Estate Planning, Probate and Trust Administration


What documents do I need as a part of my estate plan?

Which documents you need depends on your testamentary goals and objectives. In most cases, our clients will require, at a minimum, the following documents: (1) a will; (2) a durable financial power of attorney; and (3) a health care power of attorney.

What is a will and why do I need one?

Wills direct the division and distribution of your property, or assets, after you die. In a well-prepared will, you will nominate a person or persons to serve as the executor of your estate, as well as the person or persons to be guardians for your minor children. In addition, wills can be particularly helpful in the following situations:

  1. You have a mixed or blended family. The need for a well-drafted will is particularly keen in the case of mixed or blended families; such cases require special planning to ensure that everyone is treated fairly and to minimize the potential for conflicts after your death. You also need a will if you intend to leave all of your property to your current spouse and you have children from a previous marriage. Under Ohio law, if you have two or more children who are not the children of your current spouse, unless you have a will, the children from your previous marriage will inherit two-thirds of your probate estate assets and your current spouse will only inherit one-third plus an allowance for spousal support. This is probably not the result that you would want if you were to die before your current spouse dies.
  2. You have no children.
    If you die without a will and you have no children, Ohio law provides that your property would be distributed outright to your spouse, if any, or otherwise to your parents, siblings, or next-of-kin. Many people desire to leave some of their property to friends or to a church or charity of their choice. This cannot be accomplished without a will.
  3. Save on Court Costs and Administration Expenses.
    If you have a will, you can nominate an executor, who will be responsible for distributing your estate in accordance with your wishes. You can also specify that the executor not have to post bond. If you die without a will, the Probate Court will appoint an administrator, which will require additional filing and court fees. The court-appointed administrator may not be the individual whom you would have wished to settle your estate. In addition, the administrator will be required to post a bond - which will be another expense of administering your estate. Estate administration is almost always less expensive with a will than without one.
  4. Plan for Federal Estate Taxes.
    If you have a large estate, your estate may be subject to Federal estate tax. By having a well-drafted tax-saving will, you can plan ahead to minimize or perhaps avoid altogether the burden of Federal estate taxes.
  5. Plan for State and Federal income taxes on Qualified Plans, Annuities, and IRA's.
    Regardless of the size of your estate, if you have an annuity, qualified retirement plan, or IRA, you should seek the assistance of an experienced estate planning attorney in planning your estate. The attorney can advise you how best to distribute these assets in the interests of saving income taxes after you die. A few hours spent with an estate planning attorney now can possibly provide your heirs or your estate thousands of dollars in income tax savings.

What is a durable financial power of attorney?

A durable financial power of attorney is a legal document that enables you to appoint an agent to perform specified legal actions for you if you are unavailable or unable to perform these actions for yourself. A durable power of attorney can be limited to a specific transaction, such as the sale of a car or the sale of real estate, or it can provide broad authority to perform a wide range of financial and legal actions. A durable power of attorney can also be effective immediately, or it can be written so that it only becomes effective upon the occurrence of a specified future event, such as illness or mental incapacity.

What is a health care power of attorney?

A health care power of attorney, also known as a health care proxy, is a legal document that enables you to appoint an agent to make health care and treatment decisions for you if you are unconscious or otherwise unable to communicate. In a health care power of attorney you can also state your wishes concerning the withdrawal of artificial nutrition and hydration if you are in a permanently unconscious state.

What is a living will?

A living will, also known as an advance directive, is a legal document that spells out how doctors should care for you if you are in a terminal condition or permanently unconsciousness state and you cannot communicate your own wishes for yourself. It is not necessary to have a living will if you already have a health care power of attorney.

Should I have a trust?

A trust is a legal document that provides detailed and specific instructions for the management of your property both during your life and after your death. Because trusts are far more complex than wills, they are typically more expensive to set up and administer than a simple will. However, because trusts provide a much greater degree of control over the management of a person’s assets than a simple will, they can be very beneficial in certain situations.

After discussing your unique family situation, assets, and estate planning objectives, an experienced and ethical estate planning attorney can advise you whether a trust should be a part of your estate plan. Generally speaking, a trust can be very beneficial in the following situations:

  1. Asset Management for Minor Children and/or Young Adults. One of the most common uses of trusts is to provide for the proper management of assets if a person dies while his children are still minors, or are not yet old enough to manage the money wisely. These are known as minor’s trusts, and they can be set up as stand-along living trusts or they can be testamentary trusts, that is, a trust written into a will.
  2. Planning for Blended Families and Second Marriages. Trusts can be particularly helpful in second and later marriages where one spouse, usually the husband, wants to provide for his current wife, while at the same time ensuring that his estate will eventually pass to his children from a prior marriage. Without a trust, there is no way that someone can provide for the care and support of a surviving spouse and at the same time ensure that when the surviving spouse dies, whatever property is left over will pass to their children from a prior marriage and not to the children of the surviving spouse.
  3. Planning for Individuals who Cannot Manage Money Well. Sometimes there are reasons why it is not advisable to leave property outright to a spouse, child, or other family member. These situations can include a spouse or child with a gambling addiction or substance abuse issues, creditor problems, or simply the inability to manage money wisely. Sometimes, parents simply want to make sure that their property does not fall into the hands of son- or daughter-in-law that they do not approve of. In such cases, the best solution is to set up a trust for the individual in question so that he or she will not squander the inheritance and to ensure that the money will be there for him or her when it is needed.  These types of trusts are sometimes referred to as spendthrift trusts.
  4. Planning for Disabled Children. People who have a disabled child who is receiving Medicaid or some other form public assistance can set up a special type of trust known as a special needs trust. Special needs trusts are specially drafted so that the money in the trust will be available to the disabled child without jeopardizing the child’s eligibility for public assistance.
  5. Bypass Trusts, Life Insurance Trusts, Charitable Trusts, and Other Estate Tax Planning Devices. There is a wide assortment of different trusts that can be used in estate tax planning for very large estates to either eliminate or reduce estate tax liability. If you have a very large estate that could potentially be subject to federal estate tax, an estate planning specialist can advise you concerning which of these trusts, if any, is appropriate in your situation.

Do I need a living trust to avoid probate?

Some attorneys recommend the use of living trusts as will substitutes solely for the purpose of avoiding the legal process known as probate. However, if a person’s sole reason for wanting a living a trust is to avoid probate, there are many options available that will enable a person to avoid probate without the extra cost and hassle of setting up and funding a living trust. These options include wills, beneficiary designations, and transfer-on-death deeds and auto titles. An ethical and experienced estate planning attorney can advise you whether a living trust is really necessary in light of your unique situation and estate planning objectives.

Can my estate avoid paying an executor's fee?

Executor's commissions are set by state law and are based, generally, on a percentage of the value of the assets of the estate. At present, the commission varies between one and four percent of the value of the assets (combined with the income on those assets) depending on the nature, amount and title of the assets at death. However, surviving spouses and other family members often serve as executors and may waive these commissions. If the executor is the sole beneficiary of the will, then an executor's fee may not be important to him, because it will come out of the same funds he would otherwise receive as a bequest. If your will leaves property to multiple heirs, any one of them might jump at the chance to be in charge, fee or no fee. Ohio law does not disqualify a beneficiary of the estate from serving as executor merely because he or she is a beneficiary.

What is the difference between an inheritance tax and an estate tax?

An inheritance tax is a tax imposed on the people (beneficiaries) who receive property from the deceased. The tax is calculated separately for each beneficiary, and each beneficiary is responsible for paying his or her own inheritance taxes. Those states that have inheritance taxes frequently tax spouses and children of the deceased at lower rates than other heirs. The Commonwealth of Pennsylvania currently has an inheritance tax.

An estate tax is a tax imposed on the deceased's estate as a whole. The executor fills out a single estate tax return and pays the tax out of the estate's funds. The heirs will only be held liable for the tax if the executor fails to pay it. Ohio used to have an estate tax, but no longer does.

The Federal government imposes an estate tax on all citizens and residents of the United States. It imposes no inheritance tax. Under current law, the estates of most middle class Americans will not be subject to Federal estate tax.

How can I minimize federal and Ohio estate taxes?

The Ohio estate tax was repealed effective January 1, 2013, and only large estates are impacted by the federal estate tax. Prior to enactment of the Tax Cuts and Jobs Act (TCJA), the federal estate tax exemption was $5,490,000 for individuals and $10,980,000 for married couples, respectively. With the enactment of the TCJA, the federal estate tax exemption was increased, temporarily, to $11,200,000 for individuals and $22,400,000 for married couples. However, on January 1, 2026, the exemption amounts are scheduled to revert to the pre-TCJA levels, adjusted for inflation.

If you have a large estate that would be subject to the federal estate tax, we can help you to minimize these taxes through careful and effective estate tax planning.

What is a bypass trust?

A bypass trust, also known as a credit shelter trust, is a long-term planning device. If you leave property to someone in the form of a bypass trust, that property will not be subject to estate taxes when that person dies. The property will still be taxed in your estate, however; to save tax in your own estate, other methods must be used. A bypass trust is particularly useful for spouses who plan their estates together. By leaving property to each other in bypass trust form, they can guarantee that the property will only be taxed once between the two of them.

Although a bypass trust can be very flexible in practice, it is critical that the trust be drafted with absolute precision. The IRS has specified the words that may be used in a bypass trust, and if these words aren't duplicated perfectly, the trust might not be excluded from tax in the second estate. Even the slightest drafting error can cost hundreds of thousands of dollars in taxes, so be sure your bypass trust is being drafted by an attorney who is knowledgeable about Ohio and federal tax law.

What is a life insurance trust?

A life insurance trust is a trust that is set up for the purpose of owning a life insurance policy. If the insured is the owner of the policy, the proceeds of the policy will be subject to estate tax when he or she dies. But if he or she transfers ownership to a life insurance trust, the proceeds will be completely free of estate tax. The proceeds will be exempt from income tax either way.

Given current effective Federal estate tax rates of up to 40%, a life insurance trust can save hundreds of thousands of dollars in estate taxes. Many people with large estates find that the tax saving potential of a life insurance trust is worth the cost and hassle. It allows you to remove from your estate a significant asset that you are unlikely to want access to during your life. And it ensures that all of the life insurance proceeds go to your beneficiaries, not to the federal government.

What taxes will the beneficiary of my life insurance policy have to pay?

The beneficiary will not have to pay income taxes - life insurance proceeds are exempt from the federal income tax if they are received as a result of the insured's death. Your estate may owe estate tax on the value of the proceeds, however. Without careful estate tax planning, your life insurance proceeds will be included in your taxable estate. Your estate will owe federal estate taxes if it is larger than the applicable exclusion amount (currently over $5 million), after subtracting any amount received by your spouse. The maximum effective federal estate tax rate is currently 40%.

What taxes will the beneficiary of my IRA have to pay?

The beneficiary of your IRA must pay income tax on any amounts withdrawn from an inherited IRA, at ordinary income tax rates. Most beneficiaries will want to postpone their withdrawals as long as possible, but the law requires that certain minimum amounts be withdrawn every year. These are known as required minimum distributions, or RMDs.

What tax returns will need to be filed for my estate and/or trust?

Large estates and trusts that exceed the federal estate tax exemption amount are required to file a federal estate tax return and pay applicable federal estate taxes. In addition, both the federal government and the State of Ohio impose a fiduciary income tax, which applies to both trusts and estates.