Advanced Estate Planning Strategies: How High-Net-Worth Families Reduce Taxes and Protect Wealth

/in /by

Estate planning is a fundamental component of wealth management for all households—but for affluent families, it extends far beyond drafting a simple will. A comprehensive estate plan must address tax efficiency, asset protection, and long-term wealth transfer.

By utilizing advanced estate planning strategies, individuals can safeguard their assets, minimize tax exposure, and ensure their legacy is preserved according to their intentions.

Who Are These Estate Planning Strategies For?

Advanced strategies are commonly used by:

  • High-net-worth individuals and families
  • Business owners with appreciating assets
  • Physicians, executives, and professionals with liability exposure

When Should You Consider Advanced Estate Planning?

You may benefit from advanced estate planning strategies if:

  • Your estate is approaching estate tax exemption limits
  • You want to reduce estate or gift taxes
  • You want to transfer wealth to future generations efficiently
  • You own a business or rapidly appreciating investments
  • You are concerned about lawsuits or creditor exposure

Key Advanced Estate Strategies Explained

Irrevocable trusts play a pivotal role in this process, as assets transferred into such trusts are no longer considered part of the client’s estate. Consequently, these assets are exempt from estate tax calculations and are shielded from potential claims, thereby reinforcing the security of family wealth.

Various irrevocable trusts, including a Spousal Lifetime Access Trust (SLAT), Grantor Retained Annuity Trust (GRAT), Irrevocable Life Insurance Trust (ILIT) and Ohio Legacy Trusts, serve as essential instruments within these strategies, facilitating the protection and continuity of financial legacies. Let’s take a closer look at how each of these trusts works.

What Is a Spousal Lifetime Access Trust (SLAT)?

A Spousal Lifetime Access Trust is an irrevocable trust that enables one spouse to transfer assets into a trust for the benefit of the other spouse (and potentially other beneficiaries) while simultaneously removing those assets from the taxable estate.

Key Benefits:

  • Reduces estate tax liability
  • Protects from creditors
  • Allows continued financial access for the beneficiary spouse
  • Moves accrual of asset appreciation outside the taxable estate

The spouse can use funds from the trust to maintain their standard of living even though the trust assets have been removed from the estate. SLATs most often terminate at the death of the beneficiary spouse, at which point the trust assets pass to the other SLAT beneficiaries (typically a younger generation), either outright or in trust. Assets held in trust are then completely protected, and the beneficiaries can take distributions as needed.

SLATs are especially effective for married couples who want to preserve wealth while maintaining flexibility in financial access.

What Is a Grantor Retained Annuity Trust (GRAT)?

A Grantor Retained Annuity Trust enables the grantor to transfer appreciating assets to beneficiaries while minimizing exposure to gift and estate taxes.

Under this arrangement, the grantor transfers assets into the GRAT and retains the right to receive annuity payments for a predetermined period. Upon the expiration of the term, any residual assets in the trust pass to the designated beneficiaries without incurring additional estate taxes. For example, if you transfer $1 million to a GRAT, receive an annuity payment, and during the term, it grows to $1.5 million, the $500,000 in growth will pass to your beneficiaries free of estate and gift tax. This strategy is ideal for business owners or individuals with rapidly appreciating assets.

The effectiveness of a GRAT is contingent upon the appreciation of trust assets at a rate exceeding the IRS’s assumed rate of return, thereby allowing excess growth to be transferred tax-free.

Key Benefits:

  • Reduces gift tax exposure
  • Transfers asset appreciation with minimal tax impact
  • Ideal for high-growth investments or business interests

Potential Risk:

  • Mortality risk, wherein the premature death of the grantor results in the inclusion of trust assets in the estate
  • Insufficient asset appreciation, which may negate the intended tax advantages

What Is an Irrevocable Life Insurance Trust (ILIT)?

An Irrevocable Life Insurance Trust (ILIT) serves to exclude life insurance proceeds from the taxable estate, ensuring that beneficiaries receive the full policy value while simultaneously providing liquidity to cover estate expenses and shielding insurance proceeds from creditors.

Key Benefits:

  • Keeps life insurance proceeds outside the taxable estate
  • Provides tax-free liquidity for heirs
  • Protects proceeds from creditors

While ILITs were more commonly used when estate tax exemptions were lower, they remain valuable for certain high-net-worth planning scenarios.

What Is an Ohio Legacy Trust (Domestic Asset Protection Trust)?

An Ohio Legacy Trust – also known as a Domestic Asset Protection Trust (DAPT) – is designed for intergenerational wealth preservation, facilitates the transfer of assets across multiple generations without incurring estate taxes at each transfer, thereby preserving family wealth and affording protection from creditors and divorce settlements. An Ohio Legacy Trust, aka Domestic Asset Protection Trust (DAPT) is structured to insulate assets from creditors while allowing the grantor (creator) to remain a discretionary beneficiary under specific conditions.

Key Benefits:

  • Strong asset protection from lawsuits and creditors
  • Potential estate tax advantages
  • Allows continued access to assets in a limited capacity
  • Supports long-term wealth preservation

If the primary objective is the efficient transfer of wealth with minimal tax implications, a DAPT may be most suitable. A SLAT, by contrast, is particularly advantageous for individuals seeking to provide financial security for a spouse while simultaneously achieving estate tax savings.

DAPTs are often used by clients with a higher risk of lawsuits, such as doctors, business owners, or athletes. They are a great way to protect their wealth while also reducing potential estate tax concerns.

Be Cautious of Offshore Asset Protection Trusts

Offshore asset protection trusts are sometimes marked as a solution for asset protection, but they often introduce significant risks, including:

  • High administrative costs
  • Increased legal complexity
  • Potential IRS scrutiny
  • Political and economic instability in the foreign jurisdiction
  • Limited protection against certain U.S. claims

In many cases, domestic strategies – such as DAPTs – offer more practical and reliable solutions.

Which Estate Planning Strategy is Right for You?

The right strategy depends on your financial situation, family structure, and long-term goals.

  • An SLAT may be ideal for married couples seeking tax savings with flexibility
  • A GRAT works well for individuals with appreciating assets
  • An ILIT provides liquidity and estate tax efficiency
  • A DAPT offers strong asset protection for high-risk individuals

Even if estate taxes are not a concern, a revocable living trust remains a foundational tool to avoid probate and protect heirs.

Final Thoughts: Building a Strategic Estate Plan

Advanced estate planning strategies provide powerful tools for preserving wealth, minimizing taxes, and protecting assets across generations.

However, these strategies must be carefully structured and tailored to your unique circumstances. A well-designed plan ensures that your wealth is not only protected—but positioned to benefit your family for years to come.

To learn more or to schedule a free consultation, contact me at dan@baronlawcleveland.com or 216-573-3723.

parents and grandparents admiring their grandchildren

Estate Planning Considerations for 2026

/in /by

What is estate planning, and why does it matter in 2026?

Estate planning is the process of organizing your assets, legal documents, and financial decisions to ensure your wishes are carried out during life and after death. As we approach 2026, the estate planning landscape is poised for meaningful change. Economic uncertainty, evolving family dynamics, and recent changes to federal tax provisions underscore the importance of thoughtful, proactive planning.

Whether you are reviewing your existing documents or creating a plan for the first time, the new year presents a critical opportunity to ensure your affairs are aligned with your current goals, family structure, and financial situation. Without proactive planning, families may face probate delays, unnecessary taxes, confusion, and disputes at the worst possible time.

Below are key considerations every family should keep in mind as we transition into 2026.

Who This Estate Planning Guide Is For

This guide is designed for:

  • Individuals starting the estate planning process
  • Families updating outdated estate plans
  • Business owners with succession considerations
  • Individuals with retirement accounts or complex assets
  • Anyone experiencing life changes such as marriage, divorce, or new children

Estate Planning Checklist: What to Review Before 2026

Before the new year, review these key components of your estate plan:

✔ Wills and trusts
✔ Financial powers of attorney
✔ Health care directives and HIPAA authorizations
✔ Beneficiary designations (retirement accounts, life insurance)
✔ Asset ownership and titling
✔ Business interests and succession plans
✔ Digital assets and online accounts

When Should You Update Your Estate Plan?

You should review your estate plan every 2–3 years or after major life events such as:

  • Marriage or divorce
  • Birth or adoption of children
  • Death of a spouse or beneficiary
  • Business changes or asset growth
  • Changes in tax laws

Outdated estate planning documents can lead to probate delays and increased costs, unintended beneficiaries, tax inefficiencies, and family disputes or litigation.

Key Estate Planning Considerations as We Head Into 2026

 

1. Updating Foundational Estate Planning Documents

Many individuals assume estate planning is complete once documents are signed—but effective plans must evolve.

As the new year approaches, review and update:

  • Wills and Trusts: Check for outdated fiduciaries, changes in family circumstances, or assets no longer titled correctly. A plan prepared years ago may not reflect blended families, births, divorces, or shifts in financial priorities.
  • Financial Powers of Attorney: These documents often become ineffective because the named agent is no longer appropriate, or institutions demand more modern language. Banks often consider documents executed ten years or longer ago to be “stale” and will not honor them even if they have been properly executed.
  • Health Care Directives: Medical decision-making is one of the most overlooked areas of estate planning. Ensuring the correct individuals are authorized—and that they understand the client’s wishes—is essential. This includes maintaining a HIPAA release for all family members who you wish to have access to your medical records and information.
  • Beneficiary Designations: As more wealth resides in retirement accounts and life insurance policies, outdated beneficiaries create some of the most common estate planning mistakes. A periodic beneficiary audit is indispensable heading into 2026. For example, in a recent matter, an IRA owner with an account valued at approximately $1 million had never updated his beneficiary designation after his spouse passed away. Because no contingent beneficiary was listed, the account was forced to go through probate, resulting in roughly $44,000 in legal and court fees. A simple review and update of the beneficiary designation, naming either a trust or an appropriate individual, would have allowed the account to pass directly to the intended recipient outside of probate, avoiding unnecessary expense and delay.

2. Planning for Modern Family Dynamics

Today’s estate plans must account for increasingly complex family structures. Blended families, cohabitating partners, unmarried parents, and multi-generational households require carefully drafted provisions to avoid litigation or inequitable results.

Consider these questions when advising or reviewing a plan:

  • Should the surviving spouse inherit everything outright, or should assets be placed in trust to protect children from prior relationships?
  • Are guardianship nominations up to date, especially for families with minor children?
  • Does the plan contemplate adult children who may need asset protection due to divorce, debt, or personal struggles?
  • Is there a plan for digital assets, social media accounts, and electronic financial records?

Proactively addressing these issues ensures clarity, minimizes conflict, and reflects the realities of modern life.

3. Retirement Accounts and SECURE Act Considerations

The SECURE Act and its subsequent updates have significantly changed how inherited retirement accounts are handled.

Most non-spousal beneficiaries are now required to withdraw all assets within 10 years, a rule that can accelerate taxes and complicate estate distributions.

Clients should:

  • Reassess whether their beneficiary designations remain appropriate and tax-efficient
  • Confirm that any trust named as beneficiary is drafted in compliance with the SECURE Act
  • Consider how required distributions may affect beneficiaries who previously expected “stretch IRA” treatment
  • Evaluate whether Roth conversions before 2026 could help reduce long-term tax burdens

Because retirement accounts are often among a family’s largest assets, coordinating these accounts with broader tax and estate strategies is increasingly essential.

4. Estate Planning for Business Owners

Estate planning for business owners requires a unique lens.

Key areas to review include:

  • Business Succession Plans: Who will run the company? Is there a buy-sell agreement in place? Has the valuation been updated recently? Can the business interest pass outside of probate via a trust or a transfer-on-death agreement?
  • Tax Exposure: The potential reduction in the federal exemption amount may significantly impact family-owned businesses whose value is tied up in illiquid assets.
  • Management Continuity: Many plans are silent on what happens operationally during temporary incapacity.

Without clear planning, families may face operational disruption, conflict, or forced sale of the business.

5. Incapacity Planning: The Most Overlooked Risk

While most people focus on how their assets will be distributed after death, planning for incapacity often presents more immediate challenges.

The rising costs of long-term care, increasing rates of cognitive decline, and the complexity of medical decision-making make proactive preparation essential as Americans continue to live longer.

Heading into 2026, every estate plan should include:

  • Updated powers of attorney with broad and modern authorities
  • Clear health care directives
  • A well-considered strategy for funding long-term care (insurance, savings, Medicaid, or hybrid)
  • Management of digital records, online banking, and even crypto assets if necessary

The more detailed and intentional the planning, the easier it is for loved ones to step in during an emergency.

6. Communicating Your Estate Plan to Loved Ones

A well-crafted plan is only effective if key individuals understand it. Many disputes arise not from the estate plan itself but from beneficiaries being surprised or unprepared. It’s encouraged to share the general structure of your plan, identify who you have named as executor, trustee, or agents, and explain the intentions behind the key decisions. This will significantly reduce confusion and conflict.

Final Thoughts: Taking Action

Estate planning is not a one-time task – it is an ongoing process that evolves with your life, family, and financial circumstances.

Whether you’re starting your estate plan or updating existing documents, taking action ensures:

  • Greater financial security for your family
  • Reduced tax exposure
  • Clear decision-making authority
  • Preservation of your legacy

To revisit or start your estate plan, give us a call at 216-573-3723 or email me at dan@baronlawcleveland.com.

Estate and Succession Planning for Business Owners: Protecting Your Company, Family, and Legacy

/in /by

Estate planning for business owners is not just about distributing assets after death—it’s about ensuring business continuity, protecting your family’s financial security, minimizing taxes, and preserving the legacy you worked so hard to build. Unlike individuals whose wealth may be concentrated in retirement accounts or personal investments, entrepreneurs and small business owners often have a significant portion of their net worth tied directly to their company. Without a comprehensive estate and succession plan, your business could face probate delays, leadership disputes, tax burdens, and operational instability at the worst possible time.

Below are the key steps every business owner should take to protect their company, family, and long-term legacy.

Step 1: Inventory Business and Personal Assets
Step 2: Define Your Business Succession Plan
Step 3: Establish a Trust to Protect Business Assets and Avoid Probate
Step 4: Create or Update Buy-Sell Agreements
Step 5: Plan for Estate Taxes and Business Liquidity
Step 6: Align Estate Planning Documents with Corporate Agreements
Step 7: Communicate Your Estate Plan to Key Stakeholders
Step 8: Review and Update Your Estate Plan Regularly

 

Step 1: Inventory Business and Personal Assets

A comprehensive estate plan begins with a clear inventory of both business and personal assets. For small business owners, this includes ownership interests in LLCs, corporations, partnerships, and sole proprietorships, along with related governing documents.

Business assets—such as equipment, intellectual property, real estate, and contracts—should be evaluated alongside personal investments, retirement accounts, and insurance. Proper titling and ownership alignment are essential for effective trust funding and tax planning.

Step 2: Define Your Business Succession Plan

A well-designed business succession plan is central to estate planning for business owners. Succession planning answers a crucial question:

Who will take control of the company if you are no longer able to lead it?

Some business owners intend to transfer ownership to children or family members. Others prefer to sell the company or allow business partners to buy out their interest. In certain situations, owners want to separate economic benefits from management control—allowing heirs to receive income from the business without participating in day-to-day operations.

Clearly defining your succession strategy:

  • Prevents family conflict
  • Protects business continuity
  • Ensures capable leadership
  • Preserves the value of your company

Step 3: Establish a Trust to Protect Business Assets and Avoid Probate

One of the most effective estate planning tools for entrepreneurs is a trust.

A revocable living trust allows business owners to maintain control during their lifetime while ensuring seamless transfer of ownership upon death. By transferring business interests into the trust, the company can avoid probate and continue operating without court intervention.

For business owners concerned about estate taxes, creditor protection, or long-term asset preservation, irrevocable trusts may offer additional benefits:

  • Reduce estate tax exposure
  • Protect assets from creditors
  • Preserve wealth for future generations

For many entrepreneurs, trust-based planning offers the flexibility and control necessary to protect both family and business interests.

Step 4: Create or Update Buy-Sell Agreements

For business owners with partners, a buy-sell agreement is a critical component of both estate planning and business succession planning.

This legally binding agreement outlines what happens to an owner’s interest in the event of:

  • Death
  • Disability
  • Retirement
  • Voluntary departure

A properly structured buy-sell agreement can:

  • Establish a valuation method
  • Restrict ownership transfers to outside parties
  • Require remaining partners to purchase the departing owner’s shares

This prevents unwanted third parties—including heirs who may not be involved in the business—from gaining control.

Many small business owners fund these agreements with life insurance, providing immediate liquidity so surviving partners can purchase the deceased owner’s interest without disrupting business cash flow.

Step 5: Plan for Estate Taxes and Business Liquidity

Estate tax planning is particularly important for high-value businesses. Even profitable companies can face liquidity challenges if a significant estate tax bill becomes due.

Without proper planning, heirs may be forced to sell business assets—or the entire company—to satisfy tax obligations.

Advanced estate planning strategies include:

  • Lifetime gifting
  • Valuation discounts for business interests
  • Use of irrevocable trusts
  • Life insurance to provide liquidity

These tools help ensure your business remains intact while meeting financial obligations.

Step 6: Align Estate Planning Documents with Corporate Agreements

A common mistake in estate planning for business owners is failing to coordinate legal documents.

Operating agreements, shareholder agreements, and partnership contracts often contain transfer restrictions or succession provisions that may conflict with estate planning documents.

Coordination between estate planning counsel and corporate advisors ensures that all documents work together seamlessly. This reduces the risk of litigation, delays, or unintended ownership transfers.

Step 7: Communicate Your Estate Plan to Key Stakeholders

Even the most well-designed estate plan can fail without proper communication.

Business partners, successors, trustees, and immediate family members should understand the general structure of your plan and their roles and responsibilities within it.

Transparency reduces uncertainty and prevents disputes that could threaten business stability after your passing. You don’t need to share every detail – but clarity around expectations is critical.

Step 8: Review and Update Your Estate Plan Regularly

Estate and succession planning for small business owners is not a one-time event.

Your plan should evolve as your business and personal life change. Key triggers for updates include:

  • Business growth or sale
  • New partners or ownership changes
  • Tax law changes
  • Marriage, divorce, new children

Reviewing your documents every 2 to 3 years—or after major life or business events—ensures your strategy remains aligned with your goals.

Final Thoughts: Building a Comprehensive Estate and Succession Plan

For business owners, estate planning is about far more than asset distribution—it is about business succession, tax efficiency, asset protection, and legacy preservation.

A comprehensive estate plan that includes a trust provides clarity, stability, and peace of mind. Taking proactive steps today safeguards your company’s future tomorrow—and ensures that your hard work continues to benefit your family and community long after you are gone.

To schedule an appointment to analyze your business, contact our office at 216-573-3723 or email me at dan@baronlawcleveland.com.

The Transfer of Your Home to A Trust: Potential Insurance Issues

/in , /by

Written by Carter Bednar, Esq.

Transferring one’s home into a trust is a key step in estate planning. It allows control over who inherits the home and avoids probate upon the homeowner’s death, a primary goal of estate planning. However, failing to properly insure one’s home could lead to an insurance provider denying a claim, rendering all the hard work put into planning worthless.

What is a Trust?

A trust is a legal agreement in which property is transferred to a trustee, who manages the property for the benefit of beneficiaries designated by the trust’s creator, also known as the grantor. Trusts can take various forms, including revocable trusts that can be amended and modified, or irrevocable trusts that cannot be changed. When property is transferred into a trust, regardless of the type, the trust becomes the legal owner of the property.

The Risk of Trust Ownership

The hidden risk of transferring home ownership is that an insurance provider may deny a claim because the legal owner and named insured do not match. Since insurance providers base their coverage decisions on legal ownership, they may deny a claim if the insurance policy does not properly reflect the change in ownership.

How to Properly Insure a Home in Trust

The first step is to contact your insurance provider. Informing your agent as soon as possible of the new ownership structure can help avoid any potential gaps in coverage. The next step is to request that your trust be listed as an additional insured or named insured. This step is crucial as it provides your trust with an insurable interest in the property. The last step is to review your insurance policy and ensure that your liability coverage is sufficient.

Key Considerations

Placing one’s home into a trust is an invaluable estate planning tool, but it is essential to update this change in ownership on one’s insurance policy. Waiting too long to make this update can create a gap in coverage and potentially lead to a claim denial. It is also important to correctly name the trust on the policy, and working with your estate planning attorney can help ensure the trust is listed properly.

The One Big Beautiful Bill Act (OBBBA): What It Means for Estate Planning in 2026 and Beyond

/in /by

The One Big Beautiful Bill Act (OBBBA): What It Means for Estate Planning in 2026 and Beyond

After months of negotiation and speculation, Congress has passed the One Big Beautiful Bill Act (OBBBA), a sweeping tax reform bill that significantly reshapes estate planning, trust taxation, and alternative minimum tax (AMT) policy. Building on the framework of the 2017 Tax Cuts and Jobs Act (TCJA), the OBBBA introduces permanent changes with far-reaching implications for high-net-worth individuals, families, and estate planners.

There are certainly a lot of provisions in this “big” bill so I’ve created a breakdown of which specific parts are most likely to affect your estate plan:

Expanded and “Permanent” Estate, Gift, and GST Tax Exemptions

Perhaps the most consequential change in the OBBBA is the permanent increase to the estate, gift, and generation-skipping transfer (GST) tax exemptions. Under the 2018 Tax Cuts and Jobs Act (TCJA), the exemption was set at $13.99 million for individuals and 27.98 million for married couples; now, beginning January 1, 2026, the exemption increases to $15 million for individuals and $30 million for married couples, indexed annually for inflation. Contrary to what some believe the exemption is not permanent, however, there is no set expiration for these amounts at this time. Thus, even if your net worth isn’t over $15 million, you should always consider implementing tax planning strategies within a trust because congress could reduce the exemption at any time.

SALT Deduction Expansion and Trust “Stacking” Strategy

In a move aimed at alleviating the tax burden in high-tax states, the OBBBA increases the State and Local Tax (SALT) deduction cap from $10,000 to $40,000 starting in 2026. The cap phases out for taxpayers with adjusted gross income (AGI) above $500,000 and is fully eliminated at $600,000.

While this provision sunsets in 2030, it opens the door to advanced planning opportunities. One strategy is trust “stacking,” or using multiple non-grantor trusts to claim multiple $40,000 SALT deductions. Each trust is treated as a separate taxpayer and may be able to pay and deduct its own state and local taxes, potentially offering significant federal income tax savings. However, the IRS closely scrutinizes aggressive implementations of this tactic, so careful structuring is essential.

Charitable Giving and Private Foundations

The OBBBA leaves much of the charitable giving landscape intact, but introduces a few notable changes. The 60% AGI limit for cash contributions to qualified public charities is now permanent. Additionally, a new 0.5% AGI floor means only contributions exceeding that threshold are deductible, encouraging “bunching” strategies to maximize tax benefit in a given year.

New “Trump Accounts” for Minors

The bill introduces government-seeded investment accounts for U.S. citizens under 18 with Social Security numbers. Eligible children born between 2025 and 2028 will receive a $1,000 government contribution, with up to $5,000 per year in additional contributions allowed (plus a $2,500 employer contribution exemption from gross income). These funds grow tax-deferred and are unavailable for withdrawal until the child turns 18. The initial $1,000 grant is certainly advantageous, but unless you have already maxed out your child’s 529 savings plan, that remains a better place to park additional funds dogeared for future educational expenses, as they come with more flexibility and better tax advantages for parental contributions.

The Alternative Minimum Tax: Relief for Many, But Not All

The Alternative Minimum Tax (AMT), a parallel tax system aimed at ensuring higher-income taxpayers pay a minimum amount, was substantially curtailed by the TCJA. The OBBBA makes permanent many of those AMT reforms, preserving higher exemption amounts ($88,100 for single filers and $137,000 for joint filers) and reducing the number of individuals affected.

However, the phaseout thresholds for AMT are set to revert to 2018 levels: $500,000 for singles and $1 million for joint filers. That means fewer people will pay AMT, but some higher earners may still be caught in its net, especially those in high-tax states or with complicated income profiles. Importantly, these AMT changes do not affect trusts and estates, which continue to be subject to more stringent AMT thresholds.

Beyond the Big Bill

Estate planning is crucial for protecting your family’s future, regardless of legislative changes. While tax laws may shift, your personal goals and family needs remain constant. Estate planning ensures your assets are distributed according to your wishes—not left to the default rules of probate courts. It allows you to name guardians for minor children, appoint someone to manage your affairs if you become incapacitated, and provide clear instructions for your care and financial matters. Even if your estate is well below the taxable threshold, having a plan in place helps prevent family disputes, costly delays, and unintended outcomes.

Beyond taxes, estate planning is about protecting the people you care about and preserving your legacy. Ultimately, estate planning is not about how much you have, but what you want to happen with what you have. A changing tax landscape may require updates, but it should never be a reason to delay or dismiss planning altogether. The true purpose of estate planning is to provide clarity, control, and peace of mind for you and your loved ones.

Key Takeaways

When new laws take effect, it is always a good reminder to review any existing documents to make sure they are still working for you and your family. Don’t forget that almost any legal provisions regarding taxes and estate plans can be changed over time through additional legislation by current or future administrations. Additionally, these changes are only regarding federal laws – it is still important to stay informed about Ohio’s state-specific laws regarding trusts, estates, and tax-advantaged planning. And, as always, your best bet for maintaining a strong plan that will provide stability and security for your loved ones is to consult regularly with a team of qualified professionals including your estate planning attorney, financial planner, and CPA.

Estate Planning Discussions

Using the Holidays to Discuss a Difficult Topic

/in /by
Read more
Charitable Estate Planning

Leaving a Legacy While Saving on Taxes Through Charitable Gifting

/in /by

Leaving a legacy to charity is a great way to support your community, make an impact, and save on taxes. There are many charitable estate planning strategies to consider and each one comes with a careful consideration. Who you’re donating to, your financial goals, the type of asset you’re donating, tax objectives, and amount of control are just a few of the many considerations every charitable estate plan must contemplate. Using the following strategies, you can design and implement a comprehensive plan.

First, Don’t Do This…

Do not name a charity as the beneficiary of a retirement or bank account. Simply do not do this! Since big banks and financial institutions can only generate revenue based on the assets under their management, they don’t always have your best interest in mind if they lose that revenue in bequeathing your estate to your selected charity.  Leaving your wealth to a stranger at a mega-corporation can cause delay and there’s no guarantee your wishes are met.  Instead, it’s best to have a trusted estate “quarterback,” a.k.a. an executor and/or trustee who will ensure your plan is properly administrated.  You can name your children, sibling, attorney, or trusted friend. Pick someone you trust as opposed to letting the bank pick a stranger.

Donating Through Your Will

A last will and testament is one method of donating to charities; however, it is the least efficient and most time-consuming. This option is better than naming a charity as a beneficiary of a retirement account, however, because here you at least have an executor overseeing and administering the estate.  You can specify certain dollar amounts (e.g., $10,000 to XYZ church) or percentages (e.g., 10% to XYZ Church), within your will and both methods would allow your charitable beneficiaries to receive their bequest.  Keep in mind that your last will does not avoid probate. Moreover, any debts against the estate would be paid first through the probate process, reducing the amount of the bequest. Nonetheless, this method is effective and acceptable.

Basic Charitable Trust Planning

Whether you already have a family trust or want to amend your current one, leaving a bequest to charity through your trust is a great way to leave a legacy.  The trust will avoid probate and also provide more control.  Unlike a last will, here you can spread out payments to your charity, leaving a legacy for years to come.  For example, you might leave $10,000 to the OSU scholarship foundation, every year, in your family name, until the funds are depleted. Moreover, since a trust would avoid probate, the assets are also protected from creditors and the estate would remain private. Finally, you once again have a “quarterback,” known as a trustee to oversee and administer the estate.

Charitable Remainder Trust

Being able to observe the organizations you’re helping is a major benefit of an irrevocable charitable remainder trust, or “CRT.” Additionally, unlike the strategies we have discussed thus far, CRTs allow you to attain an immediate tax deduction while also creating a cash flow. The trust can be funded by real property, stock, cash, or any other type of asset. However, the tax deduction and cash flow you receive will vary depending on what type of asset you’re contributing. After funding, you receive payments over time from the revenue generated from the trust. For example, your CRT might be funded by rental properties that you not only received a tax deduction for, but now you’re receiving payments from for the rest of your life.  After death, the remaining assets are given outright to the charities you’ve named.

Who’s a good fit?  The CRT is a good option if you want an immediate charitable deduction but also have a need for an income stream for yourself or another person. If you set instructions to establish a CRT at your death, it is also a good option to provide for heirs, with the remainder going to charities of your choosing.

Charitable Lead Trust

A charitable lead trust, or “CLT” is the inverse of a CRT.  It’s an irrevocable trust that generates a potential income stream for the named charitable beneficiary, with the remaining assets eventually going to family members or other beneficiaries. Donors choose the term of the trust and the amount distributed, at least annually, to charity.  The assets used to fund a charitable trust are removed from your gross estate and may not only reduce the amount of tax your estate has to pay upon your death, but may also preserve funds for your heirs. Charitable lead trusts are not tax-exempt, and you will need to decide the tax treatment of the trust when it is created.

Who’s a good fit? This is ideal if you want to pass appreciated property to heirs and reduce gift and estate tax consequences and are also comfortable with parting with the income for a number of years in return for estate and gift tax savings.

Where Do You Start?

No matter the size of your estate, developing a charitable estate plan that will be carried out according to your wishes requires three things: (1) a Certified Public Accountant (CPA) who has experience with tax and gifting; (2) a Financial Planner; and, of course (3) an Estate Planning Attorney. The combination of utilizing these three professionals could mean the difference between a significant tax break or your estate ending up in court.  For more information or to schedule a free consultation, contact Baron Law at 216-573-3723.

Estate Planning Attorney

COVID-19 Funeral Reimbursement

/in /by

Did you know that you can be reimbursed for the funeral expenses of a lost loved one that passed from COVID-19? COVID-19 has affected the lives of many Americans and their families, reimbursement of funeral costs is a little way to ease the grief of losing a loved one from this pandemic.

The Federal Emergency Management Agency (FEMA) has started a program to reimburse those families that have lost someone due to the coronavirus. The application process starts April 12, 2021 and currently does not have an end date. To qualify you must meet the following requirements:

• The death must have occurred in the United States, this includes U.S. Territories and the District of Columbia
• The death certificate must indicate that the death was attributed to COVID-19
• The applicant must be a United States citizen, non-citizen national, or qualified alien who incurred funeral expenses after January 20, 2020
• There is no requirement for the deceased person to have been a United States citizen, non-citizen national, or qualified alien

Additionally, the following documentation should be gathered and kept for submission:
• An official death certificate – that attributes the death directly or indirectly to COVID-19 and shows that the death occurred in the United States, U.S. Territories, or District of Columbia
• Funeral expenses documents – (receipts, funeral home contract, etc.) that includes the applicant’s name, the deceased person’s name, the amount of the funeral expenses, and the dates the funeral expenses happened
• Proof of funds received from other sources – specifically for use toward funeral costs. We are not able to duplicate benefits received from burial or funeral insurance, financial assistance received from voluntary agencies, government agencies, or other sources
If approved, you will receive your funeral assistance through a check by mail or direct deposit, depending on the option you choose when applying for assistance.

Unfortunately, there are some people who cannot apply for assistance if they fall under one of the following categories:
• A minor child cannot apply on behalf of an adult who is not a U.S. citizen, non-citizen national, or qualified agent
• There are several categories of aliens that are lawfully present in the United States, but do not qualify for FEMA’s Individual and Households Program assistance, including this funeral assistance program. These include, but are not limited to:
o Temporary tourist visa holders
o Foreign students
o Temporary work visa holders
o Habitual residents such as citizens of the Federal States of Micronesia, Palau, and the Republic of the Marshall Islands

Please keep in mind there is no online application, this is through the FEMA funeral assistance hotline 844-684-6333. Once your application has been submitted via phone, you will be provided an application number and will need to submit your supporting documents (death certificate, funeral expense receipts, etc.). The supporting documents can be submitted the following ways:
• Upload documents to your DisasterAssitance.gov account
• Fax Documents
• Mail Documents

If you were responsible for the funeral expenses of more than one person lost to coronavirus you may claim each funeral on your application. The limits for assistance are up to $9,000 per funeral and up to $35,500 per application per state, territory, or District of Columbia.

This is a great program for families looking for assistance in the unexpected death of a loved one caused by COVID-19. For more information, please visit the link below. To schedule and appointment with one of our estate planning attorneys, contact Baron Law at 216-573-3723

Sources:
https://www.fema.gov/disasters/coronavirus/economic/funeral-assistance#eligible

Probate Attorney

Top Reasons Why You Should Avoid Probate

/in , /by

Whether it was a gathering for a joyous wedding or the passing of a loved one, we’ve all heard about Probate Court at some point or another. We are going to dive into what probate is and why you want to avoid it when it comes to your estate, if you have no plan.

First, what is probate? Probate is the legal process of administering a person’s estate after their death. You’re probably wondering “OK, but what does that mean?” It means:

The court will determine your assets at the time of your death.

The court will determine the value of those assets.

The court will distribute the assets to those that are entitled to them by law.

Probate court, during the process will also appoint someone to supervise the administration of your estate.

Why would I want to avoid this process? The main reasons to avoid probate are the extensive timeline and astronomical expense that are both required for probate. The minimum amount of time that is required by probate court is 6 months, but in actuality this process takes 14 – 18 months on average. The reason for this extensive timeline is to give creditors a chance to make a claim on your estate, this in turn reduces the inheritance intended for your loved ones.

The probate process is very expensive. The average cost for probate court is between 5 – 10% of the estate’s total value. This means if your estate is valued at $500,000 you can expect an average cost of between $25,000 – $50,000.

The probate court appoints someone that they deem “suitable” to administer your estate, if you have no plan. This means that your wishes will not be heard and your assets, including your personal property and belongings will be distributed by the court to whom is legally entitled.

Lastly, probate court is public record. This means that all of your assets, your heirs, and your debts are available for anyone to see. Privacy is something that should be valued during this sensitive period of bereavement.

This costly and lengthy process can be avoided with a proper estate plan put in place. Your assets should be distributed according to your wishes, not to who is just legally entitled to them. Your heirs should have the ability to access the inheritance you intend on leaving them, and your loved ones deserve the privacy and time it takes to mourn your loss.

If you have not previously considered an estate plan or have questions about how to get started on planning, contact us at Baron Law today. You can go to our website for a free consultation to start planning for the future for yourself and your loved ones.

 Helping You And Your Loved Ones Plan For The Future

 

About the author: Kristy Gross

Kristy is a Legal Assistant at Baron Law LLC kristy@baronlawcleveland.com.

Baron Law LLC Now Hiring Paralegals and Office Admin.

/in /by

Baron Law LLC is currently hiring paralegals and office management.  Details for this position are detailed below.

Hours: 20-30 per-week

Pay: $20.00 – $32.00 per-hour depending on experience.

Remote Workplace: Applicant would be able to work remotely most of the time while coming into the Independence office as needed. During the temporary pandemic, the office would only be utilized once or twice a week. This position is expected to be full-time once COVID has settled down with benefits. This position is currently a 1099 position.

Experience: Ideal applicant would have some paralegal experience (greater than one year) in estate planning, probate, and/or elder law.

Skills: Detail oriented individual who is a self starter and able to manage multiple tasks. Must have ability and experience to use Microsoft word and excel. Must have ability to work remotely and manage office tasks such as drafting, coordinating with clients, writing letters, managing software systems, completing probate forms and filing, ect. Although not required, experience with Quckbooks Online and Clio would be greatly considered.

Education: High School diploma or greater.

To apply, submit your resume to dan@baronlawcleveland.com.