House in Trust with Mortgage

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

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

LTC Medicaid Rejected

My LTC Policy Was Rejected By Medicaid, What Now?

Common scenario for Cleveland estate planning attorneys. Estate planning client comes in distraught. They did the smart and sensible thing, they purchased a long-term care insurance policy years ago to help cover the cost of later-in-life medical costs. They recently applied for Medicaid thinking their LTC policy wouldn’t be counted for calculating their Medicaid eligibility. Unfortunately for them, they received rejection letter from the Ohio Department of Medicaid saying they didn’t meet the asset requirements. Now, the Medicaid benefits, that they were counting on and always thought were readily available no longer are. Now, their estate plan is seriously threatened, and they are scrambling to make sense of the situation and found out what went wrong.

As the old saying goes, the best-laid plans of mice and men often go awry. The relationship between long-term care insurance polices and Medicaid eligibility is not a simple one. As with anything involving government bureaucracy, what you don’t know can hurt you and an experienced guide is worth his weight in gold. Two lessons often taken to heart far too late to avoid tough decisions and missed opportunities.  So, what happened to the person above? The best way to illustrate what happened is to answer the two most common questions anyone in that situation would ask.

Why did my LTC policy get rejected from Medicaid?

Only certain long-term care policies that comply with the guidelines set by the Ohio Long-Term Care Insurance Partnership program count as qualified policies and therefore aren’t countable Medicaid resources. So, what polices are “qualified?”

Per the Ohio Department of Insurance, for a LTC policy to qualify, insurance companies’ policies must meet several requirements, including:

  • The policy must have been issued after Sept. 10, 2007
  • The insured must be a resident of Ohio when coverage first becomes effective
  • The policy must be a federally tax-qualified plan based on the Internal Revenue Service Code (qualified plans can lower federal taxes, but they have benefit triggers that are less flexible than those required by nonqualified plans)
  • The policy must meet strict consumer protection standards (standard fee-look period, coverage outlines, mandatory informational disclosures, etc.)
  • The policy must include certain protection against inflation (the most common inflation protection automatically increases benefits each year by 5%)

So, if you have a long-term care policy, but don’t know, or worse hope without knowing, if it is a qualified policy, you’re likely in for a rude awaking when you apply for Medicaid.

What do I do now that my LTC policy was rejected by Medicaid?

Before any definitive answer or plan can be formulated, certain information about a Medicaid applicant must be answered definitively. At the very least, the information and/or documents needed are:

  1. LTC policy documents – should be overt on whether it was sold/defined as a qualified LTC policy.
  2. Rejection notice from the department of Medicaid – reasons for reject and any explanation regarding why the submitted policy was rejected.
  3. How does the applicant know their LTC policy is a qualified one?
  4. Contacting the insurance carrier to find out the exact details of the LTC policy in dispute.
  5. Where and how did an applicant purchase the LTC policy.
  6. Did the applicant receive the required CSPA complaint disclosures and documents (if was sold non-qualified policy but received CSPA docs could an indication of potential fraud).
  7. The realities of applicant’s current financial situation and health needs.

This last point is really the starting point and is exactly why you retain the services of experienced estate planning attorneys. Every estate planning attorney starts with the same questions, what do you need, what do you have, and prove it. No intelligent planning or decisions can be made until you know exactly where you stand. Further, in this context, the realities of where you stand are even more important because now your options are limited and you are, in a way, at the mercy of the Ohio Department of Medicaid.

If you have been rejected by Medicaid you are essentially in the realm of Medicaid crisis planning, where important questions must be asked, and tough decisions must be made. If someone is applying for Medicaid, the need is now and a solution must be found. One such critical consideration is the current need for care and the potential penalty period. To illustrate, let’s say a rejected applicant has a $400,000 non-qualified LTC policy. As of right now, with current Medicaid penalty divisor of $6,570, 400K/6,570 = approximately 61 months of Medicaid ineligibility, a little more than 5 years.

With this five-year Medicaid ineligibility period on the horizon, options are limited. Namely you can either appeal the rejection or resort to Medicaid spenddown. Medicaid spenddown is a beast all its own, is never something anyone wants to do, and largely depends on how ineligible for Medicaid you are, based on your current income and assets. For most, however, the good news is this situation and Medicaid spenddown, if the proper Ohio estate planning attorneys are used, will never be a worry because they will have done things the right way and won’t be subject to any nasty surprises. Failure to surround yourself with the right advisors, regretfully, often leads to  uncomfortable discussions and decisions that will have to be made sooner rather than later.

Helping You and Your Loved Ones Plan for the Future

Special Needs Self Settled Trusts

The Three Flavors of Special Needs Trusts: #3 Self-Settled Trusts

The federal “Special Needs Trust Fairness Act,” enacted in December of 2016, changed the law to allow individuals with special needs to create their own special needs trust. Ohio law, in response, has changed to coincide with this recent change. Currently, a mentally or physically disabled person may create a self-settled trust to hold their own assets and avoid them being counted for Medicaid or other public assistance program eligibility. Usually the need arises to make this type of trust when a person with special needs receives a legal settlement or inheritance while already eligible and receiving government assistance.

In a nutshell, “self-settled” special needs trusts are simply trusts established by the disabled beneficiary with the beneficiary’s own money and assets.  The devil, however, is in the details. Self-settled special needs trusts are, by regulatory requirements, only available to those persons who are 1) disabled and 2) are under 65 years of age. Further, the trust must be appropriately drafted to include language that mandates that the cost of Medicaid services actually paid on the individual’s behalf will be paid back to Ohio at the individual’s death. Thus, in an indirect way, the Department of Medicaid and other government program will get their money and be reimbursed, at the point of death, but the individual reliant on government assistance can still maintain eligibility. Therefore, both parties win. Note, however, the use and drafting of self-settled special needs trusts is nuanced. For example, with these trusts once a beneficiary reaches 65, the trust can no longer be funded with new assets or money. Yes, what is already in the trust will remain protected, but flexibility and control is lesser than with other types of special needs trusts. As such, always consult an experienced Cleveland area estate planning attorney when deciding which type of special needs trusts is appropriate for you and your family.

A self-settled special needs trusts are often referred to as a “Medicaid payback trust.” Both names refer to the same type of trust, however, the later name focuses on the primary characteristic, and requirement, of a self-settled special needs trust, in that any Medicaid resources or services received by the beneficiary will be paid back from the assets housed within the trust. A partial corollary is a Miller trust. A Miller trust houses income for those receiving nursing home care that would otherwise put them over the income thresholds for the Medicaid income cap. The income is kept in trust and used to pay for care, but relevant here, names the State of Ohio as a beneficiary under the trust. Thus, the State of Ohio can recover the total amount of Medicaid payments made to an individual after death.

Self-settled special needs trusts are different from Miller trusts in that they allow for a much greater breath of resources allowed to be placed in trust and does not set the State of Ohio as a direct beneficiary under the trust. Naming a person or entity as a trust beneficiary grants them certain rights and privileges which, in certain circumstances, can lead to headaches and issues for the special needs person and their families.

Often self-settled special needs trusts are estate planning instruments of last resort. Usually within the context of an unexpected windfall going to a person with special needs. Going the self-settled route also places administrative labor and costs of the trust on the special needs person. Further the requirements of specific drafting to be legally operative under Ohio law is usually something laypersons are ill-equipped to do themselves. As such, always consult an experienced Cleveland area estate planning attorney when deciding which type of special needs trust is good for you and your family. The stakes are too high to do things ill-informed.

Helping You and Your Loved Ones Plan for the Future

Special Needs Trusts

Unique Needs, Unique Solution: Supplemental Services Trusts

As with most persons with special needs and disabilities, the name of the game is to pay it forward. Unplanned and unthought out self-sacrifice, however, are rarely the proper ways to go about anything. Unfortunately, those families with loved ones with particularly debilitating diseases or affiliations are often solely focused on the here and now in terms of providing care. When asked, was about in 10 years? Or what about when you pass or are too old or sick yourself to provide care, what then? Regularly, these questions, though critically important, are pushed aside because to answer them would require tough choices to be made. Often these families fall back on pithy and often callous responses.  Responses such as, “everything will be fine as long as my child dies before I do” or “my other, more typical children will shoulder the burden and take care of their special needs sibling.”

Special Needs Trusts in a Nutshell

Special Needs Trusts are private agreements that allows a third party, a trustee, usually the family, to manage the assets that are placed inside the trust for the benefit of trust beneficiaries, the special needs person. There are many types of trusts, each with own its unique legal conventions and uses. The critical aspect of trusts in this circumstance is that the assets housed within them usually aren’t counted as a part of the trust beneficiary’s taxable estate. Thus, the resources placed within these trusts can be managed for the benefit of a person with special needs but still allow them to qualify for public benefits like supplemental security income, Medicaid, and other local and state government benefits. This allows grantors, those who create the trust, to provide much need stable and monetary support while still allowing often indispensable social assistance programs for their children, even long after the parents pass. Critically, these trusts seek to supplement income from assistance programs not to replace it, which is important in the eyes of the government because if a family, and by extension a special needs person, can provide for themselves than they don’t need assistance programs.  This theory is echoed in the needs and health-based requirements of many, if not all, assistance programs. The rules and requirements for local, state, and federal government assistance programs can be confusing, contract a local Cleveland area estate planning attorney today to make sure you’re informed enough to make the right choices.

Supplemental Services Trusts

Per O.R.C. § 5122-22-01(D), trusts for supplemental services, denotes the primary requirements of these trusts which allow special needs persons to benefit from them while also receiving government benefits:

“(D) Supplemental services. (1) Supplemental services are expenditures, items or services which meet the following criteria:

(a) The services are in addition to services an individual with a disability is eligible to receive under programs authorized by federal or state law or regulations, and the services do not supplant services which would otherwise be available without the existence of the trust;

(b) The services are in addition to basic necessities for such items as essential food, clothing, shelter, education and medical care, and the services are in addition to other items provided pursuant to an ascertainable standard; and

(c) The services are paid for with funds distributed pursuant to a trust which meets the requirements of section 5815.28 of the Revised Code or with funds distributed from the supplemental services fund created in section 5119.51 of the Revised Code, and the services would not be available without payment from the trust or fund.

The two main takeaways from this passage is that 1) the trust services do not replace government benefits and 2) a supplemental services trusts is the only way a special needs person would get these additional benefits.

In nutshell, a supplemental services trust is for individuals who are eligible to be served by the Ohio Department of Mental Retardation, a county board of mental retardation and developmental disabilities, the Ohio Department of Health, or a board of alcohol, drug addiction, and mental health services. With this trust, trust beneficiaries must be vetted and approved by the State Department of Disabilities or the County Board of Developmental Disabilities. The trust estate, i.e. stuff placed in trust, as of 2015, cannot exceed $242,00o.  Further, Ohio law is strict that the trust assets are used only for supplemental services, those services not provided by government assistance programs. Additionally, another hardpoint with these trusts is that upon the death of the beneficiary, a portion of the remaining assets, which must be at least 50 percent of the remaining balance, must be returned to the state of Ohio to be used for the benefits of others who do not have such a trust. Thus, pay it forward, at least in this circumstance, is written in the rock of Ohio law.

So why use a Supplemental Services Trust?

Again, the best way to demonstrate the value of these trusts is to go into the Ohio code. Per Per O.R.C. § 5122-22-01 (D)(2):

Supplemental services…include, but are not limited to, the following:

(a) Reimbursement for attendance at or participation in recreational or cultural events;

(b) Travel and vacations;

(c) Participation in hobbies, sports or other activities;

(d) Items beyond necessary food and clothing (e.g., funds for dining out occasionally, for special foods periodically delivered, or for an article of clothing such as a coat which is extra but which is desirable because it is newer, more stylish, etc.);

(e) Cosmetic, extraordinary, experimental or elective medical or dental care, if not available through other third party sources;

(f) Visiting friends, companionship;

(g) Exercise equipment, or special medical equipment if not available through other third party sources;

(h) The cost differential between a shared room and a private room;

(i) Equipment such as telephones, cable television, televisions, radios and other sound equipment, and cameras for private use by the individual;

(j) Membership in clubs such as book clubs, health clubs, record clubs;

(k) Subscriptions to magazines and newspapers;

(l) Small, irregular amounts of personal spending money, including reasonable funds for the occasional purchase of gifts for family and friends, or for donations to charities or churches;

(m) Advocacy;

(n) Services of a representative payee or conservator if not available through other third party sources;

(o) Guardianship or other protective service listed in paragraph (C)(9) of this rule;

(p) Someone other than mental health community support staff members to visit the individual periodically and monitor the services he receives;

(q) Intervention or respite when the person is in crisis if not available through other third party sources;

(r) Vocational rehabilitation or habilitation, if not available through other third party sources;

(s) Reimbursement for attendance at or participation in meetings, conferences, seminars or training sessions;

(t) Reimbursement for the time and expense for a companion or attendant necessary to enable the individual to access or receive supplemental services including, but not limited to, travel and vacations and attendance at meetings, conferences, seminars, or training sessions;

(u) Items which medicaid and other governmental programs do not cover or have denied payment or reimbursement for, even if those items include basic necessities such as physical or mental health care or enhanced versions of basic care or equipment (e.g., wheelchair, communication devices), and items which are not included for payment by the per diem of the facility in which the beneficiary lives; and

(v) Other expenditures used to provide dignity, purpose, optimism and joy to the beneficiary of a supplemental services trust.

From the extensive list of available uses for trust assets for special needs persons, it is no surprise that those persons with those trusts live and much more comfortable and fulfilling life than those without. Additionally, these trusts shoulder the burden for parents and sibling for providing much need support and care while also acting as a tool for benefit preservation. There are many options available for those family members with special needs persons, talk to an experienced Ohio area estate planning attorney to find out the best options for your family.

Helping You and Your Loved Ones Plan for the Future

Estate Planning Attorney

Are Your Parents in a Nursing Home? Here Are Ways to Prevent Medicaid Estate Recovery

Medicaid crisis planning has become a hot topic in estate planning. More people need Medicaid to survive the issues and problems of old age but very few actually take the time to address and plan for this all too important need. Contrary to popular belief, Medicaid is not free money. Medicaid is a needs based state and federal program which applicability is primarily focused on recipient income and assets. By waiting too long, though a person may have a sever need for Medicaid support, in the eyes of the program, they’re “too rich” to qualify. At this point, they are left waiting in a state of poverty or sacrificing a lifetime of investment and savings, the spend down, to qualify. Don’t let this happen to you.

Since Medicaid enrollment is surging across the country and the baby boomer generation is aging, the significance of Medicaid enrollment and planning cannot be understated. As always, contact a local Cleveland estate planning attorney to find out how to plan your estate to maintain eligibility for Medicaid, preserve the maximum amount of assets possible while still maintaining that eligibility, and avoid or proactively plan around the Ohio Medicaid Estate Recovery program, “MER”. The MER program is something not a lot of people have heard of, but it can potentially effect millions of senior citizens every year. The government doesn’t care that you’ve heard of the law, only that it is followed.

What is the Medicaid Estate Recovery Program?

The Medicaid Estate Recovery program is a federally mandated program which dictates that when a Medicaid recipient dies, the MER program, carried out by the Ohio Attorney general’s office, will attempt to recover from the estate what Medicaid paid for the services provided. Generally, the program will attempt to recover any medical assistance paid by Medicaid if 1) the Medicaid recipient was aged 55 years or older, 2) the Medicaid benefits were correctly paid, and 3) the recipient was permanently institutionalized, like residing in a nursing home or PASSPORT facility.

What assets are recoverable?

For purposes of the MER, the state uses an expansive definition of “estate assets,” which includes any property a Medicaid recipient had any legal ownership interest in at the time of death. Such as assets in a living trust, assets owned jointly, real property tenancies, and TOD and POD designated assets. After death, even property Medicaid determined exempt during a recipient’s lifetime, such as a house accompanied with an intent to return, household goods, or life insurance policies, are subject to recovery. That is why to be aware of the Medicaid lookback period and plan asset ownership and transfer accordingly.

What assets are except?

As a starting point, remember that to qualify for Medicaid, an individual’s countable resources must be below $1500. The good news, however, is that exempt resources and assets do not count towards this total, at least initially. The following is a non-exhaustive list of exempt resources from Medicaid.

  • One automobile – if less than $4500 or any value to the non-institutionalized spouse. This is associated with the Community Spouse Resource Allowance, consult your estate planning attorney for more information.
  • Household goods – plates, clothes, books, etc.
  • Burial plots – burial plot, gravesite, casket, urn, etc.
  • Prepaid burials
  • Qualified Medicaid annuities
  • Qualified Long-term Care Insurance Policies – these are special insurance products that most insurance companies don’t carry, contract your insurance agent. These polices provide LTC in order to avoid depleting assets spent on Medicaid for long-term care.
  • Primary residence – exempt if non-institutionalized spouse or child under 21 who is blind or disabled is living there. Institutionalized spouse can claim primary residence exemption if obtain affidavit of intent to return.
  • Sale of a house – very nuanced exemption rules but, in a nut shell, if actively attempting to sell a house and if you follow Medicaid regulations, though technically you still own property that would make not you Medicaid ineligible, this ownership and sale won’t effect eligibility.

Exemptions to Medicaid countable resources aren’t really considered in most estate plans, even those specifically geared towards preserving assets and ensuring Medicaid qualification. They do, however, become of critical importance in the context of Medicaid crisis planning. Those situations where Medicaid support is needed immediately but no proper estate planning took place in the proceedings years when Medicaid eligibility wasn’t a concern. At this point, every avenue and tactic of getting into Medicaid and sheltering estate assets is analyzed, all at the expense of the family who failed to plan is now scrambling. As any estate planning attorney or financial planner will tell you, the up-front cost of proactively planning is nothing compared to doing everything last minute in a time of dire need.

Most people have spent a lifetime amassing wealth, property, and possessions that they want to leave to friends and family. Assisted living facilities, nursing homes, and hospice care, however, are often possibilities no one contemplates, let alone proactively prepares for. Federal and state assistance programs such as Medicaid often play a critical role in providing the necessary financial support in our elder years. The MER program, however, means that the use of these programs is not without cost. A cost that is regularly not understood when the need is greatest and rarely known by the surviving family when estate assets are taken by the government for services rendered. An estate planning attorney has the knowledge and can formulate the appropriate strategies for your goals and worries to ensure that the most amount of assets go where you want them to go and not to Uncle Sam.

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

Daniel A Baron Estate Planning lawyer

What Is A Revocable Trust?

Cleveland, Ohio estate planning lawyer, Daniel A. Baron, offers the following information as to whether or not you should have a Revocable Trust as part of your comprehensive estate planning.

When you decide it is time to do your estate planning, one decision to make is: Do I Need A Trust? If the answer is yes, then the next question is whether or not a Revocable or Irrevocable Trust is the right tool to use in your Comprehensive Estate Planning.  Although both of these are created to avoid probate, there are differences between the two.

A Revocable Trust means you can change things at any time such as;

  • Beneficiaries
  • Add items of value to the trust or remove items from the trust and so on.
  • Changing Trustees
  • Change what funds the trust
  • Eliminate the trust
  • Change amounts to be funded
  • Add Trustees

With a Revocable Trust – the Grantor or Settlor creates the trust AND can also act as the Trustee AND can be named as the beneficiary.

An Irrevocable Trust means no changes can be made (with a few exceptions) once the trust is created.

An Irrevocable Trust has three parties to the Trust; the Grantor or Settlor, the Trustee(s), and the beneficiary or beneficiaries.

  1. The Grantor or Settlor is the person who funds or establishes the Trust
  2. The Trustee is the person who oversees the trust, and
  3. The beneficiary reaps the rewards of the income generated by the investments of the trust. Although the Grantor / Settlor and the beneficiary can be the same, they cannot act as the Trustee

With a Revocable Trust you must remember if you are looking to keep investments, bank accounts, property, and any other such asset as part of the trust, the accounts must be set up in the trusts name and property must be titled to the trust.  Failure to do this while you are still living means that the assets still in your personal name at the time of your death will be subject to probate and a larger amount of estate taxes.

If you are having difficulty determining whether your situation calls for a Revocable or Irrevocable Trust, seek the advice of an experienced Estate Planning Lawyer. For more information on reviewing your goals for your Comprehensive Estate Planning, contact Daniel A. Baron of Baron Law today at 216-573-3723.

Helping You and Your Loved Ones Plan for the Future

Baron Law Estate Planning Lawyer - Cleveland, Ohio

How Can I Amend An Existing Will?

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


One of the primary goals of drafting a will is to encapsulate the entirety of a life’s material assets and leave instructions for the dispensation of those assets after death. The other goal is to leave some legacy, emotional, spiritual, or otherwise, to friends and family by communicating final wishes so at least some minor part of ourselves persists, at least for a little bit, after we’re gone. Implicit in the pursuant of these goals is the assumption that the circumstances and realities of the present will mirror those of the future. That, however, is never the case. Time passes, the world changes, and we change with it.

More often than not, the initial draft of a will is not definitive. Family dynamics shift, executors and beneficiaries pass away, people move, assets are conveyed, trusts are established to avoid probate and preserve assets, and the law changes. As such, wills often need to be updated or outright rewritten. Wills, however, are legal documents. As such, you can’t just edit a will with red pen and call it a day. There are particular ways to change a will, each with its own rules and procedures. As always, if your will needs changing, or if you don’t have a will at all, contact an Ohio estate attorney. No one wants to leave their family a confusing or invalid will to deal with during the mourning process.


An amendment to a will is called a codicil. Codicils are the primary way to amend a will in Ohio and are meant to amend, alter, or confirm a previously existing will. A codicil doesn’t override a will but becomes a new part of the document. Codicils must be executed with the same formalities as a will. That is, it must be in writing, signed by the person drafting it, and witnessed by two disinterested parties who either saw the person sign or heard them acknowledge their signature. Further, the testator, the person making the will or in this instance the codicil, must possess sufficient legal capacity. That is, be 18 years of age, of sound mind and memory, and not under undue threat or influence.

Codicils are largely holdovers from the past before the existence of Microsoft Word and typewriters. Back then, wills were long, handwritten, and required multiple parties to be physically present during execution. As such, a simple amendment, rather than total rewriting, saved time and expense. Nowadays, though, since wills can be quickly amended and printed, drafting a new will is preferable.

Codicils do possess some persisting utility. In a medical crisis or where a person is on an extreme fixed income, use of a codicil may be viable. Codicils, however, are potentially problematic. Codicils can be executed improperly, establish an ademption, i.e. bequeathing property no longer owned or in existence, mistakenly revoke otherwise valid will provisions, or create ambiguity during probate. Further, any codicils must accompany the associated will. So, the misplacement or destruction of a valid codicil is a major concern when probating a will. Drafting a new will avoids these problems. Contact a Cleveland estate planning attorney to see what option is preferable for your particular circumstances. At minimum, an attorney can guarantee your family can actually find a will, and all the accompanying codicils, when the time comes.


The other method of changing a will in Ohio is revocation, and subsequent redrafting. A will is revoked primarily the following ways:

1) a testator, with the intent to revoke, tearing, canceling, obliterating, or destroying a will.

2) an agent of testator, within the presence of testator or with testator’s written direction, doing the same.

3) by another written will or codicil, signed, attested, and subscribed according to the laws of Ohio.

Further, a revocation must have the same state of mind as with will creation, i.e. sound mind and body with no undue influence.

These methods of revocation are available if a will hasn’t been filed with a probate court. In the event that a will was filed, one must file a petition with the relevant probate court, using the standardized forms provided, and ask that the will be revoked. If the court determines that the revocation is valid, it will recognize the revocation and note it in public record.

Revoking a will is often simpler than drafting codicils. Every time concurrent estate documents exist and need to be read together, considerations with conflicting and superseding terms, ademptions, and ambiguity must be addressed. Furthermore, a probate court might reject a codicil which will likely throw an entire estate plan in disarray and balloon probate costs. Such costs are borne by the estate and might outright consume any money slotted to go to surviving friends and family. An Ohio estate planning attorney is in the best position to advise on the sufficiency of an existing will and whether revocation and redrafting is justifiable in your current circumstances.


Tangible Personal Property Memoranda

Though not available in Ohio, another potential method to amend a will is with a tangible personal property memorandum, “TTPM.” Most people use simple language to bequest remaining personal property to surviving friends and family. Usually by either leaving everything to the surviving spouse or to children in proportional shares. Facially, this seems like a fair and simple way to distribute an estate. In application, though, issues often arise. Certain children may feel snubbed or offended by a particular asset distribution or manner of distribution, as often is the case when one adult child served as a caregiver for ailing parents but received the same proportional estate share that less selfless children received. Further, often estate assets cannot be spilt equally. For example, splitting a timeshare in Aspen between three children and six grandchildren. Addressing and preventing these problems is where a personal property memo comes in.

As previously mentioned, this method of will amendment is not recognized as valid by Ohio courts and will be disregarded. This places an even greater emphasis on forethought when creating an estate plan and use of clear and concise language for bequests. An experienced Ohio estate attorney will know the common pitfalls and how to avoid them.

A few hours of planning can save thousands of dollars down the line and avoid embarrassing family infighting over who gets what. Life is perpetual change and estate planning attorneys try valiantly to predict the future and address any and every circumstance. Try as they may, however, the only thing one can expect is the unexpected. Therefore, it is always wise to be flexible and not to become entrenched in now old and defunct legal documents. Even if an estate plan covers 95% of what you need, the 5% unaddressed can easily cripple any well laid plan and lead to a lifetime of savings and earnings being extinguished by taxes, creditors, or penalties.

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


Helping You and Your Loved Ones Plan for the Future.


About the author: Mike E. Benjamin, Esq.

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

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


Probate Lawyer Baron Law LLC

What is Probate?

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

Baron Law Cleveland

Estate Planning – Documents I Should Provide My Attorney

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

“Be prepared.” Boy Scouts of America

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

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

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

A General Accounting of your Estate

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

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

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

Life Insurance Policies

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

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

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

Investment Portfolio

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

A List of Important Property with Bequests

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

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

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

A “Managed Care Plan”

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

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

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

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

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


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

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

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

Helping You and Your Loved Ones Plan for the Future.

About the author: Mike E. Benjamin, Esq.

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

The information contained herein is general in nature, is provided for informational and educational purposes only, and should not be construed as legal or tax advice. The author nor Baron Law LLC cannot and does not guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable in a given situation may impact the applicability, accuracy, or completeness of the preceding information. Further, federal and state laws and regulations are complex and subject to change. Changes in such laws often have material impact on estate planning and tax forecasts. As such, the author and Baron Law LLC make no warranties regarding the herein information or any results arising from its use. Furthermore, the author and Baron Law LLC disclaim any liability arising out of your use of, or any financial position taken in reliance on, such information. As always consult an attorney regarding your specific legal or tax situation.
“He who is always his own counselor will often have a fool for his client.” Old English Proverb est. circa 1809.
Estate Planning Lawyer - Daniel A Baron

Qualified Personal Residence Trusts

Cleveland, Ohio, estate planning lawyer, Daniel A. Baron, Ohio, offers the following information on whether a Qualified Personal Residence Trust should be part of your comprehensive estate planning.

For wealthier families, a great tool to manage your future tax savings would be to transfer the liability of owning a property for which you may end up paying estate taxes on, to a Qualified Personal Residence Trust, or QPRT.

In 2017 the gift exemption was set at $5.49 million, therefore, creating a QPRT permits you to make better use of this exemption. This allows anyone with a substantial estate and the likelihood of facing future transfer taxes, the opportunity to place a residence, be it a primary home, a secondary home, lake, mountain, or ocean side getaway, in a QPRT.  Transferring of this property is a lifetime transfer of residence in exchange for a rent free use of the home for the entire term of the trust.  Should the grantor survive the term of the trust, the property can either remain in the trust for the benefit of the beneficiaries or transfer outright to the beneficiaries.  Either way, successfully establishing a QPRT reduces the gift tax or estate tax cost.

You must keep in mind that this a federal tax exemption and some states may still impose a tax on the value of the property, but it still remains a great tool to maximize your estate taxes upon your passing.

Frequently asked Questions:

  • When should I utilize a QPRT
  • What requirements need to be met to qualify a property for the QPRT tax reduction
  • Does a mortgage impact the QPRT transfer
  • Are there any tax consequences connected with a QPRT

To see whether or not a Qualified Personal Residence Trust is the right estate tax savings plan for you, contact an experienced Estate Planning lawyer. Contact Daniel A. Baron of Baron Law today at 216-573-3723 to answer any questions you may have on a QPRT or any other trust.  We welcome the opportunity to work with you recommending the best solution for your needs.

Helping You and Your Loved Ones Plan for the Future