“Invincible” estate planning trusts have weaknesses. Read this.

“Invincible” estate planning trusts have weaknesses. Read this.

Trusts can be used to protect your hard earned assets, to help your beneficiaries avoid the cost and expense of probate, as well as transfer legal ownership of assets to a trustee. A property is deeded in the name of the trust and the trustee is responsible for administering it as the grantor specifies. However, there could be more strings attached to an asset in a trust than if it were left to someone in a will.

While a trust is fairly straightforward, simple mistakes can invalidate your transfer of property.

Below we’ll discuss the common mistakes people can make when creating a trust.

  1. You fail to show intent to create a trust. This is vital. American courts are extremely protective of individual property rights. The intent standard for a trust conveyance is similar to the property being gifted: The individual granting the property must show that making such a grant was intentional. Without this, no trust can be considered valid.

2. You fail to sufficiently fund the trust. A trust cannot be created unless the property changes hands. Any failure to deliver the property to an adequate item or sum in trust will result in a trust failure. Funding problems could be due to the granting party failing to make delivery or due to placing in trust some future property interest that can’t be tied to any property in a way that proves its viability.

3. You fail to instruct beyond precatory language. Precatory language expresses your desire but doesn’t create a legal obligation. Your trust document must indicate that you are creating a legally binding obligation.

4. You fail to name beneficiaries. A person or group of people must be named as beneficiaries. Viable trusts name beneficiaries and set out any terms for the trust as well as the duties the trustee owes to the beneficiaries.

5. You fail to put the trust in writing. When a trust involves a grant of real estate or a trust is created through the execution of a will, it must appear in writing to be considered valid. A “verbal arrangement” made with a family member or close friend will never see the inside of a courtroom.

Of course, there are expenses to set-up the trust, but these expenses should be compared to the costs of probate as well as any fees paid to the estate executor that often equal a large portion of the probate estate. The expenses may include:

  • The cost to establish the trust and to create a pour-over Will that deposits all remaining assets into the trust at the time of death.
  • When administering the trust, the trustee might have to retitle documents or add new filings in order to transfer ownership to the trust.

Another potential problem involves interpersonal issues that could arise between the beneficiaries and the trustee if the beneficiaries resent the trustee’s role or believe that they are not acting in their best interests.

However, it’s key to remember that you can overcome any of these problems by setting up a trust with forethought and professional assistance. Call Chuck Bendig for your free consultation.

Filing Taxes for the Deceased

Filing Taxes for the Deceased

Chances are you’ve heard the saying “In this world nothing is certain, but death and taxes”, and as it turns out, taxes are certain even if preceded by death. In fact, a decedent’s executor must file one last tax return for the deceased, with a few conditions which we’ll discuss here.

The decedent’s marital and parental status are key factors since there are special rules for families:

The deceased’s spouse may file a joint tax return for the year of the spouse’s death. However, if the spouse remarries during that same year, a “married filing separately” return should be filed.

If the surviving spouse has a dependent child, they might receive a tax break for up to two tax years following the death. The surviving spouse referred to as the ‘qualifying widower’, can pay the tax rate that applies to married couples, which could mean a smaller tax bill.
To be eligible;

  1. you must have been entitled to file a joint return with your deceased spouse for the year of their death,
  2. you must not be remarried before the end of the current tax year,
  3. you must have had a dependent child,
  4. you must have provided more than half the cost of maintaining your home (considered head of household)

What forms should I use to file taxes for the deceased?

You’re probably familiar with Form 1040 for a federal income tax return, start there. If you’re the executor, you will sign the form in the capacity of estate representative, and if you are the surviving spouse and are filing a joint return, you will sign it yourself. Be sure to add the words “filing as the surviving spouse” after your signature. An executor who is appointed before the return is due will need to sign as well.

In the case where there is no surviving spouse and an executor has not been appointed, whoever has taken charge of the deceased’s property should sign the return as a ‘personal representative’.

Any income that was earned by an estate or trust should be reported on IRS Form 1041.

As with any other income tax return, the returns are due on April 15 of the year after death. If the deceased person didn’t file a tax return for the prior year, you’ll need to file that tax return as well. Although there is no extra paperwork needed to claim a refund for a surviving spouse on a joint return, there are additional forms in other situations.

If you’re not sure if your loved one’s estate or trust will be subject to taxes or if you’re not sure whether what you have inherited will be subject to taxes, call estate planning attorney Charles (Chuck) Bendig, as settling an estate can be complicated.

Are you single? Estate Planning is Vital.

Are you single? Estate Planning is Vital.

You may not think much about estate planning if you’re single, but you should. If you don’t have a spouse or close relatives, who will you leave your estate to? A close friend? A charity?

Additionally, you should specify who will make healthcare and financial decisions for you if you can’t make them for yourself. These documents are called Financial & Healthcare Power of Attorneys.

True story (names changed): a young woman graduates from a renowned Veterinary School fulfilling a lifelong passion for animals. At 32 years old, she enters a hospital for a suspicious heart condition. She dies. She is an only child. Her grieving parents grow apart and divorce. Her mother, now single, establishes a trust that, upon the mother’s death, will fund a scholarship program for underprivileged veterinary students in her daughters name at the Veterinary School.

If you die without a will, the State will locate your closest relative so that he or she can receive all of the proceeds of your estate. That may not be what you want. Here is the beneficiary seniority should you die without declarations (Will or Trust):

  1. Spouse
  2. Children
  3. Grandchildren
  4. Parents
  5. Siblings
  6. Nieces/Nephews
  7. Grandparents
  8. Aunts/Uncles
  9. Children of a deceased spouse
  10. Any relatives of a deceased spouse
  11. Your state of legal residence

You may have other intentions; a close friend, a charity or organization, scholarship or educational institution, a step-child, a trust to care for a minor or a pet, or maybe a business partner.

Do I really need a Will if I’m single?

If you have a positive net worth, the answer is yes. It’s normal to choose people who mean something to you and who can benefit from your estate after you pass away.

If you prefer, there are various trusts you can set up, some of which are especially good at transferring money to charities.

Incapacity Planning for Singles

You may not have named a health care representative or indicated your wishes in a medical power of attorney or a health care directive. Without these, you’ll have no control over who will represent you if you become temporarily or permanently incapacitated.

Someone will be making these decisions regarding your physical health. So, if the state can’t find a family member to represent you, everyone will be looking for an heir to act on your behalf. Thus, someone who may not know you will be making decisions about whether you will receive artificial sustenance or will become an organ donor.

A close friend, a professional representative, a lawyer or even a family doctor can be chosen to represent you. You need someone who you would feel comfortable with making decisions on your behalf. If you have strong feelings about resuscitation or other procedures, you need to make these known so your wishes are followed.

Inheritance of Your Business

If you’re a business owner, you’ll want to consider who will inherit your business and determine what restrictions (if any) you would like to put on your beneficiaries. If you’re an entrepreneur with no spouse or children, if you’re widowed or divorced, estate planning can be a little more difficult. Ask yourself, do you want your shares to be left to a business partner or another loved one, or held in trust for a minor?

You are protecting yourself and your preferences with your estate plan, using it as a tool to help you protect your loved ones and the things that are important to you.

Contact Estate Planning Attorney Chuck Bendig today.

The Top Estate Planning Errors and How To Avoid Them

The Top Estate Planning Errors and How To Avoid Them

There are many myths and misconceptions about estate planning. In this article, we’ll discuss the top common mistakes and how to avoid them, which will help your family save thousands of dollars in unnecessary taxes and probate fees:

Beneficiary omissions
Not naming beneficiaries or failing to review your beneficiaries often enough could subject your estate to probate, creditors and delays.

Forgetting to change an ex-spouse on an IRA
Many people aren’t aware that when you remarry, your new spouse becomes your beneficiary on the day you get married, but not in an IRA. This can have disastrous consequences for your new spouse and family.

Leaving assets directly to a minor without addressing guardianship issues
Who will handle a child’s inheritance? The phrase “for their benefit” welcomes a whole host of potentially abusive interpretations. Make sure to address this in your estate plans to avoid any misinterpretations.

Ownership mistakes and imbalances
If too many assets are in one spouse’s name, it could wreak havoc when it comes to tax planning. One spouse could have a much larger IRA and own a vacation house in his or her name only. By shifting the house or investment to the other spouse, the estate becomes more equalized, possibly reducing taxes.

Not having a residuary clause
A residuary clause covers items not named in a will or included in a trust, typically including items you don’t yet own but will before your death. Sometimes there are things you might not even know you own.

Not planning for the unexpected
There are a multitude of things that can happen, such as a sudden decline in your spouse’s health or a change in your assets. You can address this by having assets go to a trust. You can control how, to whom and when money gets distributed.

Not dealing with your own mortality
Don’t leave your family ruined because you don’t want to admit to yourself that you are going to die someday. Don’t make matters worse by failing to plan.

Not updating your will
Many changes take place within a family or business structure. Ensure the assets you leave behind are given to the people you intended to have them. Revisit your will every few years.

Not planning for disability
An unexpected long-term disability can affect your personal and financial affairs in many different ways. Decisions like who will handle your finances, who will raise your children or make health care decisions on your behalf are essential. It may be necessary to appoint a power of attorney or create a living trust to work on your behalf if you’re unable to do it for yourself.

Chances are, you already know you can benefit from having an estate plan. Not only can it help maximize the actual value of the estate you pass on to your heirs and beneficiaries, but you’ll also have an opportunity to make informed decisions concerning how your assets should be handled while you are still alive.

We can help you put together a clean and concise estate plan. Contact Chuck Bendig today.

Grandparent custody rights; What you need to know.

Grandparent custody rights; What you need to know.

When the parents of a child divorce, sometimes one of the parents tries to keep the grandchild or children away from their former spouse’s parents. In other words, the mother may keep the children away from the paternal grandparents or vice versa.
 
What is in the best interest of the child is always the underlying consideration the Ohio courts take into account when making decisions about the rights of grandparents. Ohio provides statutory support for grandparents’ legal rights, but it’s not all-inclusive. “Best interest” decisions begin with the language of the court order or mediation agreement and apply to all visitation and custody rights decisions.
 
The 11 Factors that apply to all visitation and custody rights in Ohio are:

 

  1. The wishes and concerns of the child’s parents
  2. The child’s age
  3. The child’s adjustment to home, school, and community
  4. The prior interaction and interrelationships of the child with parents and other relatives
  5. The location of the grandparent’s residence and the distance from the child’s residence;
  6. The childs’ and parents’ available time
  7. The wishes of the child (if the court has interviewed the child)
  8. The health and safety of the child
  9. The amount of time that a child has available to spend with siblings
  10. The mental and physical health of all parties
  11. Whether the person seeking visitation has been convicted of or plead guilty to any criminal offense involving an act that resulted in a child being abused or neglected.

 

If a grandparent is denied visitation, a court is under no obligation to tell the grandparents why the visitation was denied. However, the judge might issue a written order explaining the decision. If there is no such written order, any party can ask the judge for an explanation. This is called a “finding of fact and conclusion of law.”
 

Grandparent custody right FAQs

If my son/daughter is divorced or going through a divorce, do I have visitation rights to see my grandchild?
Ohio law provides a grandparent with certain visitation rights with their grandchildren. A grandparent can file a motion with the court in a divorce, dissolution, legal separation or annulment for grandparent visitation rights. After hearing, the court will grant grandparents their own individual visitation rights involving a child if the person has an interest in the welfare of the child and if the court determines that the granting of the companionship for visitation rights is in the best interest of the child.

If my son/daughter is deceased, do I have visitation rights to see my grandchild?
The short answer is yes. Grandparents of a deceased parent can receive visitation rights. Ohio law states that if either the father or mother of an unmarried child is deceased the grandparents have the right to ask for visitation. The court will decide if it’s in the best interest of the child.

What if the parents of my grandchild were never married?
Yes, Ohio law provides visitation rights to a grandparent when the child’s mother is unmarried. The law says if a child is born to an unmarried woman, the grandparents have a right to request visitation rights. This includes both the biological father’s parents and mother’s parents. The court will determine what is in the best interest of the child with respect to any request.

What can be done if my grandchild is removed from the jurisdiction?
Any visitation request needs to be made in the Ohio County where the child lives. The only exception would be if a case had already been initiated in another county, then that county would retain jurisdiction.

What if my grandchild does not want to visit me?
It is up to the court to make a determination on this issue.

Do I have any financial liability if my grandchild visits me?
No. Child support is strictly between the biological parents.

If my grandchild is injured during a visit with me, can I get medical care for them during that visit?
Yes. If there is a court order allowing visitation and should the child need emergency medical care while under the care of a grandparent, they would be allowed to obtain medical treatment for the child while in their care.

Can I obtain legal custody of my grandchild?
It depends. In certain circumstances, Ohio law does allow a grandparent to obtain legal custody.
The court would need to determine the biological parents to be unfit.
The definition of unfit in Ohio generally means habitual drunkenness, habitual drug abuse, abandonment and other such issues that would again require the court to make a finding of unfitness.

What if my grandchild doesn’t live in Ohio?
The state of the child’s residence is considered their “home state”, and that state would have jurisdiction as to whether or not visitation rights would be granted. Each state has different laws as pertains to visitation rights and the state with jurisdiction would need to be contacted in order to ascertain what if any rights the grandparent has in that particular state.

What if my grandchild already lives with me?
The law provides a solution for the situation where a child is living with the grandparent and the parents of the child can’t be found. Although, this is only a temporary solution and is not the same as legal custody, it does allow a grandparent to do what’s necessary for the child such as, enrolling the child in school, taking the child to the doctor, etc.

The law states that if a child is living with a grandparent who has made reasonable attempts to locate and contact both of the child’s parents, guardians, or custodians but has been unable to do so, the grandparent may then obtain the authority to exercise care and physical custody by executing a caretaker authorization affidavit.

The more common scenario is when grandparents are raising their grandchild or grandchildren with the knowledge and consent of the biological parents. Ohio law provides that in certain circumstances a parent may give a grandparent a Power of Attorney to enroll the child in school, care for the child’s medical needs, etc. This is similar to the caretaker affidavit, however, the parent is present and willing to execute a power of attorney.

Furthermore, the affidavit must be executed by both parents if they’re married and living together, if the child is subject to a shared parenting order or if the child is subject to a custody order.

 

Contact us to discuss your rights as a grandparent.

 
For over 38 years, we have successfully represented clients in child custody and visitation matters. These cases are often emotional and profoundly consequential to our clients and the children. We ensure that you know the strengths and weaknesses of your case so you can make the best decisions for your family. 
 
In the Columbus Ohio area, call us to discuss your unique challenges. (614) 878-7777