living trust attorney doug jackson

In addition to knowing exactly [what] needed to be completed and signed for probate, Jessa was also helpful with issues relating to the trust.end-quote

Resource Articles

Attorneys Douglas R. Jackson and Jessa M. Gary are committed to helping you understand your options. These articles help answer some of the questions our clients have about the more complex options of funding a living trust, avoiding probate, eliminating estate tax, and other estate planning issues.

We are happy to meet with you to discuss your concerns with these and other critical decisions including estate administration, durable power of attorney, probate, trusts, trust administration, and family business and farm estate planning.

Funding A Living Trust

Many people considering a Living Trust ask whether it should be funded during their lifetimes. The answer, in the vast majority of cases, is Yes! Some of the important things that a fully funded Living Trust can accomplish are the following: avoid Probate expenses and delay for assets titled to the trust, avoid Probate in another state if assets are titled to the trust and there is property owned in another state, allow successor trustee to handle finances in event of incapacity or incompetence of grantor(s) (people who made trust), succession planning for closely held business, provide for division of assets of married couple if estate is greater than $10,900,000, and bring together all assets in an organized manner. Real estate should be titled to the trust, and an attorney must make the deed. The deed should be recorded in the County in which the property is located. Out of state property, including vacation homes, time-shares, etc. should also be recorded. Homeowner insurance companies should be notified, and the trust should be listed as an additional insured. Transfers to the Living Trust are exempt transfers. Oil and gas interests may also be assigned to the trust. Automobiles, RV's, boats, etc. may be titled to the trust. It may be better to do so after the first spouse dies due to the recent change in Ohio law which permits the surviving spouse to take (2) vehicles in his/her name outside of Probate if their combined value is less than $40,000.00. Other personal property may be transferred to the trust by means of a properly executed Bill of Sale, which generally assigns all furniture, appliances, jewelry, clothing, household items, etc. to the trust. Bank accounts, money market accounts and Certificates of Deposit may all be titled to the trust. Re-titling these assets to a trust does not cause any early penalty withdrawal penalties, since, in most instances, these accounts are still reported for income tax reporting purposes under the Social Security Number of the grantor (maker of the trust). Banks permitted to sell securities, brokerage firms, and transfer agents easily transfer publicly traded securities to the trust. In most cases, a copy of the trust or certificate of trust must be presented with the stock certificates to transfer. A signature must be guaranteed by what is referred to as a Medallion Guarantee on the back of the Certificate. Brokerage accounts at stock brokers should be retitled to your trust; an example: John L. Smith, Trustee(s), or Successor Trustee(s), of the John Smith Trust dated December 1, 1998. Closely held business interests may also be transferred to the trust. A Limited Partnership, General Partnerships, and Professional Corporation shares may also be transferred to the trust. It may be necessary, however, to secure the permission of the partners or corporate officials prior to such a transfer. Who should fund the trust? In most cases, the individual should consider funding the trust himself/herself with some assistance from his/her attorney. Be careful of revealing your account numbers to strangers. Most attorneys, for liability reasons, will draft letters of instruction to banks/credit unions, stockbrokers, financial planners, life insurance agents, and retirement account IRA or 401(K) administrators for you. The listing of account numbers on this letter is then done by you. The attorney will spell out the appropriate "owner" or "beneficiary" designation on these letters. Verification of transfer to the trust should be done in about 45-60 days of delivery of this letter to the appropriate institution. A funded trust is a definite advantage in the overall estate planning process. Ongoing efforts to maintain funding should be done. Whenever a new bank account or certificate of deposit, bond, or stock share is purchased, title should be held by the trust. It is a good idea to maintain a log of your trust assets so that your successor trustee is aware of their location and account numbers. Never accept documents drafted by a non-attorney, and always personally meet with the attorney who drafts your documents. Execution, or signing of your documents, should be at your attorney's office or in his/her presence, if at all practical.

Avoiding Probate With Living Trusts

If a person dies with or without a will, he may be subject to probate, depending on how his/her assets are titled at the time of death. Common methods of avoiding probate are gifting during one’s life, establishing joint tenancy with rights of survivorship in real property, joint and survivorship bank accounts, payable on death accounts, transfer on death accounts, transfers with retained life states, and revocable intervivos trusts (living trusts) for those assets titled in the name of the trust. Each method listed above has its own peculiarities under Ohio law. There is no single method that is best for everybody. A client’s desires must be carefully analyzed by an attorney to determine whether a will with some of the above mentioned non-probate techniques is better than a trust. Assets must be carefully reviewed by the attorney; also, tax implications must be balanced, particularly Federal Estate Tax, if applicable. Often, if a will is part of the estate plan, it is combined with a Durable Power of Attorney that may come into existence immediately or upon incapacity (commonly referred to as a Springing Power of Attorney.) Health care decisions reflecting a client’s desires also should be discussed with the attorney. Such documents as a Durable Power of Attorney for Health Care may permit another to make health care decisions for you if you are not physically or mentally able to make those decisions for yourself. A Living Will may also be considered. This document basically states that the one signing it does not want life sustaining treatment if he/she is statutorily defined in a terminal condition or a permanently unconscious state. A living trust (revocable intervivors trust) will avoid probate for those assets titled in the name of the trust. A married couple will often be all three parties to the trust while they are living–1) grantors, or the people who make the trust; 2) trustees, managers of trusts assets; and 3) beneficiaries, people who receive benefits from the trust. Upon the death of the second spouse, the named successor trustee will distribute the assets according to the grantors’ wishes. Tax language may be incorporated into the trust so as to reduce or eliminate federal estate tax in many instances. Often times, this is referred to as a “credit shelter trust” or the creation of an A/B trust. In either event, when the estate of a married couple exceeds $10,900,000 in total asset value (stocks, bonds, home and possessions, autos, CD’s, annuities, insurance, IRA and 401(k) plans, etc.), an experienced attorney will often incorporate the appropriate tax language in such a trust. One of the major advantages of a living trust, beyond probate avoidance, is the capability of the trust to avoid guardianship proceedings in many instances. When the grantor(s) becomes incapacitated, many trusts will provide that the successor trustee (usually a child of the grantor) may step in and manage the assets for the incapacitated individual. An obvious advantage of a living trust is that asset distribution can occur more rapidly after death than with a will. This is true primarily because the probate process is avoided and delays caused by probate are then by-passed. Also, attorney fees for settling a trust are minor compared with those charged in probating a will. A well-laid out trust will often provide simple-to-follow instructions for the successor trustee to follow upon the death or incapacity of the grantor(s). Assets that are distributed via trust distribution as a result of the death(s) of the grantor(s) will also receive a step up in basis. In other words, those assets transferred at death to a beneficiary will receive a new cost based on fair market value at the time of the grantor’s death. Many times, this is preferred rather than receiving a gift during life and subjecting the recipient to capital gains tax when that asset is subsequently sold. For farmers and small business owners, the fact that a successor trustee can be named to take over the management of their farm or small business at incapacity or death without guardianship proceedings or court interference is often a major advantage of a trust when considering an estate plan. Options to purchase business property may be granted to specific beneficiaries in the living trust, with life insurance used to provide funds with which to exercise the options. With a living trust, the grantors maintain control of their assets for as long as they desire. If they no longer feel able to control their assets, they may resign and appoint a corporate trustee or the successor trustee may assume power. Problems associated with joint tenancy with rights of survivorship with children are also avoided. For example, one who uses joint tenancy to avoid probate may be exposing their assets to a divorce proceeding if one of the grantor’s children are subsequently divorced, the claims of a child’s creditors, or possibly even a judgment if the joint tenant/child was involved in a personal injury claim that went against that child. Proper estate planning does involve legal advice that is reserved to attorneys who are licensed by the State of Ohio to practice law. Make sure that you talk to and actually meet with the attorney who will draft your document, whether it includes a will or a trust, from start to finish. Attorneys have malpractice insurance if a mistake occurs; non-attorneys not authorized to practice law do not. Douglas R. Jackson & Jessa M. Gary are attorneys in private practice in the Columbus and Dayton area. 

Eliminating The Estate Tax

Irrevocable Life Insurance Trust Many people do not realize that when they die with the incidents of ownership in a life insurance policy (policies you can borrow against, assign or cancel, or can change a beneficiary or a life insurance policy in their own name or payable to their estate), the entire proceeds are included in their estate for federal estate tax purposes. Under current law, the net value of an estate over $5,450,000 is subject to federal estate tax before it can be fully distributed to your beneficiaries. This is extremely important for a single person whose estate is close to $5,450,000 or a married couple who does not have tax-planning provisions in the Living Trust or will with an estate of $5.4 million. Death benefits from life insurance are not subject to income tax. Even though these proceeds are payable to a beneficiary, they will be included in your estate for federal estate purposes. As an example, suppose an individual had $5,450,000 worth of assets including his car, home, stocks, bonds, IRAs, CDs and other investments. This individual also had a $250,000 life insurance policy with the idea in mind that the death benefit proceeds would provide liquidity for his estate to pay any debts and preserve as much of his estate as possible for his children. Unfortunately, he died owning the policy in his own name even though he named his children as beneficiaries. The $250,000 death benefit was included in his estate for federal estate tax purposes and created a $102,500 tax liability (41 to 50 cents of every dollar over $5,450,000 will go to the Federal Government), thus reducing the death benefit to $147,500 on the $250,000 policy. To eliminate this problem, an irrevocable life insurance trust could be set up. This individual would pay the premiums to the trustee of the trust. The trust cannot be managed by the person making the trust. This normally does not cause problems, particularly if you can save taxes and know who the beneficiaries would be anyway. Because the irrevocable trust owns the policy, insurance proceeds are not included in the estate and the full $5,450,000 estate value plus the entire death proceeds from the insurance will pass to the named beneficiaries free of federal estate tax. It is even possible to name the irrevocable insurance trust as beneficiary. The advantage to this over naming a child or children the beneficiary is that the trust could delay payment to named persons so that periodic payments could be made. You could even provide your spouse with lifetime income and keep the insurance proceeds out of both of your estates. It is also possible to state that the person who would receive the proceeds, if they became incapacitated, would not receive the proceeds outright so that the proceeds would not be subject to court approval, as is often the case if someone is declared incompetent. Internal Revenue Code rules must be followed in setting up and funding the irrevocable life insurance trust. It is often preferable to transfer cash to the trustee who will purchase the policies or pay the premium for the beneficiaries. The trustee will notify each trust beneficiary that a gift has been made on his or her behalf and that they have a right to withdraw the gift within a specified time, perhaps 30 days. The beneficiaries will decline, and the trustee will then invest the funds by paying for the premiums. Existing policies may also be transferred to an insurance trust. However, if death occurs within three years of the transfer, the death benefits will still be included as part of the estate or will be subject to the federal estate tax. Life insurance can be an extremely useful tool in the hands of an experienced estate-planning attorney. Insurance trusts are legal documents and they must be drafted by an attorney. Life insurance proceeds often provide liquidity to pay expenses and taxes that are due nine months after death. It may be an important consideration to provide liquidity for small business owners or farmers after the death of an individual to keep the operation going. Certainly, insurance proceeds are leveraged money, i.e.; the death benefit should always exceed the total of the premium paid. Planning, regarding ownership of insurance policies, is very important in making sure that your beneficiaries, rather than the IRS, receives the insurance benefits you are paying for.

The Ohio Living Will And Durable Power Of Attorney For Health Care

Ohio has two legal documents that every senior citizen should consider executing – the Living Will and the Durable Power of Attorney for Health Care. Both have been in the news recently and are sometimes misunderstood. Ohio’s Living Will becomes effective only when an individual is permanently unconscious or terminally ill. Permanently Unconscious, as defined by our Statute, means that to a reasonable certainty (1) you are irreversibly unaware of yourself and your environment and (2) there is total loss of cerebral cortical functioning, resulting in your inability to experience pain and suffering. Terminal Condition is defined by Ohio law to mean that you have irreversible, incurable, and untreatable condition caused by disease, illness, or injury and which to a reasonable medical certainty there (1) can be no recovery and (2) death is likely to occur within a short period of time if life sustaining treatment is not administered. With a valid and properly executed document, two doctors must agree that you are dying and beyond any medical help. Ohio’s Durable Power of Attorney for Health Care differs from the Living Will in the sense that you need not be terminally ill or permanently unconscious for it to take effect. One simply may not be able to make his own medical decisions because he or she can not physically communicate their own wishes. Often, a spouse, relative, or a trusted friend is selected to act on your behalf. Many times, that person may authorize medical treatment or surgery; they may also authorize a change in doctors. Anyone may be appointed to act on your behalf, as long as it is not your doctor or the administrator of a health care facility in which you are being treated. Both a Living Will and a Durable Power of Attorney for Health care can be revoked or changed by you at any time. The Ohio State Bar Association and the Ohio State Medical Association have agreed upon the language of both documents. In order for the documents to be valid, certain language that is specified in the Ohio Revised Code must be included. Your doctor, hospital, or attorney should be able to assist you in finding a source for these documents. Once you have these documents, it is advisable to make executed copies available to family members and your family doctor. You may even record these documents in the County Recorder’s Office in which you reside. A number of people are concerned with the issue that once they have a living will whether or not they can receive medication for pain. The answer is yes. If cessation of life support mechanisms becomes necessary due to a worsening condition, persons or family members listed in your living will must be notified of your desire to stop life support prior to following your instructions to withdraw life support. If that person does not believe your living will is legally valid, they may receive an immediate hearing in probate court to challenge it based on legal grounds. However, by statute, no one can change or overrule your living will if it was freely signed and properly executed. Ohio’s Living Will also permits the withholding of nutrition and hydration if your condition becomes hopeless. This is mostly done by removal of internal feeding and fluid tubes. If you are permanently unconscious, as was discussed earlier and certified such by two doctors, your document needs to expressly state this desire to withhold nutrition and hydration. A proposal advocated in central Ohio is that all recorded Livings Wills and Durable Health Care Power of Attorneys be made available to hospitals via computer link at the time of emergency admission or check in at hospitals.

Charitable Remainder Trusts

Sometimes Gifting Can Yield More Charitable gifting of a highly appreciated asset such as a stock or farmland often can yield positive income results for both the giver and the recipient charity. Many times, a family is reluctant to sell such an asset because of the capital gains tax that would be due when the asset is sold. The asset is typically a low yield or low income-producing property. The owners of these types of assets would like to convert them into an income for retirement, but are reluctant to do so because of adverse tax implications. The above situation may have a remedy that is widely accepted and gaining in popularity – The Charitable Remainder Trust. The advantages are that the asset may be transferred to a trustee of a trust who can sell the property without the burden of paying capital gains tax, and the trustee then can provide an income payable quarterly, monthly or yearly to the maker of the trust, thus converting a low basis stock or piece of real estate into an income-producing asset. On top of this, the grantor, the person who makes the trust, can qualify for a charitable tax deduction for the current year in which the gift is given based on the giver’s life expectancy, the amount of the gift that will eventually pass to charity, the type and value of the assets, and the applicable federal rate. The charitable donation is normally limited to 30 percent of adjusted gross income, but can vary from 20 percent to 50 percent depending on the class of charity as defined by IRS regulations. If you cannot use the full deduction in one year, the deduction can be carried forward for up to five years. At the death of the grantor, or a successive life as determined by you, the remaining Trust assets go to your specified charity or charities. The individuals making the trust, the grantors, have options as to their income choices. They may select a percentage of the trust, in which case, the annual income received will be determined by the investment performance of the Trust. This type of charitable trust is called a Charitable Remainder Unitrust. The advantage is that additional funds may be later added to the trust. The assets may grow quickly if well managed since they grow tax-free. If certain assets, like land or closely held business stocks, are put into the trust, they may not be readily marketable, so income is difficult to pay. Special wording may be put in the Trust that would pay the lesser of the income earned so that any difference may be made up in a better year. One might also opt for a guaranteed income. A trust providing a guaranteed income would be called a Charitable Remainder Annuity Trust; no matter how the Trust assets perform, a definite income will be paid. Many times, older clients will opt for this type of trust. Trust income may be paid to the grantor, the grantor and spouse, or, after their death(s), to their children for their lives. The longer the Trust lasts; however, the lower will be the charitable tax deduction. It is possible to set up the Trust now, and delay taking the income until later. Hopefully, with good financial guidance, the trustee will see the growth in value of the Trust assets, which may mean significantly higher income to the grantors during their lives, and a greater remainder amount left to charity. Since the remaining Trust assets will eventually go to charity, the question often arises as to how to replace your children’s inheritance. Fortunately, there is an easy way to do this. You may wish to apply a part of the income tax savings that would be generated due to your charitable tax donation to fund an irrevocable life insurance trust. Typically, this is accomplished with an inexpensive second to die policy, which is based on the lift expectancies of the grantor and spouse, or, another person. Since, actuarially, the life expectancy is spread over two lives, the premiums are much lower than they would be only on one person’s life. Because the irrevocable life insurance trust is the owner of the policy, the proceeds are removed from the grantor’s estate for estate tax purposes. The beneficiaries will receive the proceeds free of tax. Keep in mind that every dollar spend on premiums may qualify for the annual exclusion for gift taxes, and that every dollar of premium will buy several dollars of insurance. Thus, estate taxes may be avoided, and the proceeds will be free from probate and taxes. Implementation of Charitable Remainder Trust results in creating a winner for everyone – grantor and spouse, their children, and the charity or charities they select. In summary, it is possible to convert a low yielding asset or piece of land that has appreciated in value into a lifetime income, avoid capital gains tax, receive a charitable income tax deduction, reduce or eliminate estate tax liability, leave more for the grantor’s children through a replacement insurance trust, and also benefit your favorite charity. Charitable trusts, in order to qualify for a qualified estate-planning attorney who has expertise in this area should draft all of these benefits. IRS regulations are very strict and must be clearly adhered to. Sound financial advice from your financial advisor should be sought. Douglas R. Jackson is an attorney in private practice that emphasizes estate planning in the central Ohio area.

1660 NW Professional Plaza, Suite H

Columbus, Ohio 43220

(614) 221-2702

4031 Colonel Glenn Highway

Beavercreek, Ohio 45431

(937) 427-2049

Receive periodic communications by email.
  • This field is for validation purposes and should be left unchanged.