For Nonprofits: Classify your donations correctly

When someone donates money or something else of value to a charity (typically tax-exempt nonprofit, or 501c3), that donation is restricted or unrestricted–a charity’s assets are classified as either with donor restrictions or without donor restrictions.  Charities must know the difference between these terms and what problems might arise with any restrictions, and keep track of donations appropriately.

If I donate $500 to my favorite charity with a statement somewhere (could be written in my donation letter or email, or even on the memo line of a check) that my donation is to be used for a specific purpose of the charity–my gift is to the Humane Society of the United States to fight puppy mills, then my donation must, by law, be used for that purpose, to fight puppy mills.  This is a restricted gift.

If I donate $500 to the United Way with no statement anywhere about what purpose it is to be used, or I state that my donation can be used however the United Way sees fit, then the United Way can use my donation however it determines–operating expenses, any of its programs, etc.  This is an unrestricted gift.

What if a nonprofit that provides assistance with medical bills, raises money through GoFundMe or something similar, for a specific event–a person facing a specific surgery, then that surgery is no longer needed?  Or all of the funds raised aren’t needed–$50,000 was raised but only $30,000 is needed to pay medical bills?  The nonprofit has $20,000 remaining of a restricted gift.  Just because the bills only total $30,000 does not mean that the nonprofit has $20,000 to use as it wishes, since the donors who gave that money did so to pay for that specific surgery.  Your state’s Attorney General would become very interested in what happens to those donations.

If the purpose for the gift no longer exists, it is possible for the charity to remove donor restrictions from a gift/donation.  It can:

  1. Talk to donors.  You can go back to donors, tell them that the purpose for their donation no longer exists and ask them what they would like you to do with their donation, or for permission to put it towards another use.  If you use due diligence in this effort, then the Attorney General might not intervene since their purpose is to protect the public.  Perhaps you would put a notice on your website or Facebook page to reach the specific donors, try to contact them directly, or publish something in the newspaper asking for donors to the campaign to come forward.
  2. Talk to the Court.  It is possible to go to court requesting a modification of the gift’s restriction if the purpose for the gift no longer exists, has become unlawful, impossible to achieve, or wasteful.
  3. Talk to the Attorney General.  If the donations total less than $250,000 and are more than 10 years old, you could provide 60 days’ notice to the Ohio Attorney General of your intention to modify or release the restriction. If the Attorney General does not object, then you can release or modify the restriction–the $20,000 from the GoFundMe surgery campaign could be used for another medical bill, another program, overhead, or whatever the charity determines.

The best advice for nonprofits is to keep detailed financial records of donations and any restrictions that are attached.

If you have any questions regarding donations, charities or anything in this post, email me at julie@juliemillslaw.com.

No will? The state has one for you and it might not accomplish what you want.

“Everyone has a will.  Either you prepared it, or your state did.”  It’s true–if you have not prepared your own last will and testament, then a state’s statute of descent and distribution (here is Ohio’s) kicks in when you die.  These state statutes prescribe who inherits your assets at your death.  So yes, everyone is covered by either their own will, or your state’s laws, for distributing your assets when you die.  The question becomes whether you want to decide who inherits your belongings, or whether you want the state to decide.

For example, in Ohio if you die intestate (with no will), here is how your assets are distributed.  My summary below doesn’t cover every situation possible–see the link above to the statute if your situation in Ohio is not included in scenarios below.  Note that children who are adopted are treated legally the same as biological children:

  • Spouse is alive:
    • all kids are yours and spouse’s: all to spouse
    • no kids with spouse or anyone: all to spouse
    • kids survive but none are with spouse: some to kids, some to spouse
    • kids survive but some with spouse, some not: some to kids, some to spouse
  • Spouse died before you:
    • kids survive: to kids or their lineal descendants (your grandkids, great grandkids, and on)
    • no kids or their lineal descendants survive: all to your parents or surviving parent
    • no kids/lineal descendants, no parents survive: to whole or half blood brothers and sisters, or to any of their lineal descendants
    • no kids/lineal descendants, no parents, no whole/half blood brothers and sisters or their lineal descendants survive: one-half to surviving maternal grandparents or survivor of them; one-half to paternal grandparents, or survivor of them
    • none of above are surviving: to lineal descendants of grandparents (e.g., your grandparents’ children and their descendants)
    • none of the above are surviving: to stepchildren, or to their lineal descendants.
  • If none of the above are surviving when you die, then your assets escheat (go to) the state.

If absolutely no one survives you, do you want the state to get your assets when they could have been donated to a charity, or to benefit a school program, or sold to provide funds for a food pantry?  Perhaps you have pets and would want your assets sold to provide for their care?  Perhaps you have a dear friend who you would want to receive your assets?  Designating something in a will accomplishes what you want to happen.  Assets escheating to the state is not as uncommon as people think.

Contact me at julie@juliemillslaw.com to discuss what you wish to happen to your assets at your death.

 

Service dogs in schools–a decision for the parent

My law practice consists of estate planning, probate, business, nonprofit, real estate and other transactional-type of areas.  However, an unadvertised part of my practice involves service dogs in schools.  This area of practice came about by experience (my knowledge of the Americans with Disabilities Act [ADA]) and happenstance (jumping into the service-dog fray due to representing someone pro bono after their egregious situation made its way into the news).

Children with disabilities have service dogs (SD) for a variety of reasons.  Service dogs aren’t just comforting pets that accompany a child to make him or her feel better.  In situations where I’ve been involved, the SD has been trained to detect seizures before they happen and alert adults, detect low blood sugar in children with diabetes, prevent elopement (wandering) of children typically with autism, calm “meltdowns” that are uncontrollable, and trained in search and rescue when children do wander away without being noticed.  This training usually costs five figures or more and is time-intensive.  Some of these situations, especially “wandering,” might seem strange to parents who don’t have children on the autism spectrum, or other special needs.  Elopement-wandering, for example, is when children–again, typically who are autistic–escape notice and wander off (elopement happens often in nursing home residents as well).  This can happen in a split second and, in fact, elopement is a leading cause of death in children with autism.  Death from elopement is caused mostly by drowning, then by being struck by a vehicle.

Parents obtain service dogs for a variety of reasons also, but for most, having a service dog with their child is a matter of life and death.  One mom had an elementary-age daughter, nonverbal, autistic, who kept escaping her classroom, then escaped the school building.  The Special Education Director assured Mom that the school could keep her child safe.  The very next week, this nonverbal 6 year-old escaped the school building, wandered a mile down the road, crossed four lanes of traffic and entered a 7-11 store to the shock of the employees inside, and the school didn’t notice her missing for over an hour.  This was life and death for this child, and Mom got a service dog.  In a class of 20 students, a teacher already has his or her hands full, which is why the parents got a service dog for their child with Type 1 diabetes, so that blood sugar issues didn’t go unnoticed and possibly become fatal.

For years, schools would bring the SD issue under determination of special education procedures, i.e., an IEP, under special education federal law, the Individuals with Disabilities Education Act (IDEA).  Typically, the school would deny the SD as not necessary to the child’s education.  Fortunately the U.S. Supreme Court weighed in, and recognized what some courts held, that a service dog is a civil right to the child and not a matter under purview of anyone, including schools.  Governing federal law–the Americans with Disabilities Act and the Rehabilitation Act of 1973–permit service dogs to accompany their person anywhere, with very rare exceptions.  Service dogs are working animals, not pets, and are actually considered durable medical equipment, no different than a wheelchair.  They are protected in public places by federal law, as opposed to emotional assistance animals (most remember the peacock on the plane).

Children with disabilities can be accompanied by their service dogs to school.  Period.  This is not a decision left to the school.  A service dog is a right of the child independent of their receipt of a Free and Appropriate Public Education (FAPE).  Whether the SD is medically necessary is not up to the school.  Obtaining a prescription from the parent for the SD, requiring insurance coverage, or requiring vaccinations beyond what is required of any dog are not permitted.  Rejecting the SD’s presence due to another’s allergies, or because of the dog’s breed, are also prohibited.  These are all reasons that were given to my clients by schools in service dog cases.  Parents ask permission from the school to permit the dog to accompany their child, but frankly this is not required.  It is certainly good practice to alert the school and work with the school to accommodate your child with the service dog.  My favorite court ruling mentioned the defendant-school stating that “we[staff] can help Johnny when he needs it, he doesn’t need the service dog” (Johnny isn’t his real name), to which the court responded that this was akin to saying about a student in a wheelchair, “we’ll carry him where he needs to go–he doesn’t need his wheelchair.”

The school has to provide reasonable accommodations and reasonable modifications to policies when a request for a reasonable accommodation is made by a student with a disability.  The Department of Justice (enforces the ADA) makes it clear that public schools are to make reasonable accommodations for service dog requests.  Schools perhaps justifiably analyzed service dog requests under the law that governs their daily work lives, the IDEA.  Fortunately, the Supreme Court realized that other federal laws govern students as well.

If you have any questions regarding service dogs, whether it’s school-related, or service dogs in public places or elsewhere, please contact me at julie@juliemilslaw.com, or (614) 519-8661.

 

Misconceptions you might have with estate planning

I have heard all of these misconceptions mentioned, including just today.

  1.  The attorney who prepared my will must handle my probate.  No.  Many estate planning attorneys prepare wills with an eye toward being called upon to handle a probate if the client dies, but there is absolutely no requirement that the drafting attorney who prepared your will must handle your probate.  This includes if the attorney who prepared your will holds your original will for safekeeping.
  2. My will dispenses with all of my property. Some documents override a will.  If you have a will, and you leave all real (house, land) and personal property to John, yet you have a deed that is held somehow with Jane, Jane will get the house because she is on the deed, not John, even though your will gives it to John.  Generally, titled and deeded assets go to the person listed on the title, or beneficiary designation, or deed.  “I leave everything I own to Bob.”  At my death, I have a life insurance policy that lists Joanne on the beneficiary designation.  Who gets my life insurance?  Joanne.
  3. I had a trust prepared so I don’t have to worry about probate.  It is so frustrating to see clients come to me with trusts they had prepared (and paid a lot to have prepared), only to learn that the trusts are unfunded.  What the client has, then, is a stack of papers that likely will not do what was intended.  Funding your trust involves titling or deeding assets to your trust.  You can accomplish this by naming your trust on beneficiary designations so that asset goes into your trust at your death, or having a “transfer on death affidavit” prepared that puts your home into your trust at your death.  For example, you would have a deed prepared granting your home from Jenny Jones to “The Jenny Jones Revocable Living Trust.”   However you accomplish it, a discussion of “funding your trust” should be a critical part of planning from your attorney.  If you have a trust prepared and then never prepare a new deed putting your home into your trust, and you die, your home will likely require a probate to be opened, defeating one of the important reasons for having a trust prepared (avoiding probate, privacy).
  4. A will (last will and testament) is different than a “living will.”  A last will and testament is what we think of as a “will”–we state who is to inherit what, we name a guardian for our kids if they’re young, we name an executor.  On the other very different hand, a “living will” is a healthcare document stating whether we want artificial life support if (1) we are terminally ill and death is imminent, or (2) if we are in a permanently unconscious state (i.e., brain dead).  This is popularly known as “pulling the plug.”

Contact me at julie@juliemillslaw.com to discuss estate planning.

Barebones planning for life without you.

Some people plan for their death and the fate of loved ones, whether it’s by a will, trust, re-titling and re-deeding assets, or other ways.  These are my clients.  Other people do not do this planning, and the reasons are typically because 1) they don’t want to think about it, 2) they don’t have the time or money for it, 3) they think others will take care of everything if they die.  These are many of my family members and friends.

Frankly, people die, their loved ones do take care of everything, and life goes on.  But, if you practice probate and estate administration as I do, you see so many situations where loved ones are left trying to “take care of everything” in impossible or contentious situations, where families fight and relationships become extremely strained, or irreparably damaged.

What if you do not want to engage in any estate planning–for any number of reasons, you don’t want to have a will or a trust prepared.  At least not yet.  However, you do see the need to provide some guidance to loved ones should you die.  There are very basic steps you can take to provide this guidance.  It goes without saying that I always recommend a will or trust, but something–barebones planning–is better than nothing.  I guarantee you it would be appreciated.

The following is a list you can do, on your own, to make the lives of your loved ones easier if you die.  Some steps are specific to Ohio, where I’m licensed to practice.  Tailor to your own situation:

1.  Children: if you have children under 18 years old, write down 3 people in order of priority who you would choose to raise your children (guardian).  Sign it in front of two unrelated witnesses.

2.  Funeral: disagreements over your final disposition are common.  Write down whether you want buried or cremated.  If buried, name a cemetery.  If cremated, what happens to your ashes?  List two people in order of priority who will be in charge of decision-making and with making sure your wishes are followed.  Sign it in front of two unrelated witnesses, or have it notarized.

3.  Medical decision-making:  name a person and 2 successors to be in charge of decisions about your medical care if you cannot make them.  Explain your wishes about artificial life support–do you want kept alive by artificial means?  Sign it in front of two unrelated witnesses.

4.  Pets: please provide for their fate if you die.  Many family members take pets to shelters after their owner dies.  Who do you want to care for your pet?  List two successors after this person.  Will you leave them money to help with the care?  How much?  Sign it in front of two unrelated witnesses.

5.  Specific bequests:  do you have possessions that you want to go to specific people?  List the items, and to whom they go.  Sign it in front of two unrelated witnesses.

This list is not exhaustive, but it covers the areas where I see fighting among relatives.  Having guidance during a time of grief is a gift.

If you have any questions about this post, or about estate planning, contact me at julie@juliemillslaw.com.

 

Homebuying 101: should you get Closing Protection Coverage?

My spouse is more apt to get coverage that protects you beyond the normal warranty period, whether it is an extended warranty for a phone or car, or extra protection with an insurance policy.  Perhaps as an attorney I feel ready to assert my rights under express or implied coverage, and related laws.  Sometimes his way is more appropriate and prudent, other times such “extra” is unnecessary overkill.  Closing Protective Coverage (CPC)?  Get it.

In a nutshell, CPC protects you against mistakes or fraud from your title agent.  “Doesn’t my title insurance cover that?”  No, and many people make the mistake of thinking it does.  Your title agent is an independent person from the title company, i.e., they are licensed to work with the title company to get title insurance to you.  Often the title agent holds funds from buyer, seller or both in escrow until a certain time during the real estate transaction.  So, the independent title agent, might or might not be holding funds…. If a mistake, or–worse–fraud occurs, the title insurance company is not responsible for the acts of independent title agents.

Ohio law requires that the CPC letter offering the option for coverage must be given to the parties at the time the order for title insurance is placed.  The Closing Protection Coverage indemnifies the purchaser from:

(1) Theft, misappropriation, fraud, or any other failure to properly disburse settlement, closing, or escrow funds;

(2) Failure to comply with any applicable written closing instructions, when agreed to by the title insurance agent.

The cost for CPC is relatively low: for buyers it is $20, for sellers it costs $55.  You likely won’t experience fraud or mistake, but if you do, research showed that the range of costs from claims arising out of closing agent fraud start in the five figures.  CPC is worth it.

Contact me at julie@juliemillslaw.com, (216) 438-1298 (northeast Ohio) or (614) 519-8661 (central Ohio) for any help with real estate matters.

 

Home Buying 101: importance of “Title Commitment” policy

Title to your property is its history of ownership.

I admit it: when my husband and I bought our house almost two decades ago, I sailed through signing our documents without paying too much attention to the mounds of paperwork.  My legal practice areas at that time didn’t involve much real estate, and I hired my boss to represent us through buying our home.  We had no issues.

Then, I represented a client purchasing a home and was “aghast” at what problems my husband and I could have had.  I decided to become extremely educated on things many ignore, particularly, title commitment policies.  The home buying process and the paperwork can be daunting, and my blog will run a short series (Home Buying 101) to make it a little easier to digest.  You might not become a real estate expert but hopefully my posts will poise you to ask questions most relevant to your situation.

“Title” to your property is basically a history of its ownership.  It is important when you buy property to know that you have “clear and marketable title.”  The land is yours, and no other interest or defect is going to come along and mess with your ownership, which could cost you a lot of money.  For example, you bought your home and assume it’s all yours.  But–at some point in the past (along the “chain of title”) someone who owned the home before you and died had an unknown heir who now says that he owns part of your property, as his dad’s will stated.  This stuff happens, and without insurance, you could become involved in a law suit.   Or a past contractor has a lien against your property for unpaid work.   Or a past owner has a court judgment against her that attaches to the property.  This list of possible “defects” is endless.

A title commitment policy ensures you–the buyer–that the property you buy will be free from any “problems” (defects) regarding ownership.  No one from the past will step forward and state that they have a right to your property–if anyone does, you are protected by insurance.

Once you decide you want property that is for sale, your realtor will order a title commitment.  You get the title commitment before closing, and the title policy after closing.  The title commitment is reviewed, amended if necessary, then becomes your policy after you close on your home.  You should carefully review your title commitment so that it says and covers what you want.  This might be where readers drift away because the document seems overwhelming, so if you are not likely to read the entire document, then 1) hire me (or any real estate attorney), or (better yet) 2) read Schedule B of the commitment.  Schedule B of the document is specific to you, the seller, and your situation.  Keep in mind that you typically have only a few days to review a title commitment so be sure to review as soon as you receive it.

Schedule A is the nuts and bolts of identifying information–buyer and seller information, commitment date, property price, loan amount, etc.  Schedule B is what you want to really pay close attention to, read more than once, read again.  Schedule B lists the exceptions to the policy, especially the Covenants, Conditions & Restrictions (CC&Rs).  Exceptions can affect the property being insured and are not covered by the title policy.  Examples include restrictions, easements (most utility easements are standard, but some easements exist that aren’t of public record and can affect your use of your property), setback requirements, and mineral rights.  What are your restrictions?  Do you understand how they could impact your ownership and use of the property?

For many of my clients, their home is their biggest asset.  Know what Schedule B says in your title commitment, at the least.  I do recommend having an attorney review your documents, particularly your title commitment.

If you have any questions about purchasing a home, or your title commitment, contact me at julie@juliemillslaw.com.  I represent buyers and sellers in residential real estate purchases.