I always urge clients to FUND THEIR TRUSTS

Advising clients to use a trust as an estate planning tool is ordinary in my practice. I also urge my clients that just having a trust is ineffective unless it is properly funded. Just signing the trust is not enough. In order for the trust to be effective the Trustee must hold title to the assets in the trust. When clients do not retitle the assets into the name of the trust it really defeats one of the purposes of having a trust.

One main purpose of having a trust is to avoid probate and all the expenses and costs associated with probate. I advise clients to fund their trust as soon as it is created, and I usually assist them with transferring their real property. Many clients are able to transfer their checking and savings account, their wealth management accounts and cars without assistance from me. Don’t forget to properly fund your trust!

2 good enough reasons to create a trust

You don’t need a trust just for the tax benefits. There are other reasons, such a probate avoidance/privacy and protecting young beneficiaries. Probate is a formal process where a decedent’s property is administered and distributed. Probate is public and there is no privacy. Additionally, there are unneeded expenses. While avoiding probate is important, asset protection is more important. In probate, assets could pass to young individuals who may be over 18, but not able to handle assets and the responsibilities of an inheritance.

A trust can be drafted to protect the individual many years beyond 18 years of age, and still allow the beneficiary to receive distributions for health, maintenance, and education, but still protect the assets held in the trust. There are so many more reasons to use trusts for one’s estate plan, but PRIVACY and PROTECTION are enough to allow one to take note of their importance.

COVID 19 & Estate Plans

One thing I discovered during the pandemic is many people realized that they were not going to live forever, and they needed an estate plan. COVID 19 did not make planning and executing estate plans easy. Many high-risk workers and essential workers were eager to get their plan in place. Many older people wanted to implement changes in their current estate plans. Accomplishing document signing during the pandemic has proved challenging as Wills require two disinterested adult witnesses and power of attorney for health care and living wills do not require witnesses if the documents are signed before a Notary Public. I became creative in helping my clients sign their estate planning documents while adhering to COVID protocols.

COVID-19 has highlighted the necessity of a well-thought-out estate plan. At the same time, the pandemic has made it more difficult for clients to get these documents that are necessary in place. I have attempted to be creative in solving this current problem while also maintaining “social distance”. Under Ohio law, a Will must be signed in the physical presence of two disinterested adult witnesses. Other estate planning documents, such as Living Wills or Durable Power of Attorney for Health Care do not require witness so long as the documents are signed in front of a notary public. Ohio has not created any new legislation during the pandemic that would change Ohio’s in-person witnessing requirement, even though electronic Will witnessing is under review. In 2019 Ohio allowed for Ohio notarizations to be performed electronically by special authorized online notaries. Some attorneys are witnessing the documents outside or even reviewing the documents via Zoom and then having the clients obtain their own witnesses.

Top 5 Advice Topics for Estate Planning

  1. Your 18-year-old high school student does need a Health Care Power of Attorney, Living Will, and HIPPA authorization.
  2. Your revocable living trust does NOT protect your assets from a nursing home.
  3. You must review old life insurance policies.
  4. You can keep your assets in your family and not to ex-spouses or creditors.
  5. You must review your estate plan often as families change and laws keep on changing. Good estate planning is not a one-and-done deal.

How to Advise Clients with Diminished Capacity

Capacity is a term involving the mental ability to understand one’s actions. Of course, capacity can vary day to day and with new situations. Having diminished capacity can happen for a myriad of reasons, such as an accident, a stroke or even a mental health reason. Sometimes that capacity can be reversed while other times it cannot. It is difficult when a loved one has diminished capacity and wants to make changes to their estate plan as they must made choices regarding their health and financial matters. And each choice requires a certain amount of capacity.

A client must be able to understand a Will or Trust is being made and the client must understand what they have and be able to identify people (family and friends) who would have a claim to their estate and understand their relationship with those people.

To appoint a health care agent, a client must understand the scope of what they are doing in appointing someone to manage their health care. When creating a health care power of attorney, a client just needs to know that they are giving their power to someone else to make health care decisions on their behalf.

 

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. apetronzio@ps-law.com, 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. apetronzio@ps-law.com, 216-381-3400.