While Ohio does not have a standardized form that is required, the Ohio State Bar Association has developed forms together with several medical associations.  LeadingAge Ohio has a copy of this form available on their website: http://www.midwestcarealliance.org/aws/LAO/pt/sp/advance_directives”  You may also request a hard copy of the form on their website.

Baron Law is a firm that serves the northeast Ohio area.  For more information, or to begin estate planning for yourself or your loved ones, please contact us at 216.573.3723 or dan@baronlawcleveland.com.  State laws are specific and subject to change.  Schedule your consultation with a lawyer today to ensure that you and your loved ones are protected.

Baron Law LLC

Estate Planning – Protecting your Children Through Testamentary Trusts

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From Cleveland, Ohio Estate Planning Attorney Dan Baron:

Estate planning attorneys will tell you that testamentary trusts are a great way to protect your children and plan for your estate.  Below are 10 things to know about testamentary trusts and how they might fit into your estate plan.  To learn more, contact Cleveland, Ohio estate planning attorney Dan Baron at Baron Law LLC.

  1. What is a testamentary trust?

A testamentary trust is a trust usually coupled with your last will and testament.  Contrary to many living trusts, a testamentary trust is revocable and will not take effect until you die.  The trust provides for the distribution of all or part of an estate and often proceeds from a life insurance policy held on the person establishing the trust.   You can have more than one testamentary trust in your will.

  1. Why choose a testamentary trust?

Most often a testamentary trust is used to protect your children.  For example, if husband who has a will dies in an automobile accident, his estate would pass to his wife.  However, if both husband and wife are die in the accident, leaving their two minor children behind, a simple will will not provide a plan for the estate. Thus, a testamentary trust may provide guidelines as to how the estate is passed to their children.   There are other trusts to consider.  Contact your estate planning attorney to learn more.

  1. How do you create a testamentary trust?

As mentioned above, the most common way in Ohio to create a testamentary trust is to include the necessary language in your will.  The creator of the trust (known as the “settlor”) dedicates a Trustee who then administers trust.  For example, in the event both spouses die, the trust might make the estate pass to their children at the age of 18.  Or, the estate might pass in the even one of the kids gets married.  It is recommended that an estate planning attorney create your trust.

  1. When is a testamentary trust created?

Unlike living trusts, the money is not distributed automatically.  Many people believe that testamentary trusts avoid probate.  However, there still are some probate considerations that are involved.  In Ohio, typically a testamentary trust begins at the completion of the probate process after the death of the person who has created it.  It is recommended that an estate planning attorney help guide you through setting up the trust.

  1. What is the term?

A testamentary trust lasts until it expires, which is provided for in its terms. Typical expiration dates may be when the beneficiary turns 25 years old, graduates from university, or gets married.

  1. How is the probate court involved?

As mentioned above, a testamentary trust will not automatically take effect.  Before the creator dies,  the probate court checks up on the trust to make sure it is being handled properly.  Once the creator dies, the beneficiaries of the estate should contact an estate planning attorney to carry out the trust.

  1. Who can be the trustee of a testamentary trust?

Anyone can be a Trustee for a testamentary trust.  However, it is recommended that the Trustee be someone that the creator trusts.  The Trustee will have great responsibility in administering the deceased’s wishes.

  1. Does the trustee have to honor the terms set out for expenditures in the will?

It depends.  Ultimately it is up to the Trustee to determine whether a certain act or time has occurred in order to distribute the estate.  Some of these events are very easy to figure out.  For example, if the trust provides that the estate be distributed upon a marriage, that event is easy to determine.  Conversely, if the trust provides that a certain dollar amount be distributed upon a child “finding a good job,” it becomes more subjective for the Trustee.  Thus, it’s imperative to hire a qualified estate planning attorney to help draft a will or trust.

  1. When can I opt out of a trust?

Generally, if the person’s estate is small in comparison to the potential life insurance proceeds or other amounts that will be paid to the estate at death, a testamentary trust may be advisable.

  1. How much does it cost to set up a testamentary trust?

It is generally inexpensive to set up a will with a testamentary trust.  In most cases, attorney Dan Baron at Baron Law LLC can set up a testamentary trust for less than $1,000.  If the estate plan is more complicated, the legal fees may be higher.  If you are interested in setting up a trust or estate plan, contact a Cleveland, Ohio estate planning attorney.  Call Baron Law LLC today at 216-573-3723.  You will speak directly with an attorney who can help with your estate planning needs.

cleveland ohio attorney

Building a Charitable Contribution in your Estate Plan

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Estate Planning Charitable Donations

Have you ever considered incorporating a charitable donation into your estate plan?   Aside from the tax benefits, including charitable giving into your estate plan is a wonderful way to extend your legacy and show your generosity.  And contrary to public belief, charitable giving in your estate plan is not just for the very wealthy.   Through an estate planning attorney, there are several good ways to provide for your family while also giving to your favorite causes.

  1. Charitable Contributions through Your Will

The easiest and least complicated way to include a charitable contribution in your estate plan is through your will.  The amount you charitably contribute won’t reduce your income taxes, but it may decrease your taxable estate.  In addition, this may potentially increase the amount you’ll be able to leave to your heirs.  Talk with an estate planning attorney to learn more.

  1. Charitable Contributions through Your Retirement

You can also contribute to your favorite charity by donating a portion of your retirement account. Donating a retirement account is tax-effective and pretty straightforward.   A donor must simply designate the charity as the beneficiary on your account to receive the tax benefit.  Charities are exempt from both income and estate taxes.  Thus, the charity can receive 100% of the account’s value while your children or heirs receive their portion of the estate through non-retirement assets.  Consult with an estate planning attorney to learn more.

  1. Split-interest gift

Another way to make a charitable contribution is through a split-interest gift.  Through a split interest gift, you can donate assets to a charity but may also retain some of the benefits of holding those assets.  Here, the donor opens and funds a trust in the charity’s name and receives a charitable income tax deduction at the time of transfer.  Just like with other trusts, here the donor retains some rights to the property and may be able to avoid capital gains on the assets transferred.  Talk with an estate planning attorney to learn more about split-interest gifts.

Some ways to provide split-interest gifts include:

  • Charitable remainder trust (CRT): A CRT is an irrevocable trust that provides either a fixed payment or a fixed percentage to the donor (or other beneficiary) every year.  The term of the trust can for the life of the donor or a set number of years.   At a minimum, the donor must take annual payments from the trust no less than 5% but no more than 50% of the property’s fair market value.  At the end of the term, the remainder goes to the designated charity.  To maximize payments during the lifetime of the donor, the trust should appreciate value while receiving payments in the form of a percentage.   In contrast, if the trust will not appreciate in value, you’re better off receiving a fixed payment each year. Consult with an estate planning attorney to learn more.
  • Charitable lead trust (CLT): A CLT is the reverse of a CRT.  This revocable trust provides income to a charity for a set number of years, after which the remainder passes to the donor’s heirs or beneficiaries.  The CLT is a good choice for those who don’t need a lifetime of income from certain assets.  The trust is often structured to get an income tax deduction equal to the fair market value of the property transferred, with the remaining interest valued at zero to eliminate a taxable gift.  Contact an estate planning attorney to learn more about charitable lead trusts.
  • Pooled income fund (PIF):  Pooled income funds are trusts maintained by public charities. The trust is set up by donors who contribute to the fund.  Just like a CRT, the donor receives income during his or her lifetime.  After the donor’s death, control over the funds goes to the charity. The biggest benefit to a PIF is that contributions qualify for charitable income deductions as well as gift and estate tax deductions.  Talk with an estate planning attorney to learn more.

Charitable Giving is not just for the Wealthy.

There is a misconception that charitable giving is just for the wealthy; however, this is far from true.  Many people give to their alma mater or local church.  The amount does not need to be in the tens of thousands.  In fact, many people give smaller amounts by simply adding the charity in their will.  This blog is not meant to provide legal advice and is for informational purporses only.  For more information regarding wills, trusts, or charitable giving, contact Cleveland, Ohio law firm Baron Law, LLC.  Baron Law is your estate planning law firm in Cleveland, Ohio.  Call today for a free consultation at 216-573-3723.