Estate Planning Q&A

Q: Why do I need a will?

A: With a will, you decide how to disburse your assets rather than leaving that job to the courts. Second, you can choose a better personal representative to handle your estate during probate than the courts. Third, you can choose a more caring guardian for your minor children than the courts. Fourth, you can designate a favorite charity to benefit from your assets to minimize government estate taxes. And lastly, your grieving loved ones will be better off looking after your affairs if you detail your wishes through a will.

The greatest gift you can give your family is peace of mind. If you die without a will (known as "intestate"), you forfeit the right to direct the assets or your estate. This often results in needless legal disputes, damage to personal relationships, and sometimes, financial tragedy. A will is an opportunity for you to designate your own executor, guardians for minor children, and other fiduciaries, rather than relying on the probate court to appoint them for you. Trustees for minor children or other beneficiaries of your estate can be designated in a will, and their powers can be tailored to the anticipated needs of those beneficiaries.

Q: Do I need a trust?

A: For some, a trust is a great idea. Trusts can help distribute assets to children at certain ages, for certain purposes, or to other beneficiaries that cannot be trusted to handle their financial affairs. Anyone with children under the age of 25 years old should consider a trust. Trusts can also help avoid the probate process and help with creditor protection.

Additionally, there are negative TAX consequences that may arise for your estate as well as your heirs if you don't have a trust that provides for any tax avoidance methods. Both federal and state governments may impose taxes on the transfer or your property, and a TAX may also be imposed on the property distributed to your heirs. Trusts can help address those taxes.

Q: Do I still need a will if I form a trust?

A: Even those who have shifted the majority of their assets into trusts designed to bypass the probate process, or who use joint ownership, should draw up a will. In the typical case, the assets that are properly placed in trust pass under the trust. However, most property owners, inevitably leave behind an estate simply because the estate planning tools may not be designed to shift all assets away from the probate process. Certain properties and assets will often still be held in the name of the owner for convenience and management reasons.

Q: What information do I need to have to meet with an attorney about a will or a trust?

A: You should have a general idea of people in your life that you would trust to help with your children or your money and the people to which you would like to leave your assets. You should also have some idea of the things you own, and your insurance coverage and any accounts that have beneficiaries. We will accumulate this information to complete your file, recommend appropriate documents (wills, trusts etc.) and help you to make the right decisions.

Q: What is a living will?

A: A living will is a legal document that a person uses to make known his or her wishes regarding life prolonging medical treatments. It can also be referred to as an advance directive, health care directive, or a physician's directive. A living will should not be confused with a living trust, which is a mechanism for holding and distributing a person's assets to avoid probate. It is important to have a living will as it informs your health care provider, and your family about your desires for medical treatment in the event you are not able to speak for yourself.

Q: What is a power of attorney?

A: A power of attorney is a document in which you state that you give someone else (usually a relative or friend) the authority to make certain decisions and act on your behalf. Just because the word attorney is used does not mean that the person you give authority to has to be a lawyer.

Executing a power of attorney does not mean that you can no longer make decisions; it just means that another person can act for you also. For example, you may be hospitalized for a brief period of time and need someone to deposit your checks in the bank or pay your bills. You are simply sharing your power with someone else. Typically, you can revoke the agent's authority under the power of attorney at any time if you become dissatisfied with what they are doing. A power of attorney can also be "durable", meaning Ihat your agent can continue to make decisions for you if you become incapacitated. The agent will still be obligated to act in your best interest, making decisions and using your money and property only for your benefit.

Q: Are there other ways to leave asset, to your loved ones?

A: There are a multitude of choices for you. You can leave life insurance policy proceeds and/or retirement fund accounts to someone by designating the name of the beneficiary on the proper forms.

There is also the option of POD (payable on death) account. If you have a POD bank account, upon death those funds would immediately be transferred over to your beneficiary. If you execute a TOD (transfer on death) real estate deed, that real estate will immediately transfer to the beneficiary upon your death. When you have a survivorship deed, should something happen to you, the rights to the property immediately transfer over to the surviving spouse or designated beneficiary. This same method can be applied to a joint bank account. And last but not least, you can set up a trust whereby all your assets are placed in a trust and then, upon your death or some other event, paid immediately or over some period of time, at certain ages, or for certain purposes to your named beneficiaries.

Q: What is Probate Court?

A: The Probate Court is established in each county of Ohio to supervise the administration of the estate of a decedent who was a legal resident in the county at the time of his or her death. Each transaction involved in the administration of an estate is subject to the examination and approval of the Probate Court.

Other matters within the Probate Court's jurisdiction are: issuance of marriage licenses, adoptions, guardianship proceedings, the involuntary commitment of the mentally ill, and land appropriation cases.

Q: If I die, will my estate need to go through Probate Court?

A: If someone dies and leaves assets titled in his or her name only, then yes, the decedent's estate needs to be probated. These assets are considered Probate Assets. If the decedent owns personal or real property in his or her name only, the only way to get the property transferred out of decedent's name is via the Probate Court. If there is a will, then the assets held in the decedent's name pass according to the will. The will typically appoints an executor to assist in Probate Court. The Probate Court makes sure that the terms of the will are followed by the executor.

If there is no will, then the assets are distributed via "Ohio's Will" -the statute of Descent and Distribution. Someone who has an interest in the estate can apply to the Probate Court for the Authority to Administer the Estate and become the administrator of the estate. While the Probate Court looks to appoint someone from the decedent's immediate family, anyone with an interest in the estate can apply to be appointed the administrator including creditors.

Q: What is the difference between Probate and Non Probate Assets?

A: Probate assets are those assets that require the Probate Court to oversee their transfer or distribution. Probate assets are those assets that the decedent held in his or her name only without a beneficiary. Non-Probate assets are assets that the decedent owned jointly with someone else or had a named beneficiary to the assets. Non probate assets include Payable on Death Accounts, Joint with Rights of Survivorship real estate or bank accounts, life insurance policies paid to a specific beneficiary, or an IRA paid to a specific beneficiary.