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Category Archives: Trust

Beware the Empty Trust- A New Year’s Resolution

Written on January 14, 2012 by Thom Cooper in Trust

By Attorney Ted Brown

One of the most common situations I encounter in Estate Administration is an empty trust. An empty trust is a trust that never ends up actually holding any property or assets. Attorneys that do not specialize in Elder Law often provide clients with a trust printed on very nice paper and put into a fancy binder but leave the task of transferring assets to that trust squarely upon the client. As a result, the trust is never used to its full potential. When the client passes away, assets end up in probate, adding delay and expense to an already difficult time for their families. Similarly, estate tax savings provisions in the trust go unused, leaving the family to pay death tax they otherwise may have avoided.

If you have a trust, your assets should be clearly titled in the name of that trust. You should also be familiar with the goals and purposes of the trust and what you need to do to take full advantage of its provisions. If you think you may be suffering from an empty trust or do not fully understand how your trust works, the New Year is a prime opportunity to meet with an Elder Law Attorney at Cooper, Adel & Associates. 2012 should be the year that you can finally get your ducks in a row!

Top 5 Reasons Why Having Just a Will in Ohio is Simply Not Enough

Written on November 4, 2011 by Thom Cooper in Estate Planning, Planning, Trust

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By Attorney Dan Vu

A Will does not avoid the unnecessary cost and hassle of probate.
Although commonly misunderstood, the basic fact is that a Will is not in effect until the Probate Court admits it. It does not allow your estate to avoid Probate Court. Instead, wills are instructions to a Probate Court.
A Will does not protect the inheritance you leave to your beneficiaries from a future creditor or divorce.
Yes, believe it or not, many states, including Ohio, allow the creation of Trusts that can protect the inheritance you leave behind.
A Will does not protect your assets from the catastrophic cost of long term care.
A nursing home stay can wipe out the inheritance you meant to leave to your beneficiaries. Yes, you can also protect assets from this cost using specially created Trusts.
A Will does not allow for someone to act on your behalf while you are alive but need help.
A Will appoints Executors who can administer your estate at death, but what if you need someone to act on your behalf while you are living but lack the mental or physical capacity to manage your affairs? A properly drafted Trust and Power of Attorney can avoid the cost, hassle, and restrictions of a court appointed guardian.
A Will does not take advantage of potential estate tax savings.
The Federal and Ohio Estate Tax (or Death Tax) laws are always changing. Of course the estate tax law today does not matter, it is the estate tax law at the date of your death that really matters. The history on this subject has shown us that Trusts can be constructed to deal with the changes in law and can take advantage of serious estate tax savings that would not otherwise be available.

What is a ‘Pour-Over Will?’

Written on August 8, 2011 by Thom Cooper in Trust

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By Barbara Penwell

A Pour-Over Will is a particular type of Will used in conjunction with a Trust when a person dies with an asset that has no beneficiary. This kind of Will “pours” this property into the Trust that the person set up during his or her life so that their wishes, as expressed in the Trust, are followed.

Why isn’t everything owned by their Trust? The most frequent reason is that people forget to set up ownership for newly-acquired property, like a new car or a bank account, as their Trust.

If you die without a Will and have property with no beneficiary designated, then your property may not be distributed according to your instructions in your Trust. Rather, any potential heirs must go to Probate Court where the judgement is made about who the rightful heirs are. The property will most likely be distributed according to the rules of “intestate succession” (property inheritance when there is no Will).

To avoid the delay and expense of an intestate estate, a Pour-Over Will is created with most Trusts. It covers any property that was intentionally or inadvertently left out of the Trust during the deceased’s life. By the terms of the Pour-Over Will, all the property the deceased owned at death is “caught” and is “Poured-over” into the existing Trust. Though the property caught by a Pour-Over Will has to go through probate, it will eventually be distributed according to the instructions of the deceased rather than the State Law rules of intestate succession.

If you have a Trust, make sure you also have a Pour-Over Will as a safety net just in case you pass away with property that has no beneficiary.

For additional information regading Trusts,Pour-Over Wills,or to arrange a free consultation, please contact our office at 1-800-798-5297.

When to use a Memorandum of Trust

Written on July 16, 2011 by Thom Cooper in Trust

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By Attorney Dan Vu

If you have a trust in Ohio, your trust, unlike a will, is a private document that is normally never made public. During your life and at your death, no third party needs to know who gets what and how much unless you want them to know.

However, as you may already know, your bank, financial institutions, a government agency, or a title company may request a copy of the trust. Out of frustration, you may have complied and given them a full copy of your trust. Instead of providing a full copy of the trust, Ohio law allows you to provide a Memorandum of Trust (also called Certificate of Trust or Abstract of Trust). This is a statement, signed by the trustee, which provides the requester only the bare essential information of the trust needed to complete your transaction.

In 2007, when Ohio adopted provisions of the Uniform Trust Code, third parties accepting a Memorandum of Trust are sheltered from liability. This allows, for example, a bank to happily accept a Memorandum in lieu of having their legal department review your entire trust. A win, win for both parties. If you require a Memorandum of Trust, have your attorney prepare one for you. For the requirements of a Memorandum of Trust, see ORC § 5810.13.

What Does it Mean to Fund a Revocable Living Trust?

Written on June 23, 2011 by Thom Cooper in Trust

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By Barb Penwell

In order for a trust to function properly, assets must be “funded” into the trust.

Funding is the process by which assets that were previously titled in the name of the individual or in joint names with others and re-titled so that the Trust is the owner. In the case of insurance or annuities, it is customary to identify the Trust as either a primary or secondary beneficiary.

The ultimate goal of funding a Trust is to ensure that the Settlors’ property is governed by the terms of the Trust agreement. These funded assets are managed by the Trustee of the Trust. Thus, when the last Settlor dies, the Trustee can proceed with settling the trust without going through probate.

Why Should You Fund Your Trust?

Assets held outside the Trust cannot be managed by the Trustee – The Trustee of the Trust has no power over the Settlors’ property that hasn’t been re-titled into the name of the Trust. Thus, if the Settlor becomes mentally incapacitated, the Settlors’ loved ones will need to establish a court-supervised guardianship or conservatorship to manage the Settlors’ assets that are not held in the name of the Trust.
Assets held outside the Trust may require probate after the Settlors’ death if there is no beneficiary designation on that asset as in the case of a payable-on-death designation where the beneficiary predeceases the Settlors. Trusts typically name a series of back-up beneficiaries so that this does not happen. Further, this defeats the purpose of creating a Trust. Probate is a costly, a lengthy process, easily challenged and is a public record.
Assets held outside the Trust may not go to the Settlors’ intended beneficiaries. For instance, with jointly-owned assets, these assets will pass to the joint owner (usually one of the child helping mom or dad) and not to all of children, as is often intended.

Please contact our office at 800-798-5297 to arrange a free consultation to discuss your plan to distribute your assets.

SHELLEY’S LIFESTYLES OF THE (NOT SO) RICH AND FAMOUS

Written on May 17, 2011 by Thom Cooper in Case Study, Estate Planning, Trust

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By: Shelley Rose

OK, let’s all admit that we know a few mean people that surround us, right? Well, if you are rich and famous and you knew Leona Helmsley, you may have considered her mean. She was referred to as “the Queen of Mean” from all of those who knew and “loved” her. If you are unfamiliar with Leona, she and her husband, Harry, were well known as real estate developers and hoteliers. Leona was known for being mean to staff. It seems like everyone she ran into and also in the later years of her life was convicted of tax evasion and spent years in prison.

But with everything that she did to her friends and staff, no one would have expected what she did in her final days while writing her Trust and Will. Everyone talked after Leona passed away on August 20, 2007 at age 87 when contents of her Trust and Will were revealed.

Bottom line is that Leona’s dog, Trouble, will continue to live an opulent life because Helmsley left her beloved white Maltese $12 million. She also left millions to her brother, Alvin Rosenthal, who was named to care for Trouble in her absence, as well as two of four grandchildren from her late son, Jay Panzirer, so long as they visit their father’s grave site once each calendar year. Otherwise, she wrote, neither will get a penny of the $5 million she left for them. Helmsley left nothing to two of Jay’s other children “for reasons that are known to them,” she wrote.

But no on made out better than Trouble, who once appeared in ads for the Helmsley Hotels, and lived up to her name by biting a housekeeper.

So, I think this is a prime example that while you are living, YOU are in charge of who or what gets a portion of your Estate. That may not be so true after you are gone. So please make sure you are taking care of your affairs and you make the decisions of where your estate goes after you are gone.

Call for a free consultation with Attorney Cooper at 1-800-798-5297 to make sure your estate isn’t “left to the dogs”.

Until next time, keep your feet on the ground and keep reaching for the stars!

Leave Your Children a Creditor and Divorce Proof Inheritance

Written on May 14, 2011 by Thom Cooper in Estate Planning, Trust

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By Attorney Dan Vu

I often tell my clients “It is not the size of the inheritance that counts but rather, it’s the type of inheritance that truly matters.” If the inheritance you leave to your child is the unprotected type, your child’s future potential liabilities could make the size of the inheritance meaningless.

In one fell swoop a creditor could lay claim to the entire inheritance, no matter the size. These days a divorce could end with a similar result. Therefore, the single most valuable gift a parent can give to their children is to ensure that the inheritance left to them is the protected type. That is, protection from the endless possible events that may occur to them during their lifetime whether it be a car accident, business failure, or divorce. Ohio law allows the creation of specific types of trusts that can do just that. These trusts, sometimes called spendthrift trusts or legacy trusts, if created and utilized correctly, can be a powerful vehicle to shelter your children’s inheritance from their liabilities while still allowing them access to the inheritance for your intended purpose: to support them and only them. These special trusts can also be used for the benefit of your grandchildren, nieces, nephews, or even your spouse.

Whoever it may be, if you expect to leave an inheritance, consider doing your beneficiaries a big favor now and take that extra step to leave a protected inheritance. Call our office to discuss how this might fit into your estate planning.

Special Needs Trusts & Medicaid-Medicare Eligibility

Written on May 4, 2011 by Thom Cooper in Planning, Trust

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By Attorney Renee Fox

From “Ask Lisa: Everyday Estate Planning”

QUESTION: We had a special needs trust drawn up by a lawyer for our disabled daughter who has turned 21 and is entitled to an annuity. Our lawyer is stating in the trust that any benefits received by SSI or Medicare throughout her life must be reimbursed to the state upon her death or upon termination of the trust. We want her to be entitled to government benefits so that she can stay active (day programs, job coaching, etc) but we were surprised to read in the drafted trust document that any of these benefits would have to be “paid back”. Is this true?

ANSWER: If the money that you are going to place in that Special Needs Trust is her money, and not a gift from a third party (and this is often the case if there’s an accident settlement or the like), then, yes, your lawyer sounds as if he or she is setting it up correctly. A self-settled Special Needs Trust requires, by federal regulation, that the assets left at the end of the beneficiary’s life must be paid back to the state Medicaid agencies that provided service. Here’s a link to a helpful site, The Learning Disabilities Association of America, read the entry on Restrictions on Self-Settled Special Needs Trusts.

The above was a question posed to a New York Attorney and her response. At the Thom L. Cooper Company we specialize in both Special Needs Trusts (child’s money) as described above and Supplemental Care Trusts (third party money-which does not require a “pay-back”). If you have a disabled child and could benefit from learning how to provide for their future please call the experts at The Thom L. Cooper Company.

Wills of the Rich and Famous

Written on April 11, 2011 by Thom Cooper in Estate Planning, Important Documents, Trust

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By: Shelley Rose

Yes, I will admit it! I am a celebrity junkie and I am fascinated by every aspect of their lives, right down to their Last Will and Testaments! Do you know that the provisions of the wills of the likes of anyone from Jacqueline Kennedy Onassis, to Elvis Presley, to Babe Ruth can be found right online?

What fascinates me even more is that while we “normal people” don’t think about making our wills until we get a bit older or have grandchildren, many of the YOUNG and FAMOUS have died WITH wills in place. Marilyn Monroe and Princess Diana both died with wills at the age of 36, as did John F Kennedy, Jr. at the age of 38. Anna Nicole Smith (aka Vickie Lynn Marshall) died two years ago at the age of 39 with a will that she wrote in 2001, and actor Heath Ledger died in March 2008 at the age of 28 with a will that he wrote in 2003. Singer Janis Joplin died at the age of 27 but managed to update her will only two days before her death. She actually provided for up to $2,500 to be set aside for a party in her honor!

While we can only speculate why the rich and famous decide to write last will and testaments, their diligence certainly sets a good example for the not so rich and famous. Below are the top four reasons why people decide to meet with an estate planning attorney:

Avoiding Probate – Avoiding probate is by far the most common reason why people seek out the advice of an estate planning attorney. While many have never even dealt with probate, they still know one thing – they want to avoid it at all costs. Suffice it to say that for the vast majority of people, avoiding probate is a very good reason for creating an estate plan and can be easily achieved.
Reducing Estate Taxes – The significant loss of one’s estate to the payment of state and/or federal estate taxes or state inheritance taxes is a great motivator for many people to put an estate plan together. Through the most basic planning, married couples can reduce or even possibly eliminate estate taxes altogether by setting up revocable living trusts.
Avoiding A Mess – Many clients seek the advice of an estate planning attorney after personally experiencing, or seeing a close friend or business associate experience, a significant waste of time and money due to a loved one’s failure to make an estate plan. Choosing someone to be in charge if you become mentally incapacitated and after you die and deciding who will get what, when they will get it, and how they will get it after you’re gone will go a long way towards avoiding family fights and costly court proceedings.
Protecting Assets from Unforeseen Creditors – Lately asset protection planning has become a very important reason why many people, including those who already have an estate plan, are meeting with their estate planning attorney. Once you know or even just suspect that a lawsuit is on the horizon, it’s too late to put a plan in place to protect your assets. Instead, you need to start with a sound financial plan and couple that with a comprehensive estate plan that will in turn protect your assets for the benefit of both you during your lifetime and your beneficiaries after your death.

Using the Ohio Marital Deduction Incorrectly Can Be a Very Costly Mistake

Written on March 8, 2011 by Thom Cooper in Taxes, Trust

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By Attorney Dan Vu

The Ohio Marital Deduction allows a surviving spouse to take a deduction equal to the value of assets of he or she receives from the deceased spouse. This can result in reducing the Ohio Estate Tax to zero. Sounds great right? Well, too often Attorney’s think this is so, regardless of the family situation and what tax implication this may have in the future.

An example of this was a widow who met with an attorney specializing in probate. He also filed Ohio Estate Tax forms for his clients. He presented to her this wonderful option of paying zero in estate taxes by using a marital deduction on all her deceased husband’s assets. However, the widow was over 70 years old with over $700,000 in farmland. Also, her children, had for some time now taken over the responsibility of farming the land.

So while it is true that she would not have to pay a dime in estate taxes now, it still may not be the option she would choose if all the consequences were known. What was not told to her is that as a direct result of the marital deduction being taken, when she would pass, her estate would have an incredibly large check to pay to the Ohio Treasurer (in the tens of thousands of dollars!). Perhaps, a better option would have been to disclaim her husband’s portion of the farm to her children, who were already farming the land and who were to inherit the land at their parents death. Furthermore, an Ohio Qualified Farm deduction could have been taken to reduce if not eliminate the Ohio Estate Tax altogether, but this time, without leaving a large tax to pay when the surviving spouse would later pass.

As the difference can be tens of thousands of dollars in savings, make sure you, and at the very least, your attorney, understands the implications of your choices when filing an Ohio Estate Tax Marital Deduction. If we can help, call us for a free consultation.