Estate planning – Wills, Powers of Attorney, Living Wills and Trusts

I often hear people say they don’t need an “estate plan” because they only own a house and some retirement assets and cds.  On the flip side, I have people tell me they already have their estate planned because they have a Will.  If you are wondering who is right, you have come to the right place!

Let’s start by providing my definition of an estate plan.  A good estate plan allows you to take control of your property and health care decisions (and to an extent even take control of your children!).  A basic estate plan typically consists of a Will, a Durable Financial Power of Attorney and a Health Care Power of Attorney.  It may also include a Living Will, joint and survivorship ownership of certain assets and the naming of beneficiaries on assets.  A more sophisticated estate plan will typically contain many of the things just mentioned plus a revocable living trust.  A good estate plan will take care of you while you are alive by allowing someone you pick out and have confidence in to manage your assets, move money from a cd to a checking account and pay your bills while you are alive but need help and allow you to name someone of your own choosing to make health care decisions for you when you are unable to do so yourself.  A good estate plan takes control of your assets when you pass away and lets you name who you want those assets to go to, who is in charge of making sure your debts are paid and your assets are properly distributed and minimizes taxes, professional fees and administrative costs and allows your estate to be handled without wasting months and years in probate court.  It can also let you choose who would raise your children and who should manage assets and money of heirs too young, immature or with other problems (gambling, drugs, etc.) to be able to manage the money on their own.

Everyone must have an estate plan, if you don’t create your own plan, the State of Ohio will give you its plan!

Did you know every resident of Ohio has an estate plan already?  Even if he or she has not prepared a single document!  In such a case, the State of Ohio will decide when you pass away who gets your assets, who will raise your children, who will administer your estate and will turn over assets to your children or grandchildren when they turn 18.  Until they turn 18, the court will monitor their assets and require expensive financial statements be filed in the court every two years.  If you become incapacitated, again the State will step in, have a hearing to find you incompetent and then the State appoints someone to be in charge of you (a guardian).  This person may not be anyone you would have chosen.  The person doesn’t even have to be a relative!  Anytime the person needs to pay any of your bills or sell an asset or withdraw money from savings, permission must first be obtained from the State through the court system.

We believe that since everyone must have an estate plan, you should plan it yourself and not let the State of Ohio put its plan in place for you.

We take your wishes and desires and turn them into a workable estate plan.  We listen closely to understand your individual needs and develop a custom estate plan to meet your goals and objectives.

With our guidance, clients gain peace of mind that their long term needs will be met, that their assets will be protected for the benefit of the person or persons they choose and, most importantly, their family will be protected if the unthinkable should occur.

If you think you are too young, too old, or don’t have enough assets to put together an estate plan, think again. It’s never too early or too late to prepare.

Here are some special situations that let you know you need to take control and put your own estate plan into place now.

1. Either you or your spouse has children from a previous marriage.
When spouses have children by a previous marriage, one spouse’s children may get left out, or conflict may arise between the step-spouse, the stepchildren, and your children.  Do you have a current plan in place to prevent this and promote peace in your family?

2. You are self employed or own rental property.
If you are self employed or have rental property, keep in mind that there is a significant time delay before a personal representative is appointed to care for rental property or your business in your absence. Essentially, there will be a period of time where your rental property and/or business have to go on “auto pilot” with no person allowed to actually take legal control until someone is appointed in the Probate Court.  Are you prepared for this?  If you have a power of attorney, did you know your power of attorney ends when you die?

3. You have minor children or grandchildren.
If anyone to whom you wish to leave money is under the age of 18, they will be unable to inherit your money in Ohio without the Court appointing a Guardian to make decisions for the minor. If this occurs, Court costs can eat up a lot of a child’s  or grandchild’s inheritance. There is also the issue that money the minor may need to live on will be tied up for a lengthy period of time.  Additionally, any money left gets turned over to the child or grandchild when he or she turns 18.  I don’t know about you, but I wasn’t a very sound money manager at age 18.  The Court will also determine who will raise your children under the age of 18.  If you have someone you’d like to raise your children (or maybe just as importantly, there are family members you’d never want to raise your child), you need to make sure you properly designate those individuals.  Otherwise, the Court will just pick whomever the Court believes is the best person after a potentially lengthy and costly court proceeding. Have you properly planned for your minors?

4. You or a close family member are terminally ill, have failing health or may become incapacitated.
If you or a close family member is terminally ill or incapacitated, you will not be able to make decisions on behalf of yourself or the family member unless you plan ahead. If you have not dictated who can make decisions for you and when they can make the decisions for you, you are again doomed to the Court making those decisions for you.  Proper planning will avoid unnecessary spending on Court costs and you will be ensuring that the person you trust the most will be able to make decisions for you in the event that you are not able.  Further, without an estate plan already in place, your family will likely be prevented from taking any steps to save all or a significant amount of your assets if you end up in a nursing home.

5. You have a taxable estate.
Did you know there is yet another tax imposed upon people when they pass away?  This is known as the death tax or estate tax.  This tax is imposed on your gross estate and counts assets regardless of whether they pass through probate or not.  In Ohio, the tax starts for estates that exceed $338,333 and federally, there is no estate tax in 2010, but currently the estate tax comes back for estates exceeding $1,000,000 in 2011.  While there is no estate tax due when assets pass to a surviving spouse that is a U.S. citizen, the estate tax is due if the assets pass to anyone else.  Typically, this estate tax is collected when the assets pass to the children after the second spouse passes.  With proper planning, you can easily avoid unnecessary estate taxes. Does your current plan allow you to do this?

6. You or a family member has a gambling or substance abuse.
If you have a family member who is an abuser of drugs or alcohol or a gambler, it is up to you to prevent your money, more commonly known as their inheritance, from being contributed to the local bar, liquor store, drug dealer or casino. Does your current plan ensure that you will not be contributing to the problems of your loved ones?

7. You have a child who may not be responsible or is married to someone who may not be responsible.
Do you have inheritance protection for a child who may be subjected to a spouse who just loves to spend money or from divorce, lawsuits, creditors or bankruptcy? Do you have a child who has a problem with shopping impulse control? If so, there is a way that you can control and minimize this risk through proper planning. Keep in mind that the average inheritance, regardless of the size, is completely spent within 18 months of receipt. Proper planning on your part can help to preserve your wealth for future generations and ensure that your hard earned assets are not blown unnecessarily.

8. You have an IRA or a 401(k) account.
Retirement accounts are almost never coordinated with an individual’s estate plan, which could result in a tax problem.  It is important to put the planning in place to ensure that these plans can continue to grow tax deferred for as long as possible.

9. You own joint tenancy property.
If one joint tenant owner becomes mentally disabled, the property may become frozen. Property may also pass to unintended persons at death.  (For example, it is common for parents to put the child living closest to them on bank accounts for convenience; never realizing that those bank accounts then pass to that child directly at death and not through the Will).  Any person who ends up with the property after the passing of a joint owner may also find themselves inheriting a huge tax liability. You may also be exposing your property interest to unintended creditors while you are alive!  If you place your bank account or house in a child’s name (even if your name is still on it) and that child gets divorced or sued, your property will become part of that lawsuit!  Proper planning will prevent this from happening.

10. You have a disabled child or are responsible for a dependent adult.
Disabled children and dependent adults require special planning to ensure that they are not going to lose any public assistance or benefits that they are currently receiving. Are you putting someone’s government benefits at jeopardy?

11. You have a simple will in place now.
Simple wills are not appropriate for everyone. Used improperly, a simple will can lead to major problems, including subjecting someone to unnecessary estate tax. Even a simple will may fail if you have not properly titled your property. Joint ownership may cause a will to fail. Are you sure that a simple will is right for you?

12. You have no planning in place.
If you don’t have a will or a trust, the state of Ohio has its own plan for you. Will your property pass to those whom you want to share it with? Will your estate be subject to litigation to decide who gets your property?

13. You want to avoid probate.
Many people think that if they have a will then they have done what is necessary to avoid probate. They couldn’t be more wrong.  A will is basically instructions to the probate judge and if any asset has to be liquidated or have its ownership changed through the will, then the asset will go through probate.  Probate is slow and expense.  It is not uncommon for 3%-6% of the assets that go through probate to be used to pay fees.  Thus, on a $150,000.00 house that goes through probate, the probate fees would range between $4,500.00 and $9,000.00.  Do you really want your children to have to pay such fees when they are easily avoided?

14. You have an old estate plan in place.
The average estate plan has not been updated in many, many years. Consider all the changes in your life and in the law that have occurred over that period of time. Will you miss out on a planning opportunity by not keeping your estate plan up to date?

We will provide you with customized estate planning services tailored to meet each individual’s needs.

Our estate planning services include:

  • Trusts
  • Special Needs and Disability Trusts
  • Will Preparation
  • A complimentary checkup on your existing estate plan
  • Advice on Asset Protection
  • Counsel on Wealth Preservation
  • Guardianships and Conservatorships
  • Durable Powers of Attorney
  • Living Wills
  • Health Care Powers of Attorney

There are many businesses claiming to be estate planning “professionals” who are selling trusts, wills, living trusts and other estate planning documents without the involvement or oversight of a qualified attorney.

Often times, these documents and the advice that comes with them can lead to problems, mostly in the form of expensive litigation. We will create the right plan for you and your family. We also hold FREE seminars at nursing homes and other care facilities to educate people on their estate planning options.

If you are looking for sound advice on wills, trusts and other aspects of estate planning, please contact us today. We offer complimentary initial consultations.