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.

 

 

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.

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.

 

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.

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.