Jarvis Law Office

Should I Change My Estate Plan as I Age?

As people age, new challenges arise – even for issues they thought were already taken care of. For example, many people create estate plans when they’re younger, usually when they first have children, and then leave those plans untouched for several years. During that time, changes occur, and the initial plan might not be suited for your current situation. This is especially true as children age and loved ones pass away as these changes could have a serious impact on the effectiveness of your estate plan. Here are some considerations you should think about for your estate plan:

Last Will and Testament

Most people create a Last Will and Testament when they’re younger to ensure they have a say in who takes care of their children in the event they pass away. This is no longer a concern when the children are grown, however, so it’s a good idea to look at your Last Will and Testament in light of your changed situation. You may want to leave behind a legacy for your kids as well as your grandkids, or perhaps you want to leave something behind for a close niece or nephew. It could even be that you’d rather have your entire estate go to charity. It’s up to you, but keep in mind that the choices you made back when you first created your Last Will and Testament may not apply now to your current situation.

Power of Attorney and Living Will

The Power of Attorney and Living Will let others act on your behalf for financial and healthcare concerns, respectively, if you ever become incapacitated. In both cases, you should take a look at who you named as your agents in both documents and ensure that they’re still the right choices for now. People who create an estate plan when they’re younger sometimes name their parents or siblings on their documents, but when they’re older, those are probably not the best choices. Instead, most seniors will name their adult children to make those decisions for them if they’re incapacitated. You can also decide if you want one agent to take the lead or if your agents must work together. It’s also a good idea to re-examine the choices you made regarding your healthcare as your mind may have changed over the years about the type of care you want to receive.

If you’d like to have your existing estate plan updated to meet your current medical needs, please contact our Elder Law office at 877-653-3450 to schedule a complimentary initial consultation.

Reduce Your Tax Burden with a Qualified Personal Residence Trust

A family home or vacation property is often the most valuable asset in estate. While the homeowner may want to leave their cherished property to children or other beneficiaries as an inheritance, taxes can quickly thwart well-meaning plans. 

The sad truth is that without proper planning, most heirs simply cannot afford the tax bills that come along with inheriting valuable property, which will usually force the sale of a beloved family home or vacation property after the homeowner passes away.

Fortunately, there is a legal tool that can help homeowners safely and responsibly pass their property down to loved ones, while significantly minimizing the taxes owed by beneficiaries after the owner’s passing. 

What is a Qualified Personal Residence Trust?

A Qualified Personal Residence Trust (or QRPT) is an irrevocable trust established by the owner of a residence for the purpose of passing down real property to beneficiaries with greater financial protection and a minimized tax burden.

With the help of an experienced Ohio estate elder law attorney, ownership of the family property is transferred into the QRPT, with the trust giving the parent (or “Grantor”) the right to occupy the property for a certain term of years. When that period ends, the ownership of the residence then passes to beneficiaries. Should the Parent/Grantor still wish to live in the property, he or she may “rent” the property from the beneficiaries at a fair market value.

Who Needs a QRPT?

A QRPT may be right for you and your family if:

• You have a cherished family or vacation home with significant value that you wish to leave to your children or loved ones
  
  
• Your children are over age 30 or have otherwise proved their financial maturity (this is important due to the irrevocable nature of the trust)
  
  
• You want to make life as easy as possible for your children after your passing by shielding them from unnecessary legal fees and excessive tax bills from the State and IRS.

 

Benefits of a QRPT

There are many benefits of creating a QRPT for homeowners and future heirs alike, including:

• Significantly reduced tax bills for beneficiaries following the owners’ death
  
  
• Protection from the parents’ creditors since the property will be off limits to satisfy debts
  
  
• The ability to transfer property responsibly to loved ones when the owner is still living, while still retaining the right to live in or use the residence as long as agreed to by the family
  
  
• The Grantor stays in complete control of the property as the trustee of the QPRT and retains all the income tax benefits of home ownership, such as property tax deductions and capital gains exclusions

• If the parent lives longer than the term of the Trust, the residence is not included in his or her estate and substantial taxes are saved.

 

If you would like to learn more about Qualified Personal Residence Trusts, or if you’d like to have your current QPRT reviewed by an experienced elder law attorney to make sure it still fits your needs, please contact our Ohio elder law office at 877-653-3450 to schedule a complimentary initial consultation.

 

How to Fund Your Revocable Living Trust

Creating a revocable living trust is one of the best strategies for avoiding probate and leaving a lasting legacy for your family. However, the true protection afforded by a trust does not come after all the documents are signed – trusts need to be fully funded in order to make a real impact on your plans. Trust funding is one area that must be done by yourself, though experienced estate and elder law attorneys will offer advice on how to fund your trust.

To fund a trust, you must take any assets or property that you’d like to be under the trust protection and turn ownership of those assets or property over to the trust. This doesn’t mean that you won’t get to control the assets or property – on the contrary, as trustee of your own trust you would have just as much control as you did when you had sole ownership. The difference is that in legal terms, the trust is a living document that holds true ownership of the property. This is how revocable living trusts help people avoid probate.

The most common items that are used to fund trusts are real property and financial assets that are titled solely in one person’s name. This is because jointly-held property is not subject to probate until the other joint-holders pass away, though joint-ownership can lead to more problems down the road. Real property is usually transferred to a trust through quit-claim deeds, which give the trust all of a person’s interest in the property.

You can also fund the revocable living trust with other property that does not have a title, such as artwork or family heirlooms. To fund the trust in this way, you would work with an experienced elder law attorney to make a list of the items you’d like the trust to own, which will then be added to the trust as a schedule. This will allow these items to transfer to your beneficiaries without going through probate, and will also leave legal documentation for your beneficiaries so they know exactly which items you intended for them to receive.

If you have any questions about revocable living trusts and funding, or if you’d like to have your current revocable living trust reviewed by an experienced Ohio will and trust attorney to make sure it still fits your needs, please contact our Ohio estate and elder law office at 877-653-3450 to schedule a complimentary initial consultation.

3 Steps to a Solid Business Succession Plan

Family-owned and small businesses carry a sense of pride and familiarity, not just for their proprietors and employees, but for their patrons as well. But, the sad fact is that many of these types of businesses do not make it past the second or third generation of ownership due to a lack of specific planning as to what happens after the original owner retires or passes away. That’s why small business owners need to create a business succession plan to ensure the business they worked so hard to build and maintain can continue on after they’re no longer running it. Here are the three steps you should follow for a solid business succession plan:

Get Educated

A business succession plan is a way for the ownership of a business to pass from an owner to a buyer, with protections put in place for both parties. There are many things small business owners must take into consideration, such as the taxes a new owner may face following the succession and family strife that could arise when transitioning to the new ownership. It’s also a wise idea to create a succession plan early on in the life cycle of the business as illness, incapacitation, or death can occur at any time.

Make Your Wishes Known

Small business owners need to make their wishes known for who should take over the business. The business owner should decide whether their operations will stay in the family, transition to a business partner or employee, or be sold to an outside third-party.

Prepare for the Long Term

A solid business succession plan can take time to create, sometimes evolving over months and years. Some of the tasks that will need to be dealt with include assembling a transition team, making sure the proper documentation is in place, and receiving sound financial planning. All of these pieces must be managed carefully to make sure the business remains viable and profitable while also making sure both the seller and the buyer are well-protected. If any of these pieces are handled incorrectly, a great deal of time, money, and resources can be lost, which could impact the business’ chances for surviving the transition.

If you have any additional questions about business succession planning, or if you’re interested in creating a plan for your business, please contact our Ohio estate planning and elder law office at 877-653-3450 to schedule a complimentary initial consultation.

How to Avoid Probate in Ohio with a Roth IRA

Roth IRAs provide excellent tax benefits to those who use them for retirement planning, but these types of IRAs can also help to avoid probate in Ohio.

To start, here are some of the basics about Roth IRAs for tax-planning purposes:

• Contributions to a Roth IRA are not tax-deductible, unlike other traditional retirement accounts.
• Distributions made if you are at least 59 ½ or if the account has been open for more than five years are not taxed.
• Income tax is paid when contributions are made, making eventual withdrawals tax-free.
• There are no required minimum withdrawals with a Roth IRA.

The last point is the one that makes Roth IRAs perfect for avoiding probate in Ohio, as long as you follow these two steps: 1) Let your savings accumulate tax-free in a Roth IRA indefinitely, and 2) Name a beneficiary to your account.

When you pass away, the account will go to your named beneficiary, and the assets in the Roth IRA will not have to go through the probate process like other assets that are solely owned by you. You should regularly check your beneficiary designations to make sure they’re up to date. If, for example, your late spouse was named as the beneficiary of your Roth IRA, the Roth IRA will become part of your probate estate if you do not name any replacement beneficiaries.

It is important to note, though, that there are some limitations to Roth IRAs. As of 2018, individuals under the age of 50 can only contribute up to $5,500 a year into their Roth IRAs, while people 50 and over can contribute $6,500 a year. In addition, you can only contribute to a Roth IRA if your income is below a threshold of $135,000 for single filers and $199,000 for married joint-filers. Contribution limits decrease as you move further up the threshold.

You may also have to pay income taxes or early distribution taxes if you make unqualified distributions, such as distributions before the age of 59 ½ or before the Roth IRA is five years old. However, you may be eligible for a tax-free distribution if you make the withdrawal to purchase your first home or if you need the money due to a disability.

If you have any questions about using a Roth IRA for estate planning, or if you’d like to have your current estate plan reviewed, please contact us at 877-653-3450 to schedule a complimentary initial consultation.

Ohio Estate Planning Lawyer: Four Threats to Your Assets and Wealth

An individual’s property and assets can be attacked in many different ways, all of which can have a serious detrimental impact on their wealth. A primary purpose of asset protection planning is to guard you from losing your wealth, as seen in the following examples.

Business Liabilities

Business liabilities can lead to attacks on your personal assets. If your business faces a problem and your personal assets are not properly shielded, you may find that both your business and personal assets can be at risk. LLCs and other business entities are typically created to separate business assets from personal assets, but a proper strategy and advanced planning are essential to make sure you have not left your personal assets open to any potential attacks.

Divorce

A divorce can be a dangerous threat to your asset protection plan. Without a proper prenuptial agreement in place, you may find that your wealth is up for grabs during divorce proceedings, even if you’ve only been married to your spouse for a short time. (Celebrity divorce cases, such as Paul McCartney and Heather Mills, immediately come to mind.) There are certain strategies that can be used to protect assets from divorce, but it’s best to consult with an Ohio estate planning attorney to determine which strategy is right for you.

Sickness

Medical bills that accrue due to an illness or long-term care could very easily drain your wealth. This is most true for senior citizens who are in need of nursing home care – and who mistakenly believe that Medicare and long-term care insurance will cover all of their medical bills. Asset protection trusts are often used to protect wealth from Medicaid and nursing homes, but they must be drafted a certain way by qualified elder law attorneys here in Ohio.

Automobile Accident

Being wealthy can unfortunately lead to a painted target on your back. If a person of fairly modest means caused a car accident and was found to be at fault, they most likely would not be pursued for a large sum of money. – The opposite is true for someone who possesses a large amount of wealth. Asset protection can be done before an accident happens to help shield your wealth, but this is not the case after the accident has occurred.  The earlier you can plan, the better.

If you have any questions about asset protection planning and strategies to shield your wealth, or if you’d like to review your current asset protection plan, please contact our Ohio estate and asset protection lawyers at 877-653-3450 to schedule an initial consultation.

Ohio Estate Planning Lawyer Explains the Top Four Tax Deductions for Senior Citizens

Retirement years are all about making sure you have enough money to live a comfortable life while also having access to “rainy day funds” to take care of any unforeseen financial difficulties that may arise. That’s why it’s so important to take advantage of the tax deductions that are available for senior citizens, since these deductions can maximize the amount of money you have to use in your retirement. The following are the top four tax deductions for senior citizens:

Medical Expenses

One of the biggest expenses for senior citizens is medical care, which is why the deductions associated with medical expenses can be a huge help come tax time. Medical and dental expenses that are more than 10% of your adjusted gross income are deductible, meaning any expenses related to health care services, doctor visits, medications, and medical devices.

 

Business Expenses

Retirement businesses are a common way for senior citizens to continue to earn income after their main career has ended. Any necessary and ordinary expenses incurred while running your retirement business may be claimed as a deduction, including the purchase of business equipment, a vehicle used for business purposes, and business travel.

 

Investments and Expenses

Interest, capital gains, and dividends from your investments are generally taxed at a lower rate than normal income and are not subject to Medicare or Social Security taxes. Additionally, any fees spent for investment advice or accountant services can be itemized as long as they exceed 2% of your adjusted gross income. These fees include legal, financial planning, and accounting fees, online investment services fees, and even investment newsletter subscriptions.

 

The Standard Deduction

The standard deduction is sometimes overlooked as a great tax deduction for senior citizens, especially if they are no longer itemizing deductions. Senior citizens (in this case, anyone who is age 65 or older by December 31^st) are entitled to a higher standard deduction than others, so it’s worth considering if the standard deduction is right for you. In addition, the standard deduction can be claimed on a joint return if at least one spouse is over age 65.

If you would like to get more information about tax deductions for senior citizens, or if you’d like to review your current finances and how they work with your future plans, please contact our office at 877-653-3450 to schedule a complimentary initial consultation.

What You Need to Know About Alternate Beneficiaries

Some would argue that the point of estate planning is to have a Plan B, or a plan for when your first plan doesn’t go as anticipated. Sometimes heirs and designated beneficiaries don’t live to benefit from an estate, or they do something that makes them no longer qualified to benefit. Thus, an alternate beneficiary would benefit, if named, to ensure nothing is left to chance.

 What’s an alternate beneficiary?

 An alternate beneficiary is a person who will benefit from an estate or part of an estate if the primary beneficiary won’t or can’t benefit. For example, a mother bequeaths a farm to her oldest son. However, the oldest son doesn’t want the farm and is too sick to farm even if he wanted to do so. He refuses to take the farm. Now, the farm goes back to the mother’s estate—unless, of course, she named an alternate beneficiary to take the farm in case the oldest son didn’t want it or died before she did. Say she named her best friend, a neighboring farmer, as an alternate beneficiary. Now, the farm will go directly to the friend, who wants the farm and is willing to take it, without it going back into probate.

 Why would I want an alternate beneficiary?

 Again, an alternate beneficiary is the Plan B, or even C, of estate giving. It ensures that a principal’s estate will remain in the hands of his or her chosen beneficiaries. In the prior scenario, without an alternate beneficiary, the farm would have gone back to the mother’s estate, and a probate judge would then decide who gets the farm based on the laws of succession. This may end up being a person whom mom would have never wanted to inherit her property.  Naming an alternate beneficiary ensures that mom has the final say of where her property goes, rather than leaving this decision to a court or a judge.

Create a “Plan B” to stay in control of your estate plan.   

If you want the peace of mind knowing that your estate will pass only to the beneficiaries of your choosing, talk to a qualified Ohio estate planning and elder law attorney about naming alternate beneficiaries. Our attorneys will help you work through establishing contingency plans thus avoiding the most common issues that arise when life throws curve balls into your initial plan.  If you’d like help getting started, contact our law firm at 877-653-3450 to schedule a complimentary initial consultation.

Advance Planning to Help Your Executor

It’s an unfortunate fact that once you pass away, it will be someone else’s responsibility to wrap up your affairs. This can be a daunting and arduous task for your executor if he or she does not know where your important documents are kept, what types of financial accounts you have, or how to access everyday things like your internet passwords or home security PIN number. Providing directions to your executor in the event of your death can make a very difficult time a bit easier, and will go a long way to helping your estate close in an orderly, efficient fashion.

A list with all of your information is the best way to give your executor what he or she needs to take care of your estate. This list should include locations, combinations, or anything else related to:

• Home security systems
• PO boxes
• Home safes

The list should also include information about safe deposit boxes, including the bank where it’s held, the box number, what’s in the box, and the location of the box keys. You should also ensure that your executor is authorized to access the box.

Consider making a list of all of your financial accounts and policies, as well as information about their ownership status (solely- or jointly-owned) and beneficiary designations. In addition, you can provide passwords to your online financial accounts, as well as any email accounts or social media accounts. Keep in mind that as your passwords change and accounts are opened or closed, you will need to update your list. It’s a good idea to review your list anywhere from quarterly to yearly, depending on how many changes you’ve made.

Now, it’s important to note that you do not have to hand this information over to your executor before you pass away, especially if you have any privacy concerns. The information can be given to your estate planning attorney to be kept safe with your other estate planning documents. You can then tell your executor to contact the attorney in the event of your death to retrieve the information and begin settling your estate.

If you’d like more information about advance planning to help your executor, or if you’d like to have your existing estate plan reviewed by an experienced Ohio estate and elder law attorney to ensure your affairs are in order, please contact our Ohio elder law office at 877-653-3450 to schedule a complimentary initial consultation.

Avoiding Will Contests in Ohio

Will contests can occur when a family member or other beneficiary receives less of a share of their inheritance, or were completely written out of a last will and testament, and feel that the decisions regarding their inheritance render the will invalid. A case is brought in the probate court, and the validity of the will is determined by a judge. Will contests cause all those involved a significant amount of money and can leave family relationships beyond repair. No-contest clauses allow will makers an option to at least try to avoid some of the consequences of a will contest.

In the simplest terms, a no-contest clause is inserted into a last will and testament and states that if any beneficiary should challenge the validity of the will in court and lose, they will also lose whatever inheritance was left to them in the will. It may cause your disgruntled beneficiaries to think twice before bringing a will contest before a judge, because they risk losing out on their entire inheritance and will be saddled with some fairly expensive legal fees. In addition, Ohio state law does not recognize good faith or probable cause issues concerning no-contest clauses in will contests. This is different from many other states, which hold that if a person brings a will contest forward with probable cause, good faith, or other justifications, the no-contest clause may be ruled invalid.

However, no-contest clauses do not eliminate the threat of will contests entirely. For example, if you completely disinherit a family member from your last will and testament who otherwise would have received some sort of inheritance, a no-contest clause will not stop them from bringing a challenge to court, since they already have nothing to lose. A person bringing a will contest may also win their challenge, rendering the no-contest clause invalid and changing beneficiary distributions from what the will originally laid out.

If you think a will contest is possible after your death, it’s important to speak with an Ohio will attorney about your options, including adding a no-contest clause. An experienced attorney can run through possible scenarios with you, and provide advice relevant to your individual situation.

For more information about no-contest clauses and how they can help avoid legal challenges after your death, or if you’d like to review your current estate plan, please contact our office at 877-653-3450 to schedule an initial complimentary consultation.