How to choose a Trustee

How to choose a Trustee

So you’ve finally made the decision to move forward with your estate plan and now you need to choose a trustee who will act on behalf of your heirs’ best interests. It can be a difficult choice, but there are a few notable factors in choosing the proper one that can make the process easier.

Some people begin by considering a family member or a close friend, but did you know there’s also the option to select a professional trustee such as an accountant, lawyer, trust company or corporate trustee?

A couple of notable things to keep in mind when making your decision to choose a trustee can ease the burden of choice.

Trustworthiness

A trustee’s duties include paying bills, making proper investments, keeping accounts and preparing tax returns. Therefore, a very close friend with their own unsteady financial problems may not be a good choice. Look for trustees among the financially astute, someone who is good with money; someone who is familiar with the basic concepts of investing is something to keep in mind.

Familiarity with your family dynamics

The people closest to you such as family members or dear friends that understand your family’s dynamics could be beneficial. Family members probably won’t charge a trustee fee, although they are entitled to it. So, if you’re looking to cut costs you may go this route.

Professionals have expertise in trust administration and with that knowledge comes a price. A lawyer or accountant that is not within your family is more likely to treat everyone equally. Maybe consider a lawyer or accountant who’s been working with your family for a long time if you have one. They may bill for less than a trust company or a corporate trustee.

Professionals such as these are good at making difficult decisions and telling beneficiaries “no” when appropriate. If your heirs don’t get along and there are large sums of money involved, it might be worth the fee of a professional trustee. If you feel uneasy, you can give a family member or friend the power to remove and replace a corporate trustee.

There is also the option of a co-trustee arrangement where two entities manage your trust. For example; a sibling and a professional trust company. The professional can handle the technical work while the sibling has family knowledge. It’s just another option to consider if you feel uncomfortable appointing just one trustee.

Here are a few characteristics to keep in mind when choosing a trustee option.

Traditional Corporate Trustee

  • Regulated
  • Professional
  • Rigid Policies
  • Conservative
  • Changing Personnel
  • Accountable

Individual Trustee

  • Sensitive and knowledgeable about family
  • Flexible/Subjective – saying “no” is difficult
  • Private
  • Inexpensive
  • Not Permanent
  • Individual Fiduciary Liability
  • Family Dynamics

Private Family Trust Company

  • Confidential
  • Permanent Trustee Solution
  • Institutionalize the personal, business & investment matters for a family
  • Personalized Service
  • Liability Protection
  • Flexibility in Managing Concentrated Positions

Depending on your values, one of these options could be the best one for you.
Whatever you choose, take into consideration that your trustee will likely be managing your trust for an extended time. Therefore, you’ll want someone you think will be around for a long while and has time to really devote to their trustee duties.

Don’t let the decision of who you should appoint your trustee prevent you from finalizing and signing your estate planning documents. Call around and speak to different trusted advisors, such as Chuck Bendig, to discuss your concerns and they can be worked through until you find the best solution for you and your family. You have the option to reevaluate your choice every few years.

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What It Means To Die Intestate

What It Means To Die Intestate

Intestate simply means if you die without a Will.

If you have a close relative die without leaving a will, you’ll be faced with some complexities, but you can get through them if you know the rules.

First, it’s important to know how an estate is distributed in the absence of a will. To start with, many assets aren’t passed by will, such as:

  • Life insurance proceeds.
  • Real estate, bank accounts and assets held in joint tenancy/community property with the right of survivorship.
  • Property held in a living trust.
  • IRAs, 401(k)s and retirement plans — assuming a beneficiary was named.
  • Payable-on-death bank accounts.
  • Stocks or other securities held in a transfer-on-death account.
  • Real estate or vehicles held with a transfer-on-death deed or title document.

Ohio State law provides a list of people eligible to fill the role of executor, of which, the surviving spouse is the first choice. Adult children, typically being next on the list, then followed by other family members. In order to be named an executor, you must be bonded by a private insurance company. Section 2109.09 sets forth the bond requirements of an Ohio Executor.

If you’ve been named as executor, you’ll follow the intestate laws for inheritance rules; spouses and blood relatives inherit, and unmarried partners, friends, and charities get nothing.

More specifically, a surviving spouse will receive the largest share while splitting the inheritance with any children. In the case where there are no children, the spouse often receives all the property.

However, there may be exceptions based on state law. More distant relatives will inherit only if there is no surviving spouse and no children. If no relatives can be found, the state will take the assets.

It’s important to note that all states have rules that bar certain people from inheriting, based on past actions. For example,
– someone who is found guilty of criminally causing the death does not profit from it
– a parent who abandoned a child or committed certain crimes against a child cannot inherit from that child

There are exceptions.

Separated couples: if a couple had separated prior to the death of their spouse, or if divorce proceedings had begun, the issue of whether the surviving member is still considered a surviving spouse may have to go before a court.

Common law marriages: The State of Ohio does not recognize cohabitation and/or domestic partnership as a legal marriage, and there is no longer any confusion about same-sex married couples, as their situation is exactly the same as any other married couple.

Children/Stepchildren/Foster children:
– Legally adopted children will inherit under normal circumstances.
– For stepchildren, it depends on the circumstances of the relationship.
– Foster children normally do not inherit.
– Adoption situations can further complicate things. In the case of underage children requiring a guardian, a judge will make that decision.

The bottom line? Working closely with an estate attorney can help greatly in these situations. Contact Chuck Bendig for a free case review.

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12 Critical Estate Planning Mistakes

12 Critical Estate Planning Mistakes

If you want to ensure that your estate plan properly protects and provides for your heirs, it is essential that you thoroughly plan ahead.

To make sure it’s “smooth sailing”, here are some important estate planning mistakes to avoid.

  • Failure to plan. Without a thorough estate plan, you’re risking the financial future of your estate and your loved ones.
  • Not reviewing your documents. It is essential to make sure they’re exactly as you want them and also not out of date.
  • Not discussing your plans with family. Sometimes even a brief conversation can shed some light on which of your wishes are likely to be controversial, giving you a chance to rethink certain plans.
  • Don’t name just one beneficiary. Just in case your only heir dies before you, you’ll want to have a contingent beneficiary. According to Ohio State Law, here is the designation or qualification of a beneficiary.
  • Don’t forget that your retirement plan accounts or life insurance can’t be included in Wills or Trusts. You’ll need a beneficiary designation form to name a revocable trust as the beneficiary.
  • Don’t forget about a power of attorney or health care representatives. These professionals step in to make decisions if you become incapacitated. Typically, the roles dissolve on your death.
  • Lack of a funeral plan. Lack of communication for your funeral plans places an extra burden on your already grieving family. Be sure to give some indication of what you’d like to happen at your funeral or with your burial arrangements. Let them know what they can do to honor you.
  • Failure to include your digital assets. Include a digital estate plan that specifies how you want all your digital assets (i.e. social media accounts, online banking, email, etc.) handled upon your death, and name a digital executor to get it done.
  • Not planning for all contingencies. A will often leave an estate to the testator’s “surviving children”, but that raises questions if one of the testator’s children dies. Does the money go to that child’s heirs or is it split among the survivors? Unthinkable as it may seem, your Will should plan for those possibilities.
  • Failure to fund your trust. Simply put, a trust is useless unless it’s funded with your assets.
  • Don’t forget about taxes. Understand the limits of potential state estate taxes or inheritance taxes before you write your Will or trust.
  • Failure to properly store your estate plan. Even a perfect estate plan is absolutely useless if no one knows where to find it. Safes and safety deposit boxes are popular options, but it is vital to tell someone that it’s there and how to access it.

Get a qualified Estate Planning Attorney.

 

Help your family save money in unnecessary taxes and probate fees by sidestepping errors. By including an estate planning attorney such as Charles Bendig, you’ll have help in drafting your plan and making any changes you want to essentially carry out your wishes as you see fit.

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How To Value Items at Death

How To Value Items at Death

If you’re named an executor of an estate, part of your job is to oversee the valuation of assets. So, what does that entail? Finding out how much the estate is worth and how that value is distributed will determine not only your approach to probate, but also the allocation of the assets among the heirs, and how much the estate will pay in taxes. In the case of larger estates, valuation can be a huge responsibility. It may even require you to bring in experts to value antiques and other collectibles.

One thing to note is to expect to be challenged whenever you value assets, by the IRS, by heirs, by creditors or by the court. Be sure you’re valuing everything reasonably.

Certain types of assets are easy to value, such as the contents of a bank account or shares of stock in a publicly-traded company. To value stocks or precious metals, average the highest and lowest selling price for similar items on the date of the owner’s death. For mutual funds, use the closing valuation.

Other assets, such as a used car or collectible, don’t have such a definitive value. You estimate their value by using public references like collectible websites such as Worthpoint.com. When valuing real estate, you can check out the tax assessor’s valuation and talk to a real estate agent about comparable properties in the area.

Go with the pros

Some assets are really difficult to value, like artwork or a private business. For assets like these, you should hire a professional appraiser. Keep in mind that appraisers typically charge between $125 and $400 an hour, and often with an extra charge for visiting the site. It’s a good rule to avoid appraisers who charge based on a percentage of the asset’s value. This goes against the ethics of the Uniform Standards of Professional Appraisal Practice.

You should ask whether the appraiser has any certifications or memberships in professional organizations, and also ask them for a written estimate of the appraisal fee in advance. Among the items that can be listed as household contents are books, tools, and appliances, and you can ask for one overall valuation estimate for them. You may want to get an individual appraisal for any individual items that were specifically bequeathed in the will. The value of household items should be done based on what a buyer would pay for the items as-is.

Should the heirs decide to sell everything in an estate sale, use a reputable estate sale company. Since there are variations in quality and condition as well as changes in economic conditions and local demand, descriptions and values should be seen as general guidelines.

Lastly, a few keynotes as you proceed with the valuation,

  1. Be aware of the pitfalls. Heirs could be upset if a particular asset doesn’t meet the value they expected.
  2. Document your work in case there are questions later, and work closely with legal and financial professionals as you move forward.

When you’re ready to begin the probate process, call Charles Bendig. With over 40 years of experience practicing law before all Ohio state and federal courts, you can rest easy knowing you’re in good hands. I’ll walk you through every step of the process together.

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Leaving Your Estate to Your Grandchildren

Leaving Your Estate to Your Grandchildren

If you’re a grandparent with assets that you plan to leave to your grandchildren, it’s important to continue reading. How you plan the transfer of those assets depends on whether they’re adults or minors. In addition, grandchildren with special needs may need complete or supplementary financial support throughout their lives. You may think of contributing to that.

Would you like to pay for education as your grandchildren transition into adulthood? Some vehicles that are available to help with that are;
– 529 Plans pay for college, and you’re able to maintain control until the money is withdrawn
– A Uniform Gifts to Minors Act (UGMA) account.
– A Uniform Transfers to Minors Act (UTMA) account

Here you’ll find the difference between 529 plans, UGMA accounts and UTMA accounts.

Consider contributing to these during your lifetime as a strategic way to reduce the value of your taxable estate while still working toward education savings goals.

Successor Designations

To begin, update successor designations to stipulate who will take over managing your accounts should you pass away. Ensure your beneficiaries are up to date on assets that have provisions for naming them, such as investment and bank accounts with transfer-on-death designations.

The Importance of Trusts

If your grandchildren are still minors, you might want to ensure they’re provided for financially. Trusts will allow more control of your assets, even after your death.

  • You can state how you’ll leave money to your grandchildren, the circumstances used to distribute funds, and when the funds should be withheld.
  • You can determine whether they will gain control of the money at a certain age and whether they are co-trustees or full owners.
  • A trust gives you the ability to transfer assets while reducing estate taxes and allowing your influence on the assets.

What kinds of trusts are available?

  • Generation-skipping trusts: these allow the assets to be distributed to non-spouse beneficiaries who are two or more generations younger without incurring the generation-skipping tax.
  • Credit shelter trusts: these make full use of you and your spouse’s federal estate tax exclusion, bypassing your surviving spouse’s estate.
  • Irrevocable life insurance trusts: these purchase life insurance policies to provide immediate benefits on death that don’t usually pass through probate.

Can I leave my IRAs to my grandchildren?

Yes. You can leave any IRAs to your grandchildren, however, they will generally need to take required minimum distributions (RMDs) soon after your death, and depending on their ages may have to pay associated income taxes. So, it is important that you note any beneficiaries on retirement account forms.

Finally, keep in mind that for many grandchildren, it’s being remembered that matters more than the inheritance itself, especially if it’s paired with something sentimental for your estate. Consider this an opportunity to tell your grandchildren that they are loved, and when you’re ready to create your estate plan, call Chuck Bendig.

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