Consider charitable contribution to honor man’s best friend

By Andrew Zashin*

Andrew Zashin and his best friend, Hugo

Man’s best friend. A part of the family. Every day, dogs demonstrate their love and loyalty to their owners, which has inspired owners to leave some – or even all – of their estates to their beloved companions to ensure that these animals are well cared for after the owner’s death.

This may sound ridiculous, but it is not. More and more estate planning attorneys are incorporating provisions for prized pups into wills and trusts, and are requiring owners to consider things like what assets owners wish to leave for the pet’s care and well-being; who will care for the pet; and, what happens to any remaining assets set aside for the pet’s care after the animal’s death. Family lawyers are routinely asked to fight dog custody cases and even put together “pet parenting plans.” Some states even have statutes dealing specifically with pet custody! Pet issues, therefore, are real and can be complicated.

The most famous example of a pet-focused estate plan belongs to Leona Helmsley, a billionaire real estate mogul and hotelier who left a $12 million trust fund for her beloved dog, a Maltese named Trouble, while leaving nothing to two of her grandchildren. A court found that this $12 million inheritance exceeded the amount required to care for Trouble during her expected lifetime and ultimately reduced the trust to $2 million. In her estate planning, Helmsley entrusted her brother with Trouble’s care, but when he decided that he did not want to care for Trouble, one of Helmsley’s longtime staff members stepped up and cared for the pooch. When Trouble died in 2010, the remainder of the money set aside for her care reverted to the Leona M. and Harry B. Helmsley Charitable Trust, which Helmsley intended to provide for the “care and welfare of dogs.” The Helmsley Charitable Trust’s mission has since shifted to non-animal related causes.

Other notable examples of pet-prioritized estates include that of Gail Posner, who left her $8.4 million Miami Beach mansion and a $3 million trust to her three pups, and fashion icon Karl Lagerfeld, who similarly left a portion of his estimated $300 million net worth to his Birman cat, Choupette. While it is unclear what Posner and Lagerfeld intended for the remainder of the assets left to their respective pets after the death of each animal, this is an important question for pet owners to consider.

If an owner does not name a person or an entity to receive the remainder of the assets left for the care of a pet, the assets may revert to the owner’s estate after the pet’s death. This leads some owners to name a specific individual, like the person who provided care for the pet after the owner’s death, to receive the remainder of the assets. Others, like Helmsley, choose to honor the memory of their cherished family members and direct that any remaining assets from those set aside for the care and well-being of their pets be donated to a pet-focused charitable organization.

There are many charitable organizations committed to helping rescue and improve the lives of dogs and other animals, both locally and nationwide. I encourage you to consider contributing to pet-focused organizations like the Cleveland Animal Protective League, the Sanctuary for Senior Dogs, and the American Society for the Prevention of Cruelty to Animals, as well as to consider incorporating your pets and organizations like these into your estate planning. Man’s best friend will thank you for thinking of them.

This article originally appeared as a column for the Cleveland Jewish News.

Five reasons to incorporate trust into estate plan

By Andrew Zashin*

Trusts have long been a tool for the ultra-wealthy to preserve wealth and pass it down through the generations. But even those of more modest means may benefit from this powerful estate planning tool. Here are five reasons to consider forming a trust:

  • To minimize the tax hit: True, the exclusion for estates and prior taxable gifts is $11.4 million, meaning most estates will not be taxable. But if your anticipated life insurance proceeds might tip you over that edge or if you intend for your life insurance to offset estate tax liability, an irrevocable life insurance trust could help to keep proceeds outside of your probatable estate and minimize the hit.
  • To maintain control of how assets are distributed: While a last will and testament specifies who might receive which of your assets, it does not control how those are used. A trust can ensure that funds are used for specific purposes, such as higher education. It can limit how funds are paid out to an individual, for example to secure ongoing support for a fiscally irresponsible heir. It can even provide for your favorite charitable or philanthropic organization.
  • To maintain privacy: Probate matters are public record. Theoretically, your nosy neighbor – or an estranged family member – could go to the courthouse and peek at probate court filings, read any filed will, view accounting filings, and, generally, see what you have in your estate. A trust provides a layer of privacy that the probate process would not otherwise provide. Even during life, a trust can help to provide a layer of privacy to your dealings and help to obscure certain information – the owner of real property, for example – in the public record.
  • To promote efficiency: Probate matters can be lengthy. The court process does not always move quickly and can be difficult to navigate. They can also be expensive, as an executor or administration of an estate is generally paid a percentage of the total value of assets managed. Assets that are held in a trust will not need to go through the probate process and can be handled more efficiently and potentially less expensively.
  • To keep wealth within the family: Perhaps you want to provide for your new spouse, but make sure that your children from your prior marriage are also provided for. A qualified terminable interest property trust can provide for a surviving spouse, but also provide for the subsequent transfer upon his or her death of any remaining assets to other selected beneficiaries. Generation skipping trusts (GSTs) are another means of preserving wealth through the generations.

Ultimately, the purpose of any estate plan is to direct your assets in accordance with your wishes and to create a legacy that is meaningful to you. A trust, properly created with the help of appropriate experts, can be an important tool in the creation of your legacy.

This article originally appeared as a column for the Cleveland Jewish News.

2023-11-10T13:38:10-05:00September 16th, 2019|Estate Planning, Trusts|

A helpful blueprint to your last will and testament

By Andrew Zashin*

Less than half of the population has a last will and testament. Ohio law provides a way to divide the property, or “estate,” left behind when a person dies without a will.

Generally speaking, your estate will go to your spouse. Or, if you have no spouse, your estate will go to your children. If you have no children and no spouse, your estate will go to your parents, or your siblings, or their descendants, in that order.

In many cases, the intestacy laws may provide what you would like to see happen anyway. But so you may want to select the person who will be responsible for administering your estate. You may want to provide that the administrator be paid (or not paid) for his or her services.

And, if you are divorced and remarried, if you have children from different relationships, if you want certain people to receive specific heirlooms, accounts, or assets, or, really, if your situation is anything other than wanting to simply leave your estate to your spouse or children, it is so important to put your wishes formally in writing.

Here are some questions you will want to consider:

What assets are in your estate?

Many assets, such as accounts that are “payable on death” or jointly held, retirement accounts on which a beneficiary is named, life insurance policies, real property that is jointly held or else subject to a “transfer on death” designation, or assets held in a trust, will not be divided by the probate court (or by will.) Instead, those things will transfer to the joint account holder, beneficiary, or other payee. Anything otherwise in your name or owned by you is probably an estate asset.

What debts are in your estate?

You may have heard your debts do not survive you, and they usually go away upon death. It is true that loved ones will not generally be responsible for the debts of a deceased relative. However, it is important to note that the debtors – a mortgage holder, a credit card company, etc. – will have a claim against the estate and that debt will likely need to be repaid from the estate before your heirs will receive any inheritance.

Who do you want to inherit from your estate, and how?

An heir could be a person or an organization, and of course provisions are occasionally made for beloved pets. Keep in mind it is not really possible to completely write a spouse out of a will in the state of Ohio. A surviving spouse, by law, has the right to certain assets, despite what a will provides. You should clearly articulate all individuals you are intending to include, and any you may be intending to exclude, otherwise the probate court may incorrectly presume what you intended. In addition, you should think about what you want to see happen if one of your heirs predeceases you. Do their descendants inherit their share or something different?

Who do you trust to appropriately administer your estate, ethically and accurately handle funds, and enact your wishes?

Keep in mind that individual would have to ultimately accept the appointment. Typically, that individual would be paid for their services, usually proportionate to the size of the estate, but you may make some alternate request known if you feel it is appropriate.

If you have minor children you may specify your intention as to responsibility for their care. A court could ultimately decide that a different arrangement is more appropriate, but your wishes would doubtless be considered.

You are not required to hire an attorney to draft your will. But it is important to understand that certain formalities must be observed. For example, it must be signed by you and witnessed by at least two individuals who do not stand to benefit from the estate. And, more complex situations can get tricky, and you may find it useful to at least consult a will drafting software package, book, the Ohio Revised Code, or other how-to resources to be certain you are saying what you think you are.

This article originally appeared as a column for the Cleveland Jewish News.

Trust important part of life care plan for special needs loved one

By Andrew Zashin*

If you have a loved one with special needs, a trust could be a very important part of his or her life care plan. Generally speaking, a trust is created when someone manages property – usually money or real estate – for another person.

We often think of trusts as estate planning tools to conserve wealth for future generations. In the case of a special needs trust, the beneficiary or the person for whom the trust is created, is someone who is disabled or mentally ill and who lacks the capacity to manage his or her own finances.

This type of trust is intended to provide ongoing financial support for the beneficiary’s specific medical and lifestyle needs. And, it provides you with assurance that your loved one will be cared for when you are no longer able to do it yourself.

The definition of special needs is rather broad. Not only can a special needs trust help with medical and health care services and products, but it can be used for daily living needs such an accessible vehicle, modified communication devices or appropriate living arrangements like an assisted living or skilled nursing facility.

This money can fund recreational activities, hobbies and activities, or vocational activities, training and education for the beneficiary. It can be used toward professional services such as claims processing, attorneys, and accountants that may be hired to act on behalf of the beneficiary. Trust funds can even be used to provide for respite care for a caregiver.

The trustee typically will be a family member such as a parent or a sibling. But, if no appropriate family member is available, a third party can be appointed by a court. The trustee is tasked with smartly managing the funds or other assets, balancing the immediate needs and wants of the beneficiary against expectations that the funds will be used frugally so as to be available to provide for the beneficiary as long as possible. After all, the trust will generally continue on until either the beneficiary dies or the funds are exhausted.

Funding of the trust will vary widely, based on the available assets and the particular needs of the beneficiary. There is no minimum requirement for a special needs trust, and it can be funded with thousands of dollars, or millions. Generally, the funds will come from family assets, lawsuit proceeds, life insurance policies on the lives of the beneficiary’s parents, inheritances, etc.

Often, a prospective beneficiary qualifies for means-tested government assistance, i.e. assistance that is based on a recipient’s lack of resources, such as Supplemental Security Income, Medicaid, subsidized housing and the like. Special needs trusts are especially useful in those cases; with proper planning, the trust can subsidize expenses for a beneficiary without jeopardizing access to other benefits.

If you are looking to create a special needs trust for a loved one, it is imperative to get the right team behind you. A special needs trust is not something to do once and never look at again. Instead, you will want to work with a competent estate-planning attorney, and possibly a financial planner, to make sure the trust will continue to accomplish your goals for your loved one well into the future.

This article originally appeared as a column for the Cleveland Jewish News.

2023-11-10T13:38:12-05:00December 13th, 2017|Estate Planning, Life Care Planning, Special Needs, Trusts|

Should you draft your own will and the risks of using software

By Andrew Zashin*

This article originally appeared as a column for the Cleveland Jewish News.

The more technology advances, the more we rely on it in our everyday lives. Where we once called first to our family doctor, we may now look first to the internet to research our symptoms. DIY is easier than ever with YouTube tutorials.

Who needs an accountant when you have tax preparation software available for a quarter of the price. And, for a fraction of the cost of attorney time, we can access software to help us self-prepare a litany of legal documents, including a last will and testament. Sounds good, right? With all the resources readily available to do it yourself on the cheap, why not?

Not so fast. Television and movies present a dramatic picture of the probate process. Family, loved ones, and others just hoping for a windfall, all assemble in an attorney’s office for the “reading of the will.” Inevitably, in a dramatic reveal that may or may not involve tears and fainting, a widow learns that her deceased husband left their entire marital estate to his mistress, or the estranged children who paid little attention to their elderly mother in her old age discover they have been written out of her will in favor of her trusted housekeeper. In real life, probate matters are significantly less dramatic, and infinitely more tedious.

In will drafting, formalities must be observed. Those formalities vary from state to state, and a software program may not necessarily alert you to these intricacies. Something as seemingly simple as not having the proper number of witnesses to the signing may make it invalid. And, the fact that you know what you mean does not prevent heirs and potential heirs from interpreting it quite differently. If a term is accidently left out, or if you fall back on language like “according to law,” you may end up with a result you never intended.

There is an old joke involving a plumber who marks an “X” on the pipe that needs tightened and then charges $500 for the work. When questioned on the seemingly outrageous cost for such a small amount of effort, he sends an itemized statement showing a charge of $5 for marking the “X” and $495 for knowing where to put it. The occupation, service and costs in this joke vary widely from telling to telling, but the point is that expertise is invaluable.

If you want to draft a simple document that leaves everything to your spouse, and then equally divides everything among your adult children if your spouse predeceases you, a simple software program could probably cut it for you.

If you want to write someone out of your will, divide assets in unequal measures, if you have minor children or may have more children after you draft it, if you have children from prior relationships, or want to include step-children, you could likely benefit from speaking with a professional. If you have some assets that get passed through other means, such as jointly titled real property, life insurance, or retirement assets, if your situation is anything but the most uncomplicated, or if you are doing more complex estate planning involving trusts and Medicaid planning, you are similarly better served to work with a knowledgeable attorney.

Ultimately, “knowing where to put the ‘X’” – or, in this case, knowing what questions to ask and how to properly reflect the answers in a valid will – may mean the difference between a relatively clean estate settlement and a bitter will contest.

2023-11-10T13:38:12-05:00June 21st, 2017|Estate Planning, Trusts, Wills / Living Wills|

What’s in a name? Title affects account access

By Andrew Zashin*

This article originally appeared as a column for the Cleveland Jewish News.

Clients come in all the time with questions about how title affects ownership and access to bank accounts. Maybe an account is jointly held among spouses. Maybe a spouse is named on an account with a parent. Or, perhaps someone is on an account with a child. Maybe it’s the child’s account, but since that child is a minor, a custodian has been named. In all of those cases, access to the funds will be governed by the type of account held, as well as who holds the “title” to it.

You are probably familiar with the idea of an account with an individual account holder or, perhaps, a joint account such as a checking or savings account. When the account is held in the name of an individual, that individual is the only person with access. Period.

In the event the account holder dies, the account becomes part of the estate and would be accessible by the estate administrator to pay off obligations of the estate and ultimately to divide among heirs. In a divorce situation, the account might be divided as marital property, but the non-named spouse would not be able to go to the bank to immediately access the funds. If the account is a joint one, the joint owners have full and equal access.

A POD, or payable-on-death account, is another option, and a quick and easy way to leave money from an account to a beneficiary. The creation of a POD account essentially forms a very basic revocable trust. While the primary account holder lives, he or she is the only one who can access the account.

However, upon his or her death, the beneficiary need only bring proof of identity and the primary holder’s death certificate. Benefits of a POD account include that it’s free and easy to create. If you have enough funds on deposit to make FDIC insurance limits a concern, you can double your available coverage by separating out some funds into a POD account, though these accounts cannot be used to hide money from creditors or from a spouse in a divorce case. If you die and other assets in your estate are insufficient to cover your debts, these funds will be tapped.

If the intent is to gift money to benefit a child, an UTMA, or Uniform Transfers to Minors Act, or custodial account, might be a good option. The UTMA is model statutory language that has been adopted in some form by most states, and provides an inexpensive and uncomplicated way to gift money to minors. Ohio’s version of the law is called the Ohio Transfers to Minors Act.

These accounts are sometimes used for purposes of college savings or to make sure that a child has a bit of a nest egg as he or she embarks on his or her journey into adulthood. This type of account will have a custodian who is responsible for maintaining the funds on behalf of the minor child. The funds can generally be spent for the child’s benefit and would get turned over to the child once he or she turns 21. The gift is irrevocable. Ultimately, it will not likely be a successful tool to hide money from a spouse in a divorce case. Depending on the facts of its establishment, though, it would probably be maintained intact in a divorce, as the child’s property. These custodial accounts can be a useful part of an estate plan.

Whether you are looking to open an account or access funds in an account, the identity of the person, or people, who can access the money in that account, and under what terms, is governed by the type and title of the account.

*Andrew Zashin writes about law for the Cleveland Jewish News. He is a co-managing partner with Zashin & Rich, with offices in Cleveland and Columbus.

2023-11-10T13:38:13-05:00January 19th, 2017|Estate Planning, Trusts|

Failing to plan creates big headache for your heirs

By Andrew Zashin*

This article originally appeared as a column for the Cleveland Jewish News.

Death – right up there with taxes – is one of the few certainties, yet estate planning is something that many fail to consider until it is too late. Rather than leaving it to your spouse, your children, or worse, the state, to figure out, your best bet is to make your wishes are known while you are still healthy and of clear mind.

The last will and testament, often just called a “will,” is the estate-planning vehicle with which most individuals are familiar. A will specifies how you want your property to be divided. You can divide your estate by percentages, for example, in equal parts to your children. You can designate that certain things go to certain people (your grandmother’s diamond ring to your niece, for example). You can make provisions for the care of pets, and, more importantly, you can make provisions for the care of minor children, including naming the person you would want to become your child’s guardian if you died. You have the ability to be very flexible in creating a will that meets your needs. You don’t even need an attorney to create one for you, though that is certainly preferable; very specific requirements must be met to make sure it is valid.

Of course, there is a variety of types of trusts that you may wish to create. A trust is, generally speaking, a financial agreement that allows a third party “trustee” to hold assets on behalf of one or more beneficiaries. Very often that agreement will include specific instructions about how and when the beneficiaries can get and use those assets. For example, a trustee might be instructed to pay the beneficiary a monthly stipend from the trust. Whether you are wanting to protect your estate from lawsuits, to provide ongoing support for your child until he or she is responsible enough to be trusted with a larger sum of money, to ensure family wealth lasts for generations, to provide for a charity, or for some other purpose, trusts can be an important part of your estate planning.

A financial power of attorney can be created to allow your designated agent – usually a spouse or other trusted loved one – to handle your financial affairs in the event you can no longer do so yourself. A medical power of attorney is similar, but for medical decisions. Living wills specify your thoughts and wishes on the types of life-saving procedures you consent to being used on you and under what circumstances. Organ donation is often a polarizing topic and, if you wish to be an organ donor upon your death, you must enroll in the Ohio Organ Donor Registry and clearly specify which organs you are willing to donate and for what purpose.

Of course, if you don’t take steps to plan, these decisions will be left to your heirs, or possibly even the state. While estate planning is not a pleasant task, it is an important one, and a little planning will both ensure your wishes are followed and save your heirs from a big headache down the road.

*Andrew Zashin writes about law for the Cleveland Jewish News. He is a co-managing partner with Zashin & Rich, with offices in Cleveland and Columbus.

Consider a trust as part of your estate plan

By Andrew Zashin*

This article originally appeared as a column for the Cleveland Jewish News.

When you think about estate planning, you probably think about a will. You may think about powers of attorney in the event you should become incapacitated and can no longer make health care or financial decisions on your own. You may even think about a living will. What you may not think of – but perhaps should – is a family or similar type of trust for your estate.

In simple terms, your estate is everything you own, from the antique desk, to your home, to your investment accounts. A trust can help preserve that estate in the manner that you choose.

Generally speaking, there are two primary types of trusts you might consider, a “revocable” trust and an “irrevocable” trust. A revocable trust is, well, revocable. Its provisions can be changed or revoked at any time during your life. The property within the trust remains yours, as does any income earned on it. Only after your death does the property transfer to the trust beneficiaries. An irrevocable trust, on the other hand, cannot be changed or dissolved once it has been created. Assets become the property of the trust, and are no longer “yours.”

In either scenario, it essentially works like this: You set up the trust and you transfer assets into the trust. When set up properly – sometimes with the addition of an additional limited liability corporation or similar entity – you retain control of the assets. You will, then, name a trustee who will take over in the event you die or become incapacitated. This person will step in to manage the trust assets in line with the specifications you spelled out in the trust. Note that even though this person could face litigation and a whole lot of other mishegas if he or she fails to follow the provisions of the trust, it is still important to name someone that is responsible and capable and, above all, someone who you trust with such an appointment.

Why create a family trust?

One very important and useful reason to set up a family trust is to avoid probate. When an estate goes before the probate court, the process is lengthy, paperwork intensive, and can be very costly to your heirs in terms of things like appraisals, attorney’s fees, executor’s fees, and the like.

Further, a trust can make the necessary funds available to your future caretakers for your benefit when you are no longer able to handle your own affairs. Plenty of individuals attempt to solve this problem by simply naming their children as joint owners of accounts and real property. But issues can arise since they become joint owners of the property and your assets become accessible not only to this “co-owner” but also to his or her creditors – not a good idea if your child does not handle money well!

A trust also provides you with the opportunity to very specifically spell out how your assets are to be used, and when they will be distributed. For example, you might leave real property to be used for a particular charitable purpose. Or, you might indicate that your teenage grandchild cannot access his funds until he is of an age at which you believe he will use them for college expenses instead of a shiny new car.

A trust might also help you defer or reduce estate taxes payable by your heirs.

If you are marrying or remarrying, a trust could work in conjunction with a premarital agreement, or perhaps even in place of one, to help segregate your assets in the event you subsequently divorce.

And, the aging and elderly will frequently establish trusts – specifically irrevocable trusts – in order to qualify for certain programs and to protect their assets from recoupment by programs such as Medicare and Medicaid.

Where to start?

If you believe that a trust may be right for you and your family, you should speak with an experienced attorney, financial planner, and accountant. When they are established correctly, trusts can be a very useful part of your estate plan and can save you and your heirs a good bit of time, money and hassle down the road.

*Andrew Zashin writes about law for the Cleveland Jewish News. He is a co-managing partner with Zashin & Rich, with offices in Cleveland and Columbus.

2023-11-10T13:38:17-05:00September 20th, 2012|Estate Planning, Trusts|
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