When to say goodbye to pets

A sizable portion (surprising to some) of my law practice is pet estate planning.  Whether it’s preparing a will and designating someone in it to care for your pet if you die, or creating a pet trust for your pet (recommended), or adding provisions to an existing will or trust, people see pets as family and plan for them as they do their children or other beneficiaries.  People engage in pet estate planning for everything from one dog, to a stable of horses, to parrots who often live to age 60 or 70.  (Blatant plug–I was one of the first Ohio attorneys to publish an article on pet estate planning after the change in Ohio law that permitted it.  I wish everyone planned for their pets in this way, and I’m happy to help with documents and, or, letters of intent regarding their care.)

As difficult as it is to plan for a day when we might not be able to care for our pets, it is incredibly difficult to know when it is time to humanely let our pets die.  How do you know when it’s time to let them go?  That decision is fairly easy when there’s visible suffering, but the signs aren’t always so clear.

Veterinarian Alice Villalobos, DVM created a scale that can help guide pet owners in deciding whether euthanasia is appropriate.  If you score higher than 35 on the scale, then perhaps supportive care is appropriate instead of euthanasia.  Whatever your score is on this scale, my suggestion is to discuss everything with your veterinarian.

If I can help you plan for your pet should something happen to you, please email me at julie@juliemillslaw, or visit http://www.juliemillslaw.com for additional information.

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Three Ways Couples Hold Property in Ohio

There are three ways in Ohio that couples can hold property.  Why does it matter?

The form in which you hold property affects how you can transfer the property, what happens to it at your death, what happens if one of two property-holders dies or wants to sell his or her portion.  You should know how you hold property so you can change the type of deed you have for your specific reasons.  Do you want the other owner to get your share if you die, or do you want your kids to get it?  Do you want to transfer your share to the other owner outside of probate?  Do you want to transfer your share of the property to your spouse at your death only?

Get out your deed, or get onto your county recorder’s website and find your deed online.  Does it state:

1.  “George Burns and Gracie Allen, Husband and Wife”?  If no manner of title is stated, in Ohio the form of ownership will be presumed to be tenancy in common.  Each person owns an undivided fractional interest in the property.  They can own equal or unequal shares.  When an owner dies, that person’s share must go through probate, and is then transferred according to his or her will.

2.  “George Burns and Gracie Allen, joint tenants with rights of survivorship…”  The magic word is survivorship.  If the deed is a survivorship deed, then on the death of one owner, that owner’s share passes outside of probate to the other owner.  For a couple whose largest asset is their house, and few other assets that would need probated, having a survivorship deed could result in avoiding probate.

3.  What if George owned property and wanted to have the property pass to Gracie at his death, but for any number of reasons didn’t want her to have a present interest in the property?  George could have a transfer on death affidavit prepared (and recorded).  He would name Gracie in the affidavit to receive the property at his death.

If you want to avoid probate, be sure your deed has survivorship language or you record a transfer on death affidavit.  Why make your heirs go through the probate process if they can avoid it?

To change the form of ownership you have with your property, contact me to decide the best form of ownership for your situation, and to prepare and file a deed if necessary.  I can be reached at julie@juliemillslaw.com.

What is a trust?

What is a “trust”?  What does it do?

There are three parties involved in a trust.  First is the person who makes the trust, called the settlor or grantor.  Second is the person who is to benefit from the trust, called the beneficiary (or beneficiaries).  Third is the person who manages the trust, called the trustee.  A trust is a contract, with terms determined by the grantor to govern how the trustee manages the trust, terms to decide how the assets in the trust are to be distributed to beneficiaries, terms to govern who is included in the class of “beneficiaries” if the beneficiaries are not clearly defined, terms to decide when the trust should terminate, among others.  Because a trust is a private contract, the settlor or grantor can decide upon whatever terms and conditions he or she wants in the trust, unless they are illegal or against public policy.

Essentially, a trust is a way for someone to control his or her assets “from the grave.”  For comparison, with a last will and testament, assets are distributed once the deceased’s debts are paid by his estate.  The administration timeframe with a will is usually no longer than thirteen months.  With a trust, the trust holds assets (typically by re-titling or re-deeding an asset) and the trustee makes distributions according to the terms of the trust, which could be at staggered ages (25, 30, 35), or to pay for college, etc., and could last for years.

There are several different types of trusts used for several different purposes.  Most of my clients use trusts to provide for children or grandchildren (pay for college, provide distributions at key ages in life), or they have a child or grandchild with a disability and they want to leave assets to their disabled loved one to maintain their quality of life, without jeopardizing government benefits.   Other common trusts include credit shelter trusts, life insurance trusts, domestic asset protection trusts, firearms (“gun”) trusts, pet trusts, IRA trusts, among many others.

Trusts have certain benefits that clients find attractive.  Unlike wills, which are public documents and can reveal private information including finances, a trust is not a public document.  Privacy can be a big concern for those wishing to keep certain things private, such as business owners and their finances.  Trusts, if properly funded, avoid the probate process.  In some situations, trusts can protect assets from creditors.  Particularly important for many of my clients (as mentioned above), trusts permit someone to control the distribution of their assets from the grave, often for years.

This blog post is a very general and condensed explanation of the benefits of a trust.  If you are interested in learning more about how a trust might benefit you, email me at julie@juliemillslaw.com or contact me via http://www.juliemillslaw.com.

Trustees for special needs trusts: “You must choose, but choose wisely.”

There are special considerations when choosing a trustee for a special needs trust.  As with any trust, the trustee should be responsible and trustworthy.  If the trust is for the benefit of someone with a disability, you have added issues to factor into your choice that are critical to family relationships, safeguarding assets in the trust, and maintaining the beneficiary’s eligibility for government benefits.

In my practice it is typically the parents or grandparents of a child with a disability who creates a special needs trust.  The natural choice to my clients for a trustee is someone who knows and cares about the child–usually a family member.  Oftentimes, however, the family member is unaware of what is involved with administering a trust for a disabled person, which could lead to legal and financial problems for the trust and the trustee.  Professional trustees (financial institution, etc.) are viewed with skepticism because the child often has specific, individual needs unfamiliar to someone who doesn’t know the child, and their fees can seem excessive.

ISSUES TO CONSIDER

  1.  Trustee will need to learn about government benefits, trust taxation, money management.  There are rules and regulations that the trustee will need to know.  Government benefits are complex, and maintaining them requires diligence.  Certain actions can jeopardize the beneficiary’s receipt of government benefits.   There are tax rules for trusts, and assets in the trust that need managed.  Your trustee should prepare to become very knowledgeable in unfamiliar areas of government benefits, trust taxation, and trust asset management.
  2. Trustee can be held liable.  A trustee of any trust can be held liable for “wrongdoing,” even for mistakes.  With a special needs trust, mistakes from a well-meaning family member serving as a trustee could result in the loss of crucial government benefits for the disabled beneficiary, most notably, medical insurance (Medicaid).  Unfortunately, family-member trustees often do not purchase trustee liability insurance, making them vulnerable if they make an improper distribution that jeopardizes receipt of benefits, or if they fail to file taxes or submit accountings correctly. (I highly recommend trustee liability insurance for trustees.)
  3. Family relationships might become strained.  If Uncle John is serving as the trustee of his niece Jane’s special needs trust, it is John who decides whether a distribution should be made.  If Uncle John and Niece Jane have always had a good relationship, and suddenly he is in a position of having to disappoint Jane by deciding against her request for something, their relationship might become strained.  Additionally, if John is a future beneficiary in the trust if Jane dies, an inherent conflict could also strain relationships.  Perhaps John is declining Jane’s distribution requests so as to keep as much money in the trust as possible for him if Jane dies?  Whether true or not, such a conflict has the potential of creating familial tension.
  4. Cost.  One of the main complaints with professional trustees is their fee.  For some financial institutions, annual trustee fees can range from 1-5% of the value of the assets of the trust.  This might not be excessive when you consider costs associated with a family member serving as trustee.  Due to liability and time concerns, it is advisable for the trustee to hire an attorney to advise on government benefits and maintaining eligibility.  A CPA is advisable due to tax filings and tax considerations with trusts.  An investment professional is suggested to meet the trustee’s fiduciary obligation to maintain trust assets.  The family-member trustee can be compensated a reasonable fee for his or her services as trustee.  It’s the trust that pays for these services.  A professional trustee’s fees might be comparable to the cumulative fees associated with having a family member serve as trustee–if so, then I suggest factoring in other considerations above when choosing a trustee.

There is a middle ground.  For clients who want the personal involvement of a family-member trustee, but want the expertise of a professional trustee, I recommend designating the family member as “trust protector” and a professional trustee as the trustee of the trust. The trust protector safeguards the financial and other interests of the beneficiary, and can take legal action on behalf of the beneficiary if there are problems with the trustee.  The professional trustee has the financial ability to compensate the trust if mistakes are made, and the expertise to reduce the chance of making mistakes.

If you have questions about special needs trusts, special needs planning, choosing a trustee, or the role of a trust protector, please contact me by email at julie@juliemillslaw.com, or visit my website for other ways to reach me.  Planning for the future of a loved one with a disability is both critical and complex!

 

 

 

Living trusts–do I need one?

You might see advertisements for seminars discussing trusts, and why you should have one.  For many people, a trust is a critical part of their estate plan.  For others, a trust might be unnecessary.  Perhaps you just need to change the way your assets are held, as I explained in this blog post.

However, if anything in the list below applies to you, then I recommend a living trust for you:

  1. You have minor-aged children and do not want them to inherit everything at age 18.” Most of us remember back to when we were 18, and how we were not experienced or mature enough to manage a large sum of money.  A living trust can pay for your child’s education, and make distributions at certain ages, ensuring financial support along the rites of passage in life.
  2. You have real property in other states.”  If you own a home or parcel of land or other real property in other states, ancillary probate would need opened in each state where you own property after you die.  This would be expensive and cause delay with distributing your assets.  Putting your real property in a living trust would eliminate the need for probate, and for ancillary probate in other states.
  3. You want privacy.”  Dying with only a will means anyone can drive to the courthouse and look up your will, including probate filings such as an inventory of your assets and their value, and your tax returns.  These are all considered “public records.”  For business owners, private business information could be made public.  A living trust is a private document, and if privacy of your assets is a concern, then you need a trust.
  4. You want to disinherit or there might be potential will contests.”  With a will, next-of-kin are required to receive notice that a will has been filed with the court, and a probate might be opened.  A relative who discovers he or she will not inherit might decide to contest the will.  Because a living trust is private and there are no notice requirements to next of kin, will contests can be avoided.

If you want to see if a living trust is right for you, contact me at julie@juliemillslaw.com.

Trusts–4 things they do that you might not know

A trust is an estate planning tool where the grantor (person who creates the trust) transfers assets to the trust to be managed by someone they choose as a trustee.  Transferring assets to a trust is accomplished in many ways, but largely by re-deeding or titling.  For example, John Doe transfers the deed to his house from “John Doe” to the “John Doe Trust.”

Here are 4 things trusts do that you might not know:

  1. Protect beneficiaries. Children and grand-children are typical beneficiaries in estate planning to protect their futures. Trusts can preserve assets to children by distributing certain amounts at certain ages, such as distributing one-third of the assets at age 25, another chunk at 30, another final chunk at 40 or any age.  Staggering distributions to a child ensures they are taken care of to an extent through a certain period in their life.  If you have only a will, assets go to beneficiaries once they reach 18.
  2. Provide for beneficiaries with special needs. People with special needs often need government benefits such as Medicaid and Supplemental Security Income (SSI) for healthcare and necessities. Special needs trusts ensure that a disabled beneficiary can have assets without disqualifying him or her from receiving government benefits.
  3. Provide for pets. Trusts can ensure the care of your pets by naming people (a caregiver) to care for your pets, and providing funds to ensure that your pets receive care.  The Humane Society of the United States estimates that over 100,000 pets are taken to shelters each year after an owner dies, and in areas with large elderly populations, half the pets in shelters end up there due to their owner’s death.
  4. Encourage certain values. Trusts can provide incentives for pursuing a post-secondary education, encourage community service or productivity, support home ownership, encourage long-term savings and planning.  You cannot condition distributions to beneficiaries on anything that violates public policy, but providing matching funds or financial support in certain circumstances can be a way to reward values that are important to you.

Contact me at julie@juliemillslaw.com to discuss setting up a trust.

What happens to my pet if I die?

Provide for the care of your pet through a pet trust to avoid your pet’s fate falling into the hands of people you do not choose.  A pet trust is a legally enforceable way to provide care for your pet if you die, or become incapacitated and unable to care for your pet.

“I have a provision in my will for my dog.”  Your will comes into play after you die.  What if you became incapacitated from an accident, injury or illness?  Your will would not help, but a pet trust would.  Your trustee and pet’s caregiver could step in and begin caring for your pet if you become incapacitated and unable to take care of your pet.

“I’ve left money to my sister and she has agreed to take my cat if I die.”  What happens, however, if your sister would die shortly after you, or die before you and you never update your will, or if she otherwise becomes unable to care for your cat?  If you had a pet trust, your successor caregiver would step in and care for your pet.

A big difference between a pet provision in your will, versus having a pet trust, is timing.  With a will, your executor can’t make distributions until your estate has gone through probate, and money for your pet’s caregiver might be unavailable for months, or longer if there are any issues with probate.  With a pet trust, your trustee has access quickly to trust funds, and can provide money to the caregiver for your pet’s needs.

A pet trust is like most trusts where you name a trustee and successor trustees to manage the assets of the trust; you name a caregiver and successor caregivers to physically care for your pets; and you fund the trust, typically with your assets at your death or with a life insurance policy with the trust as the beneficiary.

If you live in Columbus, Cleveland, Akron or Canton, and areas in between, and want to provide for your pet’s future without you by preparing a pet trust, email me at julie@juliemillslaw.com, or call me in northern Ohio at (216) 438-1298 or central Ohio at (614) 519-8661.