Posts

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

Trust Attorney Baron Law

Five Reasons Why Having a Family Trust is Better Than a Simple Will

/in , /by

When planning for your loved ones, one common misunderstanding is thinking that you have to be ultra-wealthy to need or benefit from a trust.  While a common misconception, a lack of knowledge in this area can be costly. Even if your estate is fairly small, you still want to avoid the high costs and inefficiency of probate, as well as providing asset protection for your children.  Family trust planning can protect your nest egg while also providing several other advantages over a simple will.

  1. Family Trusts Avoid Probate

Having a simple will is better than having no plan at all; however, a simple last will and testament does not avoid probate.  Probate is a court system designed to administer your will and pay creditors.  Unfortunately, the probate court can be costly and time consuming.  In fact, according to the AARP, the average estate will lose between 5-10 percent of assets when administered through probate. Also, the minimum time to administer a will in probate court is six months, but the average time in most counties is eleven months.

If properly created, a Family Trust can seamlessly transfer assets to your heirs while avoiding probate. There is not a minimum time of administration, and there are no probate fees.  Additionally, there are no court forms to fill out, and probate court has no involvement in the administration.

  1. Asset Protection

If you have minor children, then having a Family Trust becomes a must. A minor child cannot legally inherit your assets.  Even if it were possible, most parents would consider it unwise for their seventeen-year-old child to receive a large sum of money.  Family Trusts provide asset protection by holding assets in trust for your children’s benefit.  Even when your children become adults, the trust still provides asset protection against creditors, litigation, and divorce.  For example, if you passed away leaving a large sum to your forty-five-year-old child who has spending issues, a pending litigation, or a divorce in process, the trust would hold the assets until your child is in a better place in life.

In addition to concerns about children, another common asset protection measure, given divorce rates over fifty percent, occurs when individuals are in their second marriage.  In this scenario, there is nothing preventing the remaining spouse from disinheriting children from a prior marriage.  Consider this example: Husband and Wife are in their second marriage.  The wife has two kids from a prior marriage. The husband has no kids except for step-children of the current marriage.  The wife passes away and leaves everything to her husband, and the contingent beneficiary naming her two kids.  Five years later, the husband remarries and creates a new estate plan naming his new spouse as primary beneficiary of his estate, the contingent naming his two step-children. Then the husband dies. The new spouse inherits everything and the children are accidentally (or in this case intentionally) disinherited.

Famous Last Words, “I would never get remarried!” In reality, this is a very typical example of the need for some level of control and strategy. A Family Trust in this example would solve the wife’s concerns entirely. And if this were not a second marriage, a Family Trust might still make sense for couples wanting to keep the estate within the family and avoid remarriage issues.  Moreover, the Family Trust in all circumstances would provide asset protection for children as mentioned above.

  1. Privacy

In addition to probate being time-consuming and costly, it is also public information.  Today, anyone can troll the probate docket observing how much money is in your estate, who the beneficiaries are, and what step in this long process you are in. This may sound harmless, but public knowledge can lead to scams against your beneficiaries, as well as placing information that you wouldn’t want available in cyberspace.  A Family Trust is a private design where only you and those you want involved will have access to your financial information and bequests.

  1. Control

Family Trusts provide control even after you have passed.  A simple will distributes assets outright as opposed to over time.  Family Trusts allow you implement conditions and asset protection strategies years after you have passed.  For example, you can dictate in your trust that your children will receive payments in thirds after achieving the ages of 30, 35, and 40.  Perhaps you have no children and you are leaving your assets to a sibling. In that case you can dictate that assets will not be distributed if your sibling is in a nursing home or receiving Medicaid.  Without a Family Trust, the assets in this second example would all go to the nursing home and/or would kick your sibling off their federal benefits.

  1. Efficiency

Family trusts are efficient and cost effective.  Although a Family Trust may cost more than a simple will to create, the amount of money saved after you have passed is worth the effort. Additionally, Family Trusts can be administered in a fraction of the time compared to probate. Finally, a Family Trust can be easily administered while creating a legacy for your family.

Helping You And Your Loved Ones Plan For The Future

For more information on Family Trusts or to schedule a free consultation, contact Dan A. Baron at Baron Law LLC at 216-573-3723 or dan@baronlawcleveland.com

About the Author:  Dan A. Baron is the founding member of Baron Law LLC focusing his practice to the areas of estate planning, business law, and elder law.   Dan was recently voted an Ohio Super Lawyer Rising Star, an award nominated by other competing attorneys and one that only five percent or less achieve.   Mr. Baron graduated with honors from Cleveland Marshall College of Law.  He holds a business degree from The University of Akron, cum laude, and is a member of the Cleveland Metropolitan Bar Association, West Shore Bar Association, Akron Bar Association, Business Networking Institute, and American Bar Association.  Dan is also a member of the estate planning section at the Cleveland Metropolitan Bar Association.

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.

Covid-19 Photo

COVID-19 and the Continuing Importance of Powers of Attorney

/in , /by

Certainty in this uncertain time is peace of mind many families are finding themselves without. The Covid-19 pandemic is highlighting harsh realities of life all of us were aware of but chose to ignore. One such reality is the importance of comprehensive and up-to-date estate planning. Many parents, grandparents, established business owners, and seasoned professionals are all awaking everyday to the potential of expensive and long-term hospitalization with the chance of persisting and life-changing health consequences. One can’t fight Covid-19 directly, it isn’t a person or thing to combat with force or wit, however, mitigation and foresight are always available. Estate planning will allow you to proactively get your affairs in order and, worst case scenario, if you become infected, allow you to rapidly and intelligently respond in a way that meets you and your families unique needs. Whether you have no estate plan or are looking to update an existing plan, where should you start? Given the current health crisis, taking a look at your powers of attorney, or POAs, is a good place to start.

Power of Attorney

A comprehensive estate plan provides the instructions necessary for estate administration, via a will, while tax relief and flexibility with asset distribution can be accomplished via trusts. Critical issues and decisions during life, however, must be addressed separately. That is where your powers of attorney come into play. A power of attorney comes in many forms, but its primary purpose is to grant authority to one or more responsible parties to handle financial or health decisions of a person in the event of illness or other incapacity. Life, and its associated obligations and burdens, tend to continue regardless of one’s physical or mental health. As many families are finding out, the bills keep coming due regardless of COVID-19. Powers of attorney are protection that ensures affairs are handled and medical wishes are followed even if you are lacking capacity in mind or body.

In your estate plan you will want both a financial power of attorney and a healthcare power of attorney. Both are agency agreements that grant another individual the authority to make decisions, within a certain sphere of decisions whose terms you dictate, on your behalf. A financial power of attorney, as the name suggests, grants your agent the authority to make financial decisions for you. Managing investments, buying selling land or property, representing you in business negotiations, etc. Healthcare power of attorney works the same way but with healthcare decisions. If you are incapacitated or otherwise can’t decide for yourself, your agent will decide who your doctor is, what treatment you undergo, what medication should be administered, etc.

As always, the terms, powers, and limits for your agents are decided by you in the documents that appoint your agent. If you want to add limits on how long they are appointed, what issues they can or cannot decide, or when exactly their powers manifest, you can do so. Furthermore, you always possess the authority to dismiss them outright or appoint someone new.

Powers of attorney are important to have because spouses or family members will face difficulty and frustration gaining access to things like bank accounts and property that is in your name only. This can be especially damaging within the context of business or professional relations in which the “gears of industry” must keep moving. Regrettably, if an individual trusted to handle the business if something happens doesn’t possess the authority to so, significant or even fatal business consequences may result. The same goes for medical decisions, often treatment decisions must be made right there and then. Hesitation may mean permanent damage or death to you and if someone doesn’t have express authority to make those decisions, things get confusing, messy, and take a lot longer.

If you decide not to draft one or more powers of attorney and you end up incapacitated, then, in certain situations, a court is forced to appoint either a guardian or conservator and the family is effectively cut off from independently managing the relevant affairs of the incapacitated family member. Further, if a court is forced to action, the entire process will take longer, cost more, be public knowledge, and is immensely more complex than it otherwise should be. Having an experienced Ohio estate planning attorney draft the appropriate POAs can avoid a lot of headache and save a lot of money down the line.

Even with the uncertainly pandemics bring, certain estate planning questions always linger. Who will manage my finances and investments if I am sick or incapacitated? Who will pick what doctor treats me or if a risky but potentially lifesaving procedure should be performed? What if I am put on life sustaining medical support? In what situations and for how long will I remain on such support, if I want to be on it at all? These types of issues and questions also must be addressed and accounted for by your estate plan. That is why finding and working with experienced Cleveland estate planning attorneys are so critical. These types of decisions and potential consequences for your life and wellbeing are not things that should be done on the fly or with doctors and stressed out family members demanding a decision. Unfortunately, with COVID-19 cases becoming more and more prevalent with each passing day, the necessity of proper POAs is crystal clear and those without these documents are scrambling to find estate planning attorneys who are open and still taking clients. If your estate planning documents, especially POAs are out of date or incomplete, contact a local estate planning attorney right away. Courthouses and government agencies are closing daily, and you don’t want to find yourself without the stability of critical legal documents during this most unstable time.

COVID-19, for good or ill, has and will continue to change how we live, work, and survive. Fortunately, one aspect of life that has largely gone untouched is estate planning. Estate planning was smart to do before Covid-19 and it still is. Northeast Ohio has felt the touch of this disease like every county in the world has. Cleveland estate planning attorneys are working around the clock to meet the historic demand for quick and immediate estate planning and are currently utilizing more teleconferencing and remote legal services than ever before to make their existing and new clients comfortable and secure. Social distancing and stay-at-home orders are all proactive protection measures that the majority of Americans are following, even if they cause financial hardship or social strain. Estate planning also represents a proactive protection measure, however, it seldom causes any financial or social pain, it actually prevents them. As such, it’s strange that 50% of people don’t even have a simple will. Considering the ongoing crisis, make sure you and your family are in the 50% that protects, not the 50% leaving everything to chance.

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.

Trust Adminstrator

What is an Administrator of an Estate?

/in /by

Managing the affairs and obligation of a recently departed is no easy task. That is why most people take the time to plan their estate. Estate planning, at its fundamental essence, is leaving a plan and instructions for those who survive you regarding what to do with the “stuff” you leave behind. People are living longer than ever before and, consequently, are leaving more behind. Often without a proper plan in place, the loved ones and family members left to organize and account all the leftover worldly possessions are hard pressed to do everything required from them by a probate court within the statutory time limits.

Dying without a will, only exacerbates this difficultly and lengthens the time it takes to administrator an estate. Bluntly, dying without a will, or dying with an invalid will, is never a preferential option. Most people already have a very limited understanding of the probate process, and if you throw intestate succession and administration, with all the accompanying issues and legal winkles, a difficult and trying process only becomes more so. As such, consult with an experienced Ohio estate planning attorney to either properly plan your estate so dying intestate doesn’t happen to you or, for those facing an instate administration, find out all the answers you need regarding what, how, and when to administrate an intestate estate.

What does dying intestate mean?

When a decedent does not have a valid will in existence at the time of death, a decedent is deemed to have died intestate and Ohio intestacy laws govern how estate assets are managed and distributed. There are two primary situations when a person is deemed to have died intestate, 1) there was no last will and testament, or 2) they had a last will and testament, but for some reason or another, it was found invalid.

Ohio intestacy laws may be avoided altogether with proper estate planning, a major aim of which is to ensure you have a will and that it is valid. It is important to note, however, that sometimes intestacy laws will control even if a valid will is subject to probate administration, an experienced estate planning attorney can inform you of these circumstances. Conversely, sometimes Ohio intestacy laws may not apply even if a decedent died intestate. As such, since the controlling law for dying without a last will and testament can vary dependent on circumstance, meeting with an estate planning and/or probate lawyer is highly recommended.

What is an administrator?

In the context of intestate estate administration, an administrator is, for the most part, functionally identical to an executor. Executors, however, are appointed in the last will and testament by the decedent while administrators are appointed by the probate court in the absence of an executor appointment. Note, however, that Ohio has explicit Ohio residency requirements for intestate administrators. Thus, out-of-state residents can only be named executors and cannot serve as administrators.

Why is an administrator needed, what do they do?

The duties of an administrator aren’t easy. The duties of an administrator are specific to each particular estate, however, there is a “core” group of duties and tasks each one must fulfill. Every administrator must:

  • Conduct of thorough search of decedent’s personal papers and attempt to create a complete picture of their finances and family structure.

 

  • Take possession, catalogue, and value all estate property.

 

  • Maintain and protect estate assets for the duration of the probate proceedings.

 

  • Directly notify creditors, debtors, financial institutions, utilities, and government agencies of decedent’s death.

 

  • Publish notices of decedent’s death, usually a newspaper obituary, which serves as notice and starts the clock running on the statute of limitations for creditor claims on the estate.

 

  • Pay or satisfy any outstanding debts or obligations of decedent.

 

  • Represent decedent during probate court proceedings.

 

  • Locate heirs and named beneficiaries and distribute respective assets at the appropriate time.

These duties occur during the probate process, which is a major reason why probate takes many months to complete. Especially within the context of intestate probate administration, where no preplanning, accounting, or collection of information regarding the decedent’s estate was likely done.

Because intestate administration is such a time-intensive and laborious process, many people take the time to plan their estate and attempt to avoid probate entirely. Often trusts are a good option to avoid probate. With trusts, estate assets can be distributed right away, no executor or administrator is needed, and many mornings, which otherwise would be spent in probate court, are freed for personal enjoyment. Contact an Ohio trust attorney to see if avoiding probate through the use of trusts is right for you and your family.

Disclaimer:

The information contained herein is general in nature, is provided for informational and educational purposes only, and should not be construed as legal or tax advice. The author nor Baron Law LLC cannot and does not guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable in a given situation may impact the applicability, accuracy, or completeness of the preceding information. Further, federal and state laws and regulations are complex and subject to change. Changes in such laws often have material impact on estate planning and tax forecasts. As such, the author and Baron Law LLC make no warranties regarding the herein information or any results arising from its use. Furthermore, the author and Baron Law LLC disclaim any liability arising out of your use of, or any financial position taken in reliance on, such information. As always consult an attorney regarding your specific legal or tax situation.

Helping You and Your Loved Ones Plan for the Future

Divorce Estate Planning Steps

Important Post Divorce Planning Steps

/in , /by

Ending a marriage, whether though divorce or dissolution, isn’t a simple process. It’s not like flipping a switch, one day you’re married, another day you’re not. Whether a couple was together for a relatively short period of time or set down roots together for decades, spouses separating financially, physically, and emotionally is a labor-intensive journey. With all the paperwork and meeting with attorneys throughout the divorce, the last thing people want to do is sit down with an Ohio estate planning attorney and go over estate planning documents. Unfortunately, reviewing and updating estate planning documents is a non-negotiable part of martial separation. Regardless of whether you do anything or not, your estate planning documents will have a profound effect on you during some of the most critical, and vulnerable, moments of your life and in the lives of your family.

Apart from drafting a new last will and testament, powers of attorney, updating beneficiary designations, and considering trust use, what else should be updated post-separation? The following is a list of additional advice every experienced Cleveland domestic attorney would give their divorced or separated clients regarding their estate documents:

Review Your New Tax Reality

A big part of estate planning is minimizing taxes. Namely, estate, generation-skipping, and gift taxes. Since probate administration can easily eat up 5% to 8% of the value of a decedent’s estate, everyone is looking to save money. The good news, however, there are exemption limits. This is where the unified tax credit comes in. The unified tax credit is a certain amount of money and assets that can be given free of estate, generation-skipping, and gift taxes. Individuals get a set exemptible limit, but married couples can effectively utilize twice the amount than that of single individuals. Obviously, an estate plan formed on tax assumptions centered around accessible martial exemptions and deductions needs to be rethought post-divorce. The last thing you want is your surviving friends and family to deal with an out-of-date tax plan for your estate. The unified tax credit, however, is only the tip of the tax iceberg. Numerous federal, state, and local taxes work differently for married couples than they do for single individuals, make sure the middle of April isn’t full of nasty surprises because you assumed you’d still be taxed at a married rate.

Review Current Property Ownership

Often spouses are joint owners of property obtained during the lifetime of the marriage. Vehicles, boats, martial homes, and vacation residences all must be reviewed post-divorce to confirm who the listed owner or owners are.  What is said on paper matters in the legal world and a house owned jointly with a right of survivorship goes to the surviving owner, regardless of whether the divorce is finalized. Often in the whirlwind of divorce negotiations and arguments, simple things like updating a deed goes unnoticed. If there is a dispute, however, one of the first places a court and attorneys will look to determine who gets what is legal documentation. As such, make sure the ownership documents for your most significant assets reflect your life going forward.

Review and Update Guardianships 

If a spouse is nominated as a guardian for a minor or someone with special needs, divorce and martial separation does not revoke that appointment. If the time ever came when a guardianship is necessary, the existence of a pending or finalized divorce would be a factor a court would consider during an appointment hearing but it wouldn’t be determinative. Again, leaving it up to a court official to decide who cares for a child or someone with special needs is never preferable. That is why experienced Ohio divorce and estate planning attorneys will make sure you take a hard look at who will care for those who depend on you when you are no longer able. A simple designation in a basic estate planning document can make a whole lot of difference to your children and wards.

Review and Amend Existing Trusts

Given the utility of trusts, from tax savings, avoiding probate, ensuring eligibility for government programs, and plain old peace of mind, they are becoming more and more prevalent within families. Trusts, however, are only one piece of a comprehensive estate plan and when used within the context of a married family, are highly tailored to the issues, concerns, finances, and benefits of marriage. Thus, when divorce rears its ugly head any effected trust must be reevaluated for effectiveness and potential martial asset division. Often a pre-martial trust does not survive a divorce, too much regarding a trust was created on the assumption of marriage. As such, sit down and read your trust with your Ohio estate planning attorney and ask yourself if your trust is actually accomplishing what you want it to.

Disclaimer:

The information contained herein is general in nature, is provided for informational and educational purposes only, and should not be construed as legal or tax advice. The author nor Baron Law LLC cannot and does not guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable in a given situation may impact the applicability, accuracy, or completeness of the preceding information. Further, federal and state laws and regulations are complex and subject to change. Changes in such laws often have material impact on estate planning and tax forecasts. As such, the author and Baron Law LLC make no warranties regarding the herein information or any results arising from its use. Furthermore, the author and Baron Law LLC disclaim any liability arising out of your use of, or any financial position taken in reliance on, such information. As always consult an attorney regarding your specific legal or tax situation.

Helping You and Your Loved Ones Plan for the Future

House in Trust with Mortgage

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

/in , , /by

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

  • What is trust? 

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

  • When can a mortgage be called?  

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

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

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

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

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

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

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

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

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

Helping You And Your Loved Ones Plan For the Future

Advanced Directives and Your Estate Planning

/in , /by

What are Advanced Directives?

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

How Are These Documents Used?

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

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

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

How Can You Obtain These Documents?

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

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

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

Estate Planning Attorney Baron Law

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

/in /by

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

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

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

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

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

Guardianship and Your Estate Planning

/in /by

What is Guardianship?

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

Are There Different Types of Guardianships?

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

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

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

How do I Establish Guardianship?

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

  • Power of Attorney
  • Will
  • Trust

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

When Should You Establish Guardianship?

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

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