Can I transfer my property via a quitclaim deed into my trust without affecting my title insurance?

The topic of transferring real property comes up often in my estate planning practice. A typical scenario is when a trust is created for a couple or a single person and we choose to transfer the real property via a quitclaim deed into a trust. The question that arises is, “what happens to our title insurance policy?” The question at hand is whether the transfer of property via quitclaim deed invalidates the title insurance policy that the client already has in place on their real property. The answer is no, it does not so long the person who quitclaims the property into the trust is also the settlor (the person who creates the trust) of the trust. If the owner quitclaims the property into a trust where they are not the settlor then then will have to file a Form 107.9, which is a title insurance endorsement that amends the existing title insurance policy by adding an additional insured to the coverage.

If you have any questions regarding estate planning issues, please contact Anna M. Petronzio., 216-381-3400.

Dynasty Trusts: is this a trust for you, your children and …?

Dynasty Trusts: is this a trust for you, your children and your great-great-great grandchildren?

For whatever reason I have had a bunch of clients ask me about dynasty trusts this week. So, I thought that might be “a sign” that I should write an article about it. I suppose a good place to start is by defining what a dynasty trust is and what it does.

A dynasty trust is a long-term irrevocable trust created to pass wealth from generation to generation without incurring transfer taxes such as the gift tax, estate tax and generation-skipping transfer tax so long as assets remain in the trust. The defining characteristic is the duration of the trust and can be drafted to last for multiple generations, so long it does not violate the Rule of Perpetuities, if this rule exists in your jurisdiction. Thank you, Suffolk Law- Wills and Trusts. On to what a dynasty trust does. A dynasty trust mitigates the impact transfer taxes, helps shield your wealth from creditors and money grubbing soon-to-be ex-spouses and the bad choices of your future beneficiaries. It also helps ensure your assets are invested for the benefit of your children, grandchildren and future generations. This all sounds great, right? What are the downsides, you ask? The first potential downside is you have to choose the rights assets to place in a dynasty trust, such as life insurance, tax-exempt bonds, real estate or an asset that offers high potential appreciation and little to no transfer tax. Since income created within a dynasty trust is taxed more heavily it makes sense to place assets into the trust that are non-income generating. In addition, the trust is irrevocable, so once you (the grantor) places the assets into the dynasty trust there is no turning back or changing your mind as the grantor does not have the right to revoke or even to amend the trust. That is a biggie. Also, the trustee should be a professional trustee as they are usually given some discretionary powers to distribute income and/or principal to the beneficiaries and using a pro allows there to be consistency in the administration of the trust, especially as this trust is supposed to be for the long haul. Moreover, the trustee must follow strict rules to qualify for the annual exclusionary gifts for any dynasty trust that contains life insurance. If trustee fails in his/her duties of properly sending out a Crummey Letter the result could be expensive. Finally, the question I ask is whether it is your intention to shackle your children so that you could preserve wealth for your future great-great-great grandchildren? Maybe you just are thinking about your children or even grandchildren. Of course, dynasty trusts have a time and place and just the right grantor, but the question remains is whether this trust is right for you.

If you have any questions regarding estate planning issues, please contact Anna M. Petronzio., 216-381-3400.

2018 Tax Brackets, Tax Rates and Standard Deductions

I am not a tax attorney. Since the tax reform affects everyone who pays taxes, I thought I should share it. The Republican Tax Cut & Jobs Act (tax reform) the 2018 tax brackets, tax rates and standard deduction amounts have been revised. Many are still focusing on the 2017 taxes for tax filing purposes, but these have not been impacted by the by the tax reform. So, it is on to the 2018 tax brackets, which are below:

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LGBT Estate Planning

Everyone should have a solid estate plan no matter what their sexual orientation. Estate planning for the LGBT community, however, is critical. It will provide protection even in the face of discrimination and when people may not be willing to recognize your relationship, even if married. The necessity of an estate plan is needed for times of incapacity, such as an illness or accident. Without an estate plan in place the parties may leave their spouse or partner without the ability to make any decisions on their behalf.

The case U.S v. Windsor allowed federal benefits to be made available to spouses in same sex marriages. In the matter the U.S. Supreme Court struck down the Defense of Marriage Act, which was a federal law which defined marriage as between a man and woman ONLY. The case made sure to allow all married couples to be treated equally under federal law. Later, in Obergefell V. Hodges, the Supreme Court ruled that there is a constitutional right to get married, which includes same sex marriages and that same sex marriages in one state must be recognized by all states. Finally! U.S. Supreme Court ruled that the Constitution allows for same-sex couples to marry, effectively overturning remaining restrictions in place in states. Just because the Supreme Court ruled on marriage equality does not mean that discrimination and resistance towards same sex couples does not exist. Unfortunately, we know otherwise.

The right estate plan can help alleviate any potential issues allowing same sex married couples to get all the state and federal benefits and avoid probate and maintain privacy. For unmarried same sex couples, the right estate plan can allow the partners to make health care decisions on each other’s behalf, make financial decisions on each other’s behalf and allow one another to inherit from each other all the while avoiding probate. If minor children are involved, a proper estate plan can allow the couple to nominate a Guardian and Custodian for the children. I am not sure why anyone would risk not having a proper estate plan in place for themselves.

If you have any questions regarding estate planning issues, please contact Anna M. Petronzio., 216-381-3400.

Determining High Income Child Support

Why is the answer to, “What will I have to pay in child support when my income and my spouses’ income is more than $150,000 combined?” not so easy?

One of the first questions I get from potential clients and clients alike is, “How much will I have to pay in child support?” and “How much will I get in child support?” Ordinarily, the answer is easily obtainable by a calculation using the Ohio Child Support Guidelines Worksheet which applies statutory guidelines set forth by the Ohio Revised Code Section 3109.021. The basic information used for child support calculations includes each parties’ income, the parent’s work-related child care expenses, health insurance premiums incurred for the minor children, the local income taxes paid by each parent, and whether any other child support or spousal support is being paid or received by either party. “Running the child support is not rocket science” is the phrase I usually use, until the combined gross income of the parties is $150,000 or more. When calculating high income child support the trial court must determine the income of both parties. Once the income is determined, the incomes are them combined for the purpose of applying the child support guidelines. If the calculation yields an amount more than $150,000, then the income qualifies for the “high income” child support. The trial court must then determine in each individual case what child support amount is in the best interests of the minor children. The court must look at the life style of the children, if there are any special needs and the incomes of the parents. The “extrapolation method” is then used. What is the “extrapolation method” you ask? In Cummin v Cummin the Fourth Appellate Court in Ohio (12-21-2015) upheld the trail court’s ruling in extrapolating the child support income and imputing income to a doctor. The Court of Appeals exhaustively analyzed how to calculate child support where the parent’s combined income was more than $150,000. The trial court made an initial determination and attached to the original divorce decree a child support guideline worksheet basing the support on the parties’ actual income, rather than capping the income to $150,000 for purposes of calculating the support. At the time the parties’ income was over $300,000. The court used the extrapolation method. Three years later the trial court modified its previous award of child support again using the extrapolation method. Since the Appellant did not originally object to the trial court’s method, the court deemed it was improper for him to raise the objection for the first time. Too late, buddy, but I am not sure the objection would have made a difference. The Appellate court further stated that even if the argument is not waived, the trail court was within its’ discretion (both statutorily and case law wise) to either cap the income at $150,000 or use the parties’ actual income when crafting a child support order. Case by case. Since there is no statutory calculation for child support on “high income” parties the broad discretion has resulted in a wide variety of child support orders, even when the facts of the case seem very similar. Like I said, not such an easy question to answer.

If you have any questions regarding domestic relations/ family law matters, please contact Anna M. Petronzio,, 216-381-3400.

Considering a Prenuptual Agreement?

Have you ever heard about the bride who is given a prenuptial agreement moments before walking down the aisle to get married? Many people believe that the agreement given to her moments before she takes her vows of marriage would hold up in Court. Me, not so much.

A prenuptial agreement which is also referred to as an antenuptial agreement is an agreement between two parties contemplating marriage that alters or confirms the legal rights and obligations they would otherwise have under the laws that govern marriage that end in either divorce or even in death. These agreements are charged with controversy as to their enforceability. This area of law is complex area and encompasses family law and estate planning. All fifty states recognize prenuptial agreements in one way or another. There are technical requirements of the agreement. They must be in writing and they must be signed by both parties. Generally, parties to a prenuptial agreement must have had the opportunity to consult with legal counsel. I believe this is super important and one of the pillars of enforceability. The more time the parties negotiate the terms with their counsel the greater likelihood the agreement will hold up. There must be full financial disclosure and the agreement must be signed before the marriage. The closer the agreement is signed before the marriage the more likely it is to be challenged. Personally, I will not take on a matter unless the parties are at least four months from marriage as I recognize there will be time spent to negotiate, draft and review a prenuptial agreement and signing one on the eve of marriage makes it a pretty weak agreement. Obviously, there must be a marriage subsequent to the execution of the agreement. There are some public policy limits, such as attempting to limit the number of children born in the marriage. Also, provisions in the agreement regarding child custody are not usually enforceable. There are also fairness standards. What constitutes fairness depends on the circumstances of the agreement and are called Button standards, after the case Button v. Button. The standards are as follows: objectives of the parties, economic circumstances of the parties, the property owned by each party before the marriage, the existence of other family relationships and obligations, each party’s income and earning capacity, anticipated contributions of each party to the marriage, the health of the parties, education and professional goals of the parties, including expectations that one party will contribute as homemaker and parent.

Many times the questions I ask before I take on a prenuptial matter are and if the answer is not “yes” I am unlikely to take on the case.

  • Is there enough time to negotiate, draft, review and sign the agreement so that no one is unduly pressured?
  • I require both parties to hire attorneys, so has the other party hired an attorney?
  • Are the parties willing to bring in their accountant to review their taxes and finances?
  • Are the parties willing to use a valuation expert to value real estate and businesses?

Many times the agreement covers not only divorce but death. Usually, this is where family law and estate planning attorneys must work together.

If you have any questions regarding domestic relations/ family law matters, please contact Anna M. Petronzio,, 216-381-3400.

Ohio Private Judge Statute

Private Judge Statute. I am a fan.

A recent Continuing Legal Education class taught me about the benefits of using a private judge. A private judge is a retired judge who has registered with the Ohio Supreme Court. The registration states that the judge is willing to serve as a judge according to an agreement entered into by the parties under R.C. 2701.10. The parties must file an agreement in their case in order to be heard by the private judge. The agreement must be signed by all interested parties and by the retired judge who will be hearing the matter.

R.C. 2701.10 allows parties to hire a retired judge to serve as the judge in their lawsuit. The judge must first register with the Ohio Supreme Court and give his or her intent to hear cases under the statute. Then, the judge registers with the Clerk in that county in which he or she wants to hear cases.

The advantage of having a private judge hear your matter is that the parties do no have to go to a court house, but can be heard in the offices of their lawyers.

Interestingly, seven states allow for private judges. Luckily, Ohio is one of them!

If you have any questions regarding domestic relations/ family law matters, please contact Anna M. Petronzio,, 216-381-3400.