What’s the Difference Between a Will and a Trust?

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By Chris Meyer

Many people think that Wills and Trusts are the same thing. Nothing could be further from the truth. While there are similarities, there are some very important differences. A Will is a very basic document that simply expresses the wishes of the deceased to the Probate Court. It does not avoid probate. The Executor who oversees the dispersement of the estate must follow a strict set of guidelines, keep meticulous records and report every action to the Probate Court. As such, these actions and the contents of the estate are a public record, in other words, they are NOT private. Any estate that is probated may be accessible to the public and with the convenience of the internet today, anyone may be able to access the details of a probated estate in many counties from the comfort of their own home!

The assets of a Trust on the other hand, completely avoid probate and public knowledge.The assets of a Trust on the other hand, completely avoid probate and public knowledge. A pre-appointed Trustee simply disperses the estate according to the wishes of the decedent which are outlined in the Trust. The Trustee does not have to report to the Probate Court and consequently the estate can remain private. In addition, the Trustee does not have to post bond. Other advantages of a Trust are that it can be customized for special situations, help maximize your estate tax deductions and even help you to preserve your assets from the Medicaid spenddown.

All estates are different, and there are many different types of Trusts that can be created in order to best suit your wishes after you pass away. If you would like to schedule a free one-hour consultation to see one of our attorneys, please contact our office at 1-800-798-5297. Our offices are located in Monroe, Sidney, Chillicothe, and Centerburg. Also, be sure to Like us on Facebook in order to keep up-to-date with our most recent blogs about a wide variety of estate planning and nursing home protection aspects.

Will you get an IRA penalty this year?

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The Tax Policy Center reports that 68% of IRA owners over age 70 1/2 have not yet taken their required minimum distributions this year.  If they don’t take these distributions by the end of the year, they will pay a 50% penalty on the distributions they should have taken!
Will two out of three IRA owners pay a huge tax penaltyTime keeps on slippin.’ Will two out of three IRA owners pay a huge tax penalty? New research from Fidelity offers a wake-up call to IRA holders over age 70 and a halfTime reports the findings: Among the 750,000 IRA holders required to take distributions and pay taxes by December 31, 68 percent have yet to take their full amount. More than half—56 percent—have so far taken nothing. If the money is not taken out, the IRS assesses a hefty penalty equal to half the amount to be distributed out of the account. As many as 250,000 IRA owners each year miss the end-of-year distribution deadline, according to the Treasury Inspector General. This generates potential tax penalties totaling $175 million.

Veterans Day 2014

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By Jessica LoPiccolo

Veterans Day is a day of celebration to honor America’s Veterans for their patriotism, love of country, and willingness to serve and sacrifice for the common good. The holiday is observed on November 11th every calendar year. The reason it is always on November 11th goes back to World War I when the fighting ceased seven months before the Treaty of Versailles on the 11th hour of the 11th day of the 11th month, in 1918. That is the date generally known as the end of “the war to end all wars.”

In 1954, President Eisenhower officially changed the name of the holiday from Armistice Day to Veterans Day.

Today, there are about 23.2 million military veterans in the United States. My dad is one of them. He was in the United States Marine Corps for 4 years where he proudly served the Commander in Chief, President Ronald Reagan, in Helicopter Marine Experimental -1 (HMX-1), the Presidential Helicopter Squadron at Quantico, Virginia. He was certified in Communications, Aircraft Maintenance, Electronic Warfare, Aircrew, and Ground Maintenance. His rank was E-4 Corporal. I received an email from my dad today stating that he was chosen for Veteran of the Month by his employer, Boeing. He has been with Boeing for 18 years where he is an engineer. I found it fitting to share this accomplishment, with Veterans Day just around the corner.

Boeing Veteran of the month award

Will My Estate Have to be Probated?

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By Roy Whited

While I have heard some very detailed definitions for the term “estate”, I especially like the one used by Certified Elder Law Attorney Thom L. Cooper during his educational seminar for seniors: He says, “It is all your stuff; all of the things that you own at your date of death; put it in a box and it makes up your estate.”

However, while you may only have one ‘box of stuff’ or estate, your estate may be made up of many different types of estates. For example you can have a probate estate, a non-probate estate, a trust estate, a taxable estate, and a non-taxable estate. In this writing we will be talking about your probate estate.

Generally, a probate estate is made up of any asset owned by an individual at their death that is subject to probate administration. The probate administration process is designed to provide proof to the probate court that the individual’s Will is genuine.

Types of assets found in a probate estate:
All assets that are owned in the individual’s name alone
All assets that are owned by the individual as a “tenant in common”
All assets that are payable to the estate of a beneficiary
All assets owed to the individual before death but are paid after the date of death
Other personal property items such as household goods, jewelry, etc.

Probating an estate can be costly and time consuming, causing delays in the distribution of assets to heirs. Call 1-800-798-5297 and schedule a free one-hour consultation with a Certified Elder Law Attorney at Cooper, Adel & Associates to learn how to avoid probate.

Congratulations to Lauren Cooper!

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Cooper, Adel & Associates would like to congratulate all the July 2014 Ohio State Bar applicants who received a passing score. A very special congratulations to our own Lauren Cooper, who has worked for the firm for the past five years.

Lauren Cooper after passing the Ohio State Bar

Estate Planning for the Modern Farming Family

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By: Senior Attorney Dan Vu

White barn with Ohio logoI have always found that farming families are more aware of the importance of proper estate planning than the general population. This is perhaps, because most farmers have a story or two of an estate plan that went terribly wrong. I am never surprised, because there are plenty of ways for an estate plan to fail, especially for farmers.

For farmers, the stakes are high and the goals are even higher. For example, most want the farm to stay in the family for their children who want to continue the farming tradition. The difficulty is somehow also providing for the children who don’t want to farm while burdening all of their children with as little tax and debt as possible. These are long-standing problems for farmers, and I am certain that the fairly recent boom in farmland prices have only exacerbated the problems.

With these issues looming, most farmers attempt to resolve them earlier than most other families. I confirmed this when I was recently working in our booth at the Farm Science Review in London, Ohio. Many farmers I met already had a revocable living trust in place. This was good news since I believe that a revocable living trust is a necessity for a farming family. If properly created and utilized, it can resolve many of the farmer’s concerns. However, I was also glad to be there to explain how a typical revocable living trust cannot, on its own, solve all of the problems that face a modern farming family.

The most often overlooked but most costly modern problem is the devastating expense of long term care. Today an extended stay in a nursing home could literally cost the farmer his or her farm because, unfortunately, a revocable living trust cannot protect the farm against these long term care costs. In fact, the State routinely requires farms to be sold to pay for the cost of long term care… and … the State will place a lien on farms that can’t be sold.

Also often overlooked is the problem of the capital gains tax. This is not a new problem but with elimination of the Ohio Estate Tax and the increase in the Federal Estate Tax exemption, the modern farming family has a new opportunity to take advantage of the “step-up in basis” rules. A “step-up in basis” occurs at a farmer’s death and it allows the family to re-depreciate assets or sell them with little to no capital gains tax. Before the changes in the estate tax, the farming family would have to choose between paying the estate tax or receiving a favorable capital gains tax treatment. With these recent estate tax law changes, many farming families can now receive favorable capital gains tax treatment without a large estate tax.

It’s not often that the government lets you have your cake and eat it too. But you do not get the full use of the “step-up” rules with a typical revocable living trust. In fact, many of these older trusts were created before the estate tax law changes and most put the farming family in a worse tax position than they would have been with no trust at all.

So if you are a farmer, it is important that you take another look at your revocable living trust and your existing estate plan as a whole. Make sure it is built to face the modern problems of today’s farming families. I know you are thinking that you already took the time to do so years ago with some attorney who you can barely recall. But unfortunately things change, so make sure your plan changes with it. Swing by our booth at next year’s Farm Science Review or better yet, call us after this year’s harvest for a complimentary appointment with one of our knowledgeable attorneys.

How Can You Reduce or Avoid High Trust Taxes?

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By Sandra K. Dennison, CPA

A recent article in the Wall Street Journal describes a strategy to avoid taxes when you put money into a trust and when you take it out. Here’s a summary of how it works:

Distributes net income to lower tax bracket beneficiary

In cases where Mom & Dad’s trust has a higher tax bracket than their beneficiary’s, there is an opportunity to save tax dollars. Trusts have fewer tax brackets and higher tax rates than individuals who have more tax brackets and lower tax rates. Consider that a trust with as little as $12,150 in assets pays the maximum tax rate – 43.4% while individuals can earn over $400,000 before they pay 43.4%. It seems clear that paying at the individual tax rate is better than paying the trust rate, in most cases.

You also have the option to look at which tax strategy (trust or individual) makes the most sense – if you get it done in the first 65 days of the year. This extended “decision time” is only available to trusts and beneficiaries.

Although appealing, distributions should not be made just for the sake of tax saving and certainly not without expert counsel. Distributing funds from a trust could produce negative consequences that far outweigh the tax savings. Respect for the purpose of the trust is more important.

Read more at: “How a Trust Can Cut Taxes” written by Arden Dale for the Wall Street Journal.

How a Trust Affects Your Ohio Homestead Exemption

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By Tricia Applegate

Do I still qualify for the Homestead Exemption if my home is in a Trust? The short answer is yes, with a few provisions. The State of Ohio states:
You are eligible for the homestead exemption if all of the following are true:

  • You created the trust to be effective during your lifetime (an inter vivos trust)
  • You provided the assets for the trust (you are the settlor).
  • The trust agreement contains a provision that says you have complete possession of the property.

Revocable and irrevocable trusts may qualify. Most of the other common forms of property ownership (such as survivorship deeds) also qualify for the exemption. Properties owned by corporations, partnerships, limited liability companies and trusts, other than the trust described above, are not eligible for the homestead exemption because such properties are not owned by an individual.

If you have questions regarding your trust and the homestead exemption, please contact your estate or elder law attorney.

 

What is HIPAA?

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By: JM Megail Gaumer

HIPAA stands for “Health Insurance Portability & Accountability Act”. The law was adopted in 1996 to, among many other complicated provisions, protect patients’ personal information (a.k.a. protected health information).

So what is considered “protected health information”? The Privacy Rule protects all individually identifiable health information held or transmitted by a covered entity or its business associates, in any form or media, whether electronic, paper, or oral. The Privacy Rule calls this information protected health information (PHI).

“Individually identifiable health information” is information, including demographic data, that relates to:


  • The individual’s past, present or future physical or mental health or condition.

  • The provision of healthcare to the individual, or

  • The past, present, or future payment for the provision of health care to the individual.

So what does it mean to you? If you are injured and cannot speak for yourself, your family may not be able to obtain information about your condition.

What can you do? It is imperative that you have healthcare directives (a Health Care Power of Attorney or Living Will) that include language specifically permitting your loved ones to require that the hospital release your protected health information to them. This will allow individuals you name to obtain information regarding your care and condition.

 
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I Don’t Want My Daughter’s Ex-Husband to Get Any of My Estate!

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By Attorney Ted Brown

One of the many benefits of a Living Trust is that it allows you a great deal of flexibility to customize distribution of your assets at your death to avoid undesirable and unintended consequences. One such consequence is an ex-daughter-in-law (or ex-son-in-law) ending up with your assets instead of your grandchildren or remaining family members.

A Living Trust can be specifically drafted to state that, should your daughter pre-decease you, her share will not go to her ex-husband. In addition, the Trust can be used to ensure that her share will be used for the benefit of her children. If those children are minors, the Trust can be drafted to ensure that the funds are managed for their benefit by someone you designate.

Call us today at 1-800-798-5297 to set up a free consultation to learn more about how a Living Trust can help you plan for the unexpected and make sure your assets end up in the hands of your loved ones.