Advantages for Buyers:

Contracts

While most individuals have the ability to negotiate face-to-face with another party, the terms of the deal must be properly memorialized in a contract for them to be legally binding. Attorneys can do that by not only negotiating on your behalf but also making sure that the contract adheres to all state laws as well as addresses any specific issues that might affect the future use of the property.

Title

Real estate attorneys oversee all title work, ‘title’ referring to evidence that proves a person’s legal right to the ownership of a property. Title work involves a search of all the relevant land and public records. This search reveals encumbrances, or burdens on the property such as restrictions or easements, imposed by a prior owner, or other issues that need to be rectified before closing. The outcome of the title search is extremely important because it reveals whether the seller has the legal right to sell the property. An attorney will be able to provide this service much faster, and often with less cost because real estate attorneys have working relationships with title search companies. The attorney also assures that the fees charged by the bank are correct, and reviews other documents for accuracy, including any taxes due.

Filings

Real estate deeds often need to be filed at the county and state level. The filing process may differ from county to county. An attorney will be able to do this quickly and efficiently as they are familiar with the filing process.

Advantages for Sellers:

Contract

The contracts of selling the house need to be carefully examined, as they can be used against the seller in case of a liability. Real estate attorneys help the seller in drafting the terms of their sale. Real estate attorneys take care to ensure terms are clear and show the seller’s intent to prevent future issues. Real estate attorneys also guide the seller in case of counter-offers, and help prepare or review all the paperwork, including deed, power of attorney, and the proposed settlement statement from the buyer’s attorney.

Closing

Real estate attorneys will prepare many of the documents required to close. In some instances, real estate attorneys can arrange for you to sign the appropriate documents ahead of time so you do not even have to attend the closing. Your real estate lawyer will also review all closing figures and explain what is happening with your money to assure that you do not pay any unnecessary charges.

As you can see, whether a seller or buyer, it is critical to obtain a real estate attorney before becoming too involved in a property transaction. Having an attorney on your side will not only protect your interests, but also take the ease off of an easily-stressful situation, and leave more time to enjoy the holidays. Save yourself the headache– call us today at  (614) 452-9724 to discuss your situation with one of our experienced attorneys today!

The post Don’t Let Moving Take The Merry Out of Your Christmas! appeared first on Charles H. McClenaghan, LLC.

To protect yourself from these possible scenarios, it is incumbent to periodically update your estate plan, so they continue to mitigate financial risks.  Below are a few situations that may warrant a rehashing of a clients’ estate plan:

1. An occurrence of a triggering life event

A triggering life event can range from a change in marital status, birth or adoption of a new child, to the death of a close family member. Any of these situations warrant a revisiting of your estate plan to address changes in beneficiary designations, successor trustees, health care and fiduciary agents. If a trust must be changed, updates can be made by way of an amendment or a complete restatement. However, if there are numerous revisions then a trust restatement may be the better option, to prevent future controversies requiring judicial intervention.

If your client has recently become a parent or grandparent, they may wish to amend their trust to add specific bequests, add an education trust, set up and fund a gifting trust, UTMA/UGMA account, or 529 plan for their new child or grandchild.

2. Changes to a job and/or living circumstances

If you have moved to a new state, they may need to update their trust and other estate planning documents to comply with the laws of their new state. You may also need to retitle their new residence in the name of their trust.

You may have purchased a second home and needs to amend their trust or add a Qualified Personal Residence Trust to address what happens to the second home after death. You may also need to retitle their new residence in the name of their trust.

If you are a business owner, any changes to ownership would warrant updating their estate plan. For example, if you sold your business, you may need to update your trust or add advanced planning to address additional liquidity. If you still own your business, they may need to create a business succession plan.

 3. If it’s been a while

Since state and federal tax laws have changed significantly over the past year, an outdated estate plan may cause income tax or estate tax issues because it doesn’t take advantage of modern, flexible planning options. With the recent increase in the estate and gift tax exemption, you may want to:

• Make additional gifts to individuals and trusts.
• Decant non-GST exempt trusts to make them GST exempt.
• Sell appreciable assets to trusts.
• Establish and fund spousal lifetime access trusts.

Significant family changes may have also occurred if a long period of time has lapsed since the creation of an estate plan. For example, an old trust may now inadvertently disinherit desired beneficiaries or include unintended beneficiaries. Additionally, your children who are now grown adults, may be better options for successors, trustees, and other agents in place of your clients’ parents, siblings, or friends.

A word of caution: when making amendments to old estate planning documents, be wary of creating future probate issues. For example, an old trust with multiple amendments allows beneficiaries to see prior provisions and changes that have been made over the years, which can open the door to challenges and family conflicts. To avoid such issues, call our experienced attorneys today to schedule an appointment to talk about updating your estate plan.

The post 3 Signs You Need To Update Your Estate Plan appeared first on Charles H. McClenaghan, LLC.

Whether or not it still matches your current ideas about your estate plan, a will remains in force until you revoke it. This means not changing your will when a triggering life event occurs can cause something you do not want to happen. The birth of a new child, moving to a new state, a divorce or changes in tax law are just a few things which may unintentionally cause the redistribution of assets among your beneficiaries in ways you never contemplated. To safeguard your plan, you should revisit your will after every significant life event or at least once every three to five years.

2. Medical/Healthcare Power of Attorney

Do you want the State making medical decisions for you? Depending upon where you live, if you are single and over the age of 18, no one (including your parents or partner) can make medical decisions on your behalf unless you or a court empowers them. Make sure you have someone in place that is willing and able to make these decisions for you.

3. Financial Power of Attorney

You have the wherewithal to pay, but you are incapacitated. Your creditors (and possibly the hospital) may not know or care, or wait too long to collect. Have a person you trust authorized to keep your finances in order or create a revocable living trust with a competent personal or corporate trustee.

Having an updated estate plan ensures your assets are done with as you please. Make your intentions known, and protect what is important to you. Consult with one of our experienced attorneys today by scheduling an appointment at (614) 429-1053. We look forward to working with you!

The post Regularly Update Your Estate Plan- Ensure Your Intentions are Current and Known appeared first on Charles H. McClenaghan, LLC.

Historically, joint trusts have been popular among married couples due to their cheaper start-up costs, ease of management, and the fact that a joint trust reflects the traditional view of a marital estate as a singular unit. However, separate trusts, have some great (and often superior) benefits for a married couple in regards to asset protection, management flexibility, and cost savings after the death of the first spouse.

Asset Protection

Separate Trusts – 

Depending on state law, separating the marital estate into two separate trusts may insulate the assets of one spouse from any financial risks brought on by, or actions taken against the other spouse.  Since the innocent spouse’s assets are in a separate trust, they may be out of reach from his or her spouse’s creditors.

Joint Trusts – 

Since all marital assets are located in one trust, all assets would be at risk if a creditor obtains judgment over either spouse.

Note, however, that some states have extended tenancy by the entirety (T/E) protection to T/E property contributed to a joint trust.  See e.g. MO Rev Stat § 456.950 and 765 ILCS 1005/1c. (If your client is domiciled in a T/E state, check your state law for possible statutory protection.)  If so, the joint trust will provide superior protection from judgments against one spouse.

Separate trusts may be a better option to protect assets from creditors.

Administration during the couple’s lifetime

Separate Trusts – 

Separate trusts require a bit more work, as each spouse is required to manage their own trust. If a couple wishes to keep their martial estate as a singular unit, separate trusts can still accommodate this by naming each spouse as the other’s co-trustee. This allows both spouses to maintain control of all assets, despite being located in separate trusts.

Joint Trusts –

Joint trusts are easier to manage during a couple’s lifetime. Since all assets are rolled into one trust, trust management would be very similar to pre-trust ownership, in that both spouses control their separate assets in the trust and have equal say in the management of the joint assets held by the trust. Since each spouse, however, has the right to revoke the trust as to his or her separate property or trust share, this may not be a safe solution if there exists any volatility between spouses.

Joint trusts may be easier to manage during a couple’s lifetime.

Administration after the first spouse’s death

Separate Trusts – 

Separate trusts provide more flexibility in the event of the first spouse’s death because the trust property is already divided when the trust is funded.  Separate trusts preserve the surviving spouse’s ability to amend or revoke the assets held in the surviving spouse’s trust.

Separate trusts also allow each spouse to designate exactly what they would like done with their assets—who inherits what, if they would like to provide for their surviving spouse—all while protecting their assets from being inherited by new children from another marriage (should their spouse ever remarry).

Joint Trusts –

Spouses can fund their joint trust with their joint or community property and with any property interests that the spouses own individually. An improperly drafted joint trust may result in the surviving grantor’s making a completed gift of his or her separate trust property and share of community property to the remainder beneficiaries of the trust when the joint trust becomes irrevocable upon a grantor’s death. See Commissioner v. The Chase Manhattan Bank, 2 AFTR 2d 6363, 259 F.2d 231 (5th Cir 1958). To avoid this gift tax issue, each spouse should be given the power to withdraw his or her separate trust property at any time without the consent of the other spouse. Retaining the unrestricted right to withdraw the grantor’s separate property makes any potential gift incomplete and thus creates no gift tax liability. In a properly drafted joint trust, the surviving spouse retains significant rights in his or her separate trust property and his or her share of any community property or tenancy in common property. The retained rights prevent the occurrence of an immediate gift to the remainder beneficiaries of the joint trust.

This division, however, must be recognized after the death of the first spouse, which may create additional complications both in the initial drafting of the trust and the subsequent administration.

It is also especially difficult to draft a joint trust in which the beneficiaries receive different distributions upon the death of each spouse. This makes drafting problematic especially in second marriage situations where the spouses each have different distributions schemes for their beneficiaries.

Joint trusts, however, are superior from an income tax perspective if funded with community property. Community property in a properly drafted joint trust receives a 100% step up in basis upon the death of the first spouse to die!

Separate trusts may be easier to manage after one spouse has died.

Estate tax benefits

Separate Trusts –

With property marital trust planning, separate trusts provide estate tax relief for affluent couples who’s estate totals higher than the federal estate tax exemption, (a combined $22,400,000 for 2018).

Joint Trusts –

A property drafted and funded joint trust will consist of community property—property treated by law as ½ the separate property of each spouse. It may also be funded with joint property under common law and should be converted specifically to tenancy in common property (either by separate property agreement or by the trust language) so that ½ can be treated as each spouse’s separate property. By converting the property to separate property of each spouse for gift tax purposes, the separation allows a property drafted joint trust to achieve the same estate tax marital deduction planning benefits as separate trusts.

 This one’s a tie, since, if properly drafted, both separate trusts for each spouse, and joint trusts can provide the same estate tax benefits.

Circumstances where one trust may be more advantageous than the other

Separate Trusts – 

Separate trusts are a good option for remarriages (who may differ in their beneficiary designations) or couples own individual property prior to the marriage; couples who expect to receive an individual inheritance that they would like to keep separate; and is a better option for common law marriages and couples who have already signed a prenup agreement.

Joint Trusts –

Joint trusts are a good option for first marriages that have the same beneficiaries, the same distribution patterns, and the same trustee; and for couples who wish to keep their marital estate as a singular unit.

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The generation-skipping transfer tax (GSTT) often impedes people who wish to leave assets to their grandchildren. The GSTT is the IRS’s way of ensuring such gifts—as well as the grandparent’s estate—do not escape taxation.

However, there is a way for you to make such gifts without incurring the GSTT and that’s through the creation of a Health and Education Exclusion Trust (HEET). As the name implies, these trusts can only pay for the medical and/or educational needs of your grandchildren and their descendants.

Why HEETs are Hot

While grandchildren or their descendants can benefit from a HEET, there’s a catch: at least one beneficiary must be a charitable organization. Having a charity involved prevents a HEET from acting as a garden variety generation-skipping trust. Charitable beneficiaries receive funds as “qualified transfers” as per IRS rules. The amount of income received by the charity annually depends on the individual HEET. However, it’s wise to consider an amount between 6 and 10 percent in order to pass IRS scrutiny.

A HEET can be used to pay the educational expenses of a your grandchildren. Unlike a 529 plan, it can be used to fund education at any level, from kindergarten to graduate school. While HEETs can’t benefit your children directly, they do so indirectly by removing a parent’s financial obligations to pay for educational expenses. Additionally, medical insurance premium payments for descendants also qualify under HEET. If the HEET is created during your lifetime, it is an irrevocable trust and not part of the estate—thus minimizing a your estate tax liability. Since people permanently lose access to HEET funds in an irrevocable trust, some may decide to fund a HEET via a will or revocable trust. In this instance, the HEET will go into effect posthumously. It’s important to note, that HEETs created in this manner are subject to applicable estate taxes.

Additionally, a HEET doesn’t just benefit the client, it can also benefit the attorney that prepares the trust. If a trust is not irrevocable or allows the grantor to make modifications to the trust over time—such as add more beneficiaries or set aside additional property for funding the trust—HEETs are a good opportunity for recurring business. While HEETs can be quite time consuming to create, there are tools that provide document automation and built-in adaptability; allowing attorneys to draft HEETs and other types of estate planning documents efficiently and with the flexibility that you require.

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Yes, I suppose they fit the broad definition of a blended family, but the story of the “lovely lady” and a “man named Brady” was, of course, simply that. A story. When I turn off the TV and look at today’s blended families, my first observation is how very unique and different they all are. (Or as one estate planner remarked to me: “If you’ve seen one blended family, you’ve seen one blended family.”)

Estate planning for blended families is complex and it requires a watchful eye and a delicate touch. Clients in blended families should understand that there are important additional issues unique to them that must be addressed, like how to properly provide for their spouse without accidentally disinheriting their own kids. If there are minor kids, planning for their custody adds further complexity.

These issues raise a number of questions around estate planning. Do you need a living will, a revocable living trust, an irreovcable trust, or charitable trusts? How do you decide? The options might seem overwhelming to you, and understanding your needs is the first step to piecing this puzzle together.

Understandably, many couples will be inclined to procrastinate, uneager to revisit past relationships. But reaching a successful outcome to their estate planning demands that they plan with an eye toward the past as well as toward the future. An experienced estate planning attorney can help facilitate those potentially painful conversations.

Even with careful planning and thorough documentation, unexpected disagreements can arise. Through the planning process, the couple may find their objectives aren’t completely consistent. Sometimes those differences can be worked out, but if a conflict grows and the disagreement becomes irreconcilable, withdrawing from representation may be the necessary next step.

We help couples in blended marriages identify their particular circumstances and the characteristics of their relationship that make them unique. We honor their differences but guide them toward those things they have in common.

Call us today at (614) 452-9724 to set up an appointment to work with one of our experienced attorneys.

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Trust fund kid: the term conjures up images of entitlement, snobbery, and pastel golf shirts. Daddy’s spoiled little brats account for only a little more than 1% of the U.S. population (there’s that maligned 1% again). When compared to the approximately 22% of Americans who inherited money, those who did so via a trust fund are an especially small minority.

That doesn’t mean the demographic should be ignored, especially in the current climate. Baby boomers—the country’s wealthiest generation—are expected to transfer $30 trillion to Gen Xers and Millennials over the coming decades, according to CNBC. That means millions of young people will, expectedly or unexpectedly, come into significant wealth. As an estate planning attorney, you need to be ready to capture this demographic.

Despite their negative connotation in the public consciousness, trusts are extremely useful estate planning tools for individuals looking to preserve and transfer assets. With a myriad of tax and non-tax benefits, trusts aren’t just a tool for the ultra-wealthy and should be an integral part of your estate planning practice. Here’s why.

What is a trust and why is it useful?

While most Americans consider wills the de facto estate planning tool, trusts have additional benefits that may work for many of your clients. Deciding which is best for your client is a key step in the estate planning process. Let’s get the basics out of the way:

• Wills. A will is a legal document that directs the distribution of assets after death. Wills are subject to probate, or the court-supervised collection and distribution of assets.

• Trusts. A trust becomes valid upon execution. You can place any number of assets into the trust, including cash, stocks, or real estate. In the case of an irrevocable trust, once you place the assets in the trust, you lose control of the assets, which then fall under the care of a trustee, such as a bank or attorney.

Trusts have many added advantages. When executed properly, most trusts will avoid estate and gift taxes, as well as probate. Trustors can also set stipulations for use of a trust, like restricting distributions to purchasing a home or financing education. Trusts can also help clients:

• Ensure a child’s inheritance is properly managed
• Ensure homes are transferred to designated beneficiaries in the event of death
• Keep a business in family hands throughout generations
• Protect family assets in the case of future divorces
• Maintain privacy of assets since trusts are not public records

Incentivizing achievement

Many parents, regardless of wealth, worry about spoiling their children. For those parents who have amassed great wealth, the concern often boils down to wanting to leave enough wealth so children can live productive, meaningful, and comfortable lives, but not so much wealth that the children choose to do nothing. While trustors will want to give their beneficiaries every opportunity, trusts can be crafted in a way that incentivizes education, hard work, or other desirable behavior.

Incentive trusts impose restrictions on distributions. For example, an incentive trust might require beneficiaries to graduate from college or even achieve a certain grade point average in order to receive money from the fund. They could require employment or charitable work, and reduce or cut off distributions for beneficiaries who fail to meet the requirements.

Incentive trusts have become increasingly common, but they’re not without their drawbacks. A trustmaker may not foresee all future problems, including medical emergencies or financial hardships, which might affect the trust’s stipulations and require greater financial distributions. Designing these trusts effectively requires careful listening and understanding of the client’s situation so that the incentive trust will work to further the client’s goals.

Setting up a trust fund for your child doesn’t need to be such a hassle. Contact us today to work with our experienced attorneys to create the perfect scenario for your family.

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1. Not choosing the right trustee
We all know that our clients would rather not spend too much time thinking about what would happen to their children should they die prematurely. As such, clients are often quick to choose a close family member—their sibling or parent to act as the trustee. While this may seem like common sense to the client, they often fail to take into account factors such as age, health, distance, and judgement—all of which are extremely important in the selection of an appropriate trustee. Incompetence, negligence, and inability on the part of the trustee can result in the mismanagement of the trust, thus jeopardizing the trust’s ability to provide for the beneficiary’s needs. To help clients avoid these potential issues, an attorney can 1) guide clients in making a thoughtful trustee selection (family member vs. a bank/professional); 2) if one candidate doesn’t tick all the boxes, then advise appointing co-trustees (someone who has a good relationship with the beneficiary and another who is financially savvy); and 3) designate successor trustees in case the first trustee dies or becomes incapacitated.

2. Not considering a minor’s maturity level 
When it comes to transferring wealth to younger generations, estate planners must remember that not all beneficiaries are responsible or prepared enough to handle a large inheritance. To protect a beneficiary from making bad financial decisions (like blowing all their money in Vegas, or buying all their friends Ferraris), attorneys counsel clients to consider using incentive provisions in a trust. An incentive provision establishes specific requirements that beneficiaries must meet before they can receive a distribution from the trusts. For example, an incentive provision may require a beneficiary to obtain a certain level of education, reach a certain age, maintain gainful employment, or assume a role in the family business before receiving a distribution from the trust. Trust incentives can also be used to discourage harmful behavior, such as in the event a beneficiary became addicted to drugs or alcohol, certain protective provisions would kick in, stopping all trust distributions until the beneficiary was drug tested. If the test was positive, then the trust could pay for rehab and the distributions would resume after the beneficiary tested clean.

3. Not including asset protection provisions
Divorce, car accidents, and bankruptcy happen every day. The odds are that your client’s kids will experience one or more of these things over their lifetime. Thus, it’s important to include asset protection provisions and language to protect beneficiaries (and their inheritance) from their would-be creditors and/or future ex-spouses. The first step is to include spendthrift provisions in the trust to ensure a beneficiary cannot assign the trust to a creditor. Next, ensure a client’s assets align with a trust. Only assets in a trust are protected by the trust’s provisions. Finally, have a system in place to track and validate a client’s assets over time (since we all know that a client’s circumstances will inevitably change). While it may be tempting to treat a trust as a “once and done” project, it is important to note that without these last two steps, a trust’s protective provisions are worthless. In addition, by providing these additional services, an attorney adds significant value to their practice, improves the client experience, and creates a potential for additional firm revenue in the future.

The post The 3 Biggest Mistakes When Setting Up A Trust Fund for Children appeared first on Charles H. McClenaghan, LLC.

A Jointly Owned Asset is property shared by two or more tenants. In Ohio, a Joint Tenancy must be owned equally by all tenants. When one joint tenant dies, his share of the asset automatically passes to the remaining tenants. While probate will be unnecessary to transfer the property upon one joint tenant’s death, legal documentation is required to show the property is owned solely by the surviving tenant.

Writing a Living Trust is also an alternative to drafting a Last Will. A Living Trust places your property and assets in a trust which is managed by a trustee for the benefit of your beneficiaries. A Living Trust avoids probate altogether because the real property and other assets are already placed in the trust account. A Living Trust avoids the costs of writing a will and other court fees associated with properly recording it. If a Last Will was drafted instead, such fees would be taken out of the estate.

A Transfer-On-Death Affidavit is a legal document that conveys the clear intent of the owner of real property to transfer his property to another upon his death. While more than one beneficiaries may be designated, each must be by name. Therefore, a transfer-on-death affidavit stating “my children” as the beneficiaries would be invalid. Should the sole beneficiary pass before the owner of the real property, the property would then pass along to the contingent beneficiaries.

Not every method is compatible for everyone. Every situation is different, and no two people have the same needs or want the same thing, so it is crucial that you consult an attorney before making any final decisions. Call us today to consult with an experienced attorney who can help you make the right choice for your family.

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It’s Estate Planning Week! We are celebrating by holding an Estate Planning workshop on October 17th at 10am to 12pm here in the Hilliard office to work with parents and their college students. We are located at 3956 Brown Park Drive in Suite B.

It’s more crucial now than ever before that your student has certain legal documents in place in order to protect himself in much-too-common dire situations that occur every day to our young ones away at university. Just because you may be footing the bill does not mean your student is protected. The requirement of such legal documents is even increasing in universities as college administrations become daunted by their incoming students fresh adult-status under the law. With parents’ limited power to make decisions on their college-aged children’s behalf, universities feel the need to set an additional safeguard in place.

Parents have little hope to retain some say in their child’s affairs once the age of eighteen hits. While a parent may be appointed guardian or gain conservatorship through the court, such processes require an exhaustion of resources. The most efficient, and inexpensive method, are drafting documents such as a Healthcare Power of Attorney to appoint a representative or agent to make healthcare decisions should one become unable to do so, a HIPAA Authorization Form to permit medical facilities to release information pertaining to one’s medical data to a specific individual, and a Durable Power of Attorney to authorize someone to make financial decisions on another’s behalf.

We have LIMITED SEATING- ONLY SIX SLOTS AVAILABLE! Click here to reserve your slot today! Expect the unexpected and implement the necessary safeguards to protect your children while they are away at college or studying abroad!

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