Your role as trustee of a trust

You have been named Trustee of someone’s trust. Here is a very basic overview of your responsibilities as trustee, under Ohio law.

The person who made the trust–the “Grantor,” or some people use “Settlor”–must have thought of you as a responsible, trustworthy person to designate you as Trustee of this person’s trust. The trustee has many responsibilities in managing and administering a trust, and shoulders some personal liability as well. If the Grantor has died and you are the first successor trustee, this list will provide you with a basic understanding of what you need to do. You have many responsibilities, and my advice is to seek legal counsel with an attorney experienced in trust administration.

  1. Again, meet with an attorney unless you are familiar with the Ohio law. A trustee has 60 days to inform beneficiaries of the existence of the trust. Sixty days from what date? Who falls under the definition of “beneficiary,” and are all beneficiaries created equal? Do I send the entire trust, and only if a beneficiary asks for it? Know the answers to these and other responsibilities with keeping beneficiaries informed.
  2. Gather all of the decedent’s estate plan documents, 10 copies of the death certificate, and the previous 3 years (if possible) of tax returns. Gather together other important documents.
  3. Read the trust document. Make a list of the beneficiaries, distribution ages, charities named, any restrictions made by Grantor. Son might get a distribution, but does he need to pass a drug test first? Does Daughter receive an increased distribution if she makes certain grades in college?
  4. Determine assets that are held by the trust and get date-of-death values. Deeds to property will show if the property is held by the trust, as will titles to cars and boats. Review all assets with beneficiary designations to see if the trust is a beneficiary, such as IRAs, life insurance, payable/transfer on death bank accounts, stocks and bonds. Also look for shares in any business interests such as LLCs, corporations, partnerships.
  5. Determine if probate will be necessary. For most of my clients, a reason for having a trust prepared is the desire to avoid probate. The trust is then “funded” by deeding property in the name of the trust, or re-titling assets into the trust’s name. Sometimes people forget to change ownership of an asset such as a checking account or real property to their trust, or die before getting the chance to. Probate then becomes necessary to transfer ownership for those assets.
  6. Once you know what assets the decedent owned and their values, pay all bills owed. Before you sit down and start writing checks to creditors, be sure that the bill is legitimate.
  7. Get a CPA. The decedent might have died before paying taxes and you, Trustee, will need to file the decedent’s final tax return. Some trusts have to file tax returns. Consult a CPA to determine what, if any, taxes are owed by the decedent, the decedent’s estate, and possibly the trust.
  8. Distribute assets, terminate the trust. The distribution of assets comes *last.* After all bills are paid, tax returns filed and taxes owed are paid, and after probate closes if probate is required, then the trustee can distribute assets according to the terms of the trust. Once the assets are distributed, or if the trustee determines that the value of assets in the trust is low enough that it makes administration of the trust impractical, then the trust can be terminated.

A trustee can shoulder personal liability for improperly administering a trust, so consult with an attorney and a CPA if you are not familiar with the Ohio Trust Code and trust administration. The list above is a basic overview and is not legal advice. If you have questions about your role as a trustee, contact me at julie@juliemillslaw.com, or visit http://www.juliemillslaw.com for additional resources.

The Estate Plan List (to get you started)

Will

Do you have a will?  If yes, is it up to date with people you chose to serve as executor and guardian?  Do you want to add or remove any beneficiaries?

Financial Power of Attorney

Do you have a durable financial power of attorney that names trusted people to take care of your financial matters if you are unable to?  How will your bills get paid if you are in the hospital?

Living Will

A living will is a healthcare document that details your end-of-life decisions.  Do you want to be kept alive by artificial means?  Are there some procedures you want to refuse (typically for religious reasons)?  For your living will to take effect, two doctors must agree that you have a terminal condition or are in a permanently unconscious state, and death is being prolonged with no reasonable chance for recovery.  The people you list in this document are merely for contact purposes–they have no decision-making authority.

Healthcare Power of Attorney

A healthcare power of attorney allows you to name people who will have authority to make healthcare decisions for you if you are unable to do so.  If you have a living will, your healthcare power of attorney cannot override your wishes in your living will.

Life Insurance

Why have life insurance?  Obvious reasons include providing money to those dependent on your income if you die.  Life insurance can also be used to pay off your debts so that you don’t burden your family with your financial liabilities, such as medical debt if you were hospitalized or had a lengthy illness.  You can purchase a policy designed to pay off the mortgage on the house if you want to be sure your children and family can keep the family home.  If you own a business, life insurance can be purchased to enable your business partners to buy out your shares and keep the business running smoothly.

There are more components to an estate plan, but the list above explains your first considerations when starting to plan.  This list is specific to Ohio.  Documents described above might be different in your state.

If you have any estate planning questions, email me at julie@juliemillslaw.com.

 

 

Coronavirus and your healthcare decision documents

In Ohio, we have “advance directives” that include a living will and a healthcare power of attorney.  A living will (not related to a Last Will & Testament which distributes your assets after you die) is an end-of-life document that details what medical treatment you want or don’t want if you are dying.  Death must be imminent.  Any treatment is only prolonging death.  A healthcare power of attorney gives a person you choose the power to make healthcare decisions for you if you can’t make them yourself.  This person cannot contradict your living will.

Most living wills state that we don’t want to be kept alive by artificial means such as a ventilator if death is imminent and there is no reasonable hope for recovery.  The scenario that comes to mind is one where someone’s organs are shutting down, breathing is labored, death is near, and the last thing we want is to be hooked up to a ventilator and have a machine breathe for us.  We state these wishes in our living will, and hopefully our agent in our durable power of attorney for healthcare ensures that our wishes are followed by medical personnel.

Some people are reconsidering their living wills in light of the coronavirus.  The need for a ventilator to help us breathe seems common for many of those being treated for coronavirus/covid-19, and there is concern that if you have a living will stating “no ventilator,” then you won’t get one if you are being treated for coronavirus.  This not true.

A living will applies only when death is imminent and a machine, such as a ventilator, will only prolong your death.  With coronavirus, a ventilator is used as treatment for recovery, and ventilators remain in use as long as there is a reasonable hope for recovery.  It is used as treatment to counter the effects of what the virus is doing to your lungs.  That is not a situation where a machine is simply prolonging death.  When you sign your living will, you are not stating that you do not want a breathing machine or ventilator under any circumstance.  A living will is not a document that doctors consult to determine a course of treatment.  It is a document that is used in determining end of life decisions.

If you have any questions regarding healthcare documents, and how coronavirus/covid-19 might affect when the documents are used, please email me at julie@juliemillslaw.com.

 

Before you die…

Or this post could have been titled “Ease the burden of loved ones.”  Because I’m an estate planning attorney, the “Before you die…” advice I’d typically give would be to have a will or living trust plan prepared.  I certainly always recommend that advice.  This post, however, is different.

I recently read an article I loved, “You Need to Make a ‘When I Die’ File–Before It’s Too Late.”  The article speaks to the side of estate planning that I rarely participate, and that’s the grieving family part of planning for what happens after you die.  I help my clients get all the documents they need, and advise on decisions that need made.  What struck me about the suggestions in this article though were actions to take that speak to people you love.  The article adds two items to the typical estate planning checklist, i.e., an ethical will and letters to loved ones: “[W]here a legal will transfers assets, an ethical will transfers immaterial things: your life lessons and values.”

An ethical will supplants a traditional will, and might be used to explain why you chose one child to serve as executor over the other child, or why you chose close friends as guardians for your child over your siblings.  “Letters to loved ones” is self-explanatory, and I highly recommend it if you have children who might have difficulty remembering you if you die when they are young.

As the author states:

The point of all this is to make a difficult thing like dying or loving someone who is dying less difficult. In that sense, creating a When I Die file is an act of love. It will always be too soon to tell your story and let people know how much they mean to you, until it is too late.

If you have any questions about estate planning, email me at julie@juliemillslaw.com.

Has a nursing home asked you to sign?

Your mother, father, aunt, etc., is moving to a nursing home.  You accompany your dad, for example, so he won’t be going through this alone, and he might need help completing paperwork.  The nursing home asks, or requires, that you sign as hi—STOP!  Don’t sign!

The nursing home asks you to sign as your dad’s “personal representative.”  Or to sign as guarantor.  Or to sign anything.  What you are likely doing is signing an agreement to be held financially responsible if your dad, through his insurance or Medicaid, does not or cannot pay his bill.  This might happen if his Medicaid application is not approved, or if insurance denies his claims, or any number of reasons.

But, the nursing home simply wants you to sign as the “responsible relative,” the person who will take steps to see that Medicaid or insurance pays your mother’s nursing home bills, right?  Or as the point person who will track down information, call the insurance company, provide information, right?  You would certainly agree to help your mother this way.  The problem is that you have unwittingly agreed to also be financially responsible to the nursing home for your mother’s bills.  Just ask Judy Andrien.

This practice by nursing homes occurs regularly, at least according to what I see and hear.  It happened to my family member, where the nursing home left his sibling lying out in the hallway on a gurney until the family member signed as “personal representative,” assuring this family member that “oh, it’s just a formality–we never pursue payment.”  They did pursue payment.

It is illegal under the federal “Nursing Home Reform Law” (summarized here) to require or request someone to sign as a guarantor as a condition of someone (usually a family member) being admitted, or of being permitted to continue to stay.  Nursing homes often get “crafty,” however, by asking family to voluntarily sign, whether as personal representatives, the responsible party, guarantor, etc.  “It’s just a formality….”

As an attorney, I have handled matters where stunned family members come to me with 5-figure bills from the nursing home, where the nursing home says that they signed as a financially-responsible party and now the bill is due.  At this point, one of the the only arguments is that my client did not sign voluntarily which can be a difficult argument to make, not to mention costly in attorney fees.

My advice if you accompany someone other than your spouse to a nursing home to be admitted?  Do not sign anything.  Period.

If you have any questions, contact me at julie@juliemillslaw.com.

Steps to take when a Veteran dies

If your deceased loved one was a Veteran of United States military service, there are steps you should take to know what documents to gather, and to get an idea of what benefits are available.  These are beyond the typical steps taken when a loved one dies, such as choosing a funeral home, obtaining the death certificate, gathering insurance policies. Funeral homes are experienced in knowing what to do, and what is available, for veterans’ funerals, but gathering what documents you need and knowing what is available is very helpful during a period when you and loved ones are grieving.

The following are a few steps to get you started.  Gather:

  1. A copy of the Veteran’s DD-214 (or discharge papers);
  2. Claim number for the Department of Veteran Affairs (VA).  Start with (800) 827-1000 if you are unsure where to find it.
  3. Social security numbers of the deceased veteran, spouse, and children.
  4. Contact information for your local National Cemetery or local VFW, DAV, VVA or American Legion group, if burial will be at a military cemetery.  You can request a “Military Funeral and Honor Guard” where two uniformed representatives of the deceased’s military branch will attend the funeral, serve as pall bearers, play Taps.
  5. Contact information for your local VA Hospital to arrange pick up of any VA-issued medical equipment such as wheelchairs, prosthetic limbs, hospital beds, if you would like to return them.

The VA also provides burial flags, headstones, medallion markers.  This post just touches on the benefits available to Veterans and their survivors.  To learn more, visit the VA’s website, and download the document “Planning Your Legacy: VA Survivors and Burial Benefits Kit.”

If you have any questions about Veterans’ or survivor benefits, feel free to email me at julie@juliemillslaw.com.

Have you been named Executor? Trustee? Possibly both?

When clients have estate plans prepared, they must choose people they trust to fill certain roles in estate plan documents.  The biggest shoes to fill are the executor of a will, and the trustee of a trust (if the client is getting a trust).  The duties for both roles are different because the documents do different things.  Sometimes the same person fills both roles, if that’s what the client wants and if the person they choose agrees.

Executor

An “executor” is the person named in your Last Will and Testament to wrap up your affairs after you die.  You might be expected to:

  • Pay financial obligations including taxes of the decedent from estate assets
  • Manage the estate by possibly submitting a will for probate, gathering the decedent’s assets and holding them until they are sold or distributed
  • Contacting government institutions and agencies to stop benefit payments
  • Represent the estate in legal matters

The role of an executor typically lasts for 13 months or under in Ohio.   You are wrapping up someone’s affairs and distributing their assets as their will dictates.  Once bills are paid and assets are sold or distributed, your role ends.

Trustee

A “trustee” is the person named in your trust (often, a “revocable living trust”) to perform the duties stated in your trust.  You might be expected to:

  • Manage the assets in the trust, which might be monetary assets, a home, etc.
  • Distribute trust assets according to the terms of the trust.  Common terms include the trustee paying for a beneficiary’s college expenses, distributing portions of the assets of the trust at certain ages
  • Communicating with the beneficiaries

The role of a trustee lasts for the lifetime of the trust.  A trust ends once final distributions are made or assets are exhausted.  A trust can also be terminated, which mostly happens when the value of the assets of the trust make administering the trust impossible–the trust’s assets diminish in value to the point of the trust not being able to pay trustee fees or other expenses.

Both roles carry some amount of personal liability, impose fiduciary responsibility, and can be time consuming.  If you were named in either role, then the person creating the documents trusts you, your abilities and judgment.

If you have been named the executor or trustee in someone’s will or trust, and you have questions or need guidance, please 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.

 

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.