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Wills And Trusts

A Will, or Last Will and Testament, is the backbone of the traditional estate plan. Most people have heard of wills, or seen family members or friends go through the probate process to administer a loved one’s will. The law surrounding a last will and testament is both strict and unforgiving and also deceptively simple. It is very easy for people to execute a will that doesn’t really do what they intended. Many people are drawn to the “cheaper” online estate planning websites, but the bottom line is that those people are getting what they paid for – a $70 will is as ineffective as a professionally written will IS effective.

It is crucial to meet with an experienced estate planning attorney, like Kelly Parks, before trying to make a will.

What is a will?

A will, is a legal document that allows individuals to specify how they want their assets and property to be distributed after their death. It is one of the fundamental components of estate planning and serves several important purposes:

Asset Distribution: A will enables individuals to designate beneficiaries who will receive their assets and property upon their death. This can include real estate, personal belongings, financial accounts, investments, and other valuable possessions.
Appointment of Executors: In a will, individuals can appoint an executor, also known as a personal representative, to administer their estate and ensure that the terms of the will are carried out according to their wishes. The executor is responsible for handling various tasks, including probate proceedings, paying debts and taxes, and distributing assets to beneficiaries.
Guardianship for Minor Children: For individuals with minor children, a will allows them to nominate guardians who will assume legal responsibility for the care and upbringing of their children in the event of their death. Without a will, the court will determine guardianship based on state laws and the best interests of the children.
Expressing Specific Wishes: A will provides individuals with the opportunity to express specific wishes and instructions regarding their funeral arrangements, burial or cremation preferences, and any other personal matters they deem important.
Avoiding Intestacy: Without a valid will in place, state laws of intestacy will govern the distribution of an individual’s assets upon their death. This means that the state will determine how assets are distributed among surviving family members according to a predefined hierarchy, which may not align with the individual’s preferences.

Creating a will is an essential aspect of estate planning, regardless of the size or complexity of an individual’s estate. It allows individuals to maintain control over the distribution of their assets, provide for their loved ones, and ensure that their wishes are carried out according to their intentions.

To be legally valid in Ohio, a will must be signed freely and willfully by a testator (the person making the will), without fraud or coercion, in the presence of two witnesses who also sign the document. The testator must be 18 years old and over, and must be competent to sign a legal document – meaning they are aware of what they are signing, able to understand the consequences of their decisions, and they have not been declared incompetent by a court of law or licensed physician.

The Language of a Will

While the specific sections of a will may vary depending on individual circumstances and preferences, common sections typically found in a will include:

Introduction and Identification: The will typically begins with an introductory section that identifies the testator by name and confirms their intent to create a valid last will and testament.
Revocation Clause: This section explicitly revokes any prior wills or codicils (amendments to a will) made by the testator, ensuring that the current will is the most recent expression of their wishes.
Appointment of Executor: The testator appoints an executor, also known as a personal representative, to administer the estate and carry out the terms of the will. The executor is responsible for managing the estate, paying debts and taxes, and distributing assets to beneficiaries according to the terms of the will.
Disposition of Property: This section outlines how the testator wishes to distribute their assets and property among beneficiaries. It may specify particular bequests of specific assets or property to named individuals or organizations, as well as instructions for the distribution of the remainder of the estate (residuary estate) after specific bequests have been satisfied.
Guardianship Provisions: For testators with minor children, the will may include provisions for the appointment of guardians to care for and raise the children in the event of the testator’s death. The nominated guardians are responsible for providing physical and emotional support for the children and making important decisions regarding their upbringing.
Trust Provisions: If the testator wishes to create trusts for the benefit of specific beneficiaries, such as minor children or individuals with special needs, the will may include provisions establishing the terms and conditions of the trusts, appointing trustees, and specifying how trust assets are to be managed and distributed.
Miscellaneous Provisions: This section may include additional provisions and instructions related to funeral and burial arrangements, the disposition of digital assets, and any other matters the testator deems important.
Witness and Execution: A will must be signed by the testator in the presence of witnesses to be legally valid. The witness section of the will identifies the witnesses who attest to the testator’s signature and confirms that they witnessed the testator’s signing of the document.
Self-Proving Affidavit: In Ohio, a self-proving affidavit is sometimes included as part of the will. This affidavit, signed by the testator and witnesses in front of a notary public, serves as evidence of the validity of the will and may expedite the probate process by eliminating the need for witness testimony during probate proceedings.

Why Having a Will Matters

A commonly asked question is “what’s the big deal if I don’t make a will?”. Under Ohio law, there is a dividing line between the rules when a person dies with a will in place (testate) vs. the rules when a person dies without a will (intestate).

Dying Intestate

It can be a costly mistake to assume that you don’t need a will because “my spouse gets my stuff anyway, so it’s not a big deal!”. For good or bad, the people who will pay the cost of that mistake will be your family.

Anytime someone dies, their individually titled assets (bank accounts, real estate, vehicles, etc.) are essentially “frozen”. Banks won’t let a family member just walk into a branch and pull the money from the account, the BMV won’t let your spouse sign over title to sell your car, and title agencies won’t let you sign your own name to sell the decedent’s house.

Ohio law requires the probate court to oversee the decedent’s estate – it takes a court order from the probate court to make a bank release funds from the account, or approve the transfer of a vehicle, or to order the transfer or sale of real estate.

When the estate is intestate (meaning the person died without a will), The probate court exercises very strict control over how their estate is administered. The person (called the administrator) who is appointed by the court (usually a family member) to handle the final affairs will be required to post a monetary bond as an incentive to not take or mismanage the estate’s funds. The court will have to preapprove every action before the administrator takes it – making the process take significantly more time. Additionally, more than one family member may apply to be the administrator, causing a delay while the court holds a hearing to decide who should get the job.

As to the estate itself – when a person dies intestate they do not get to decide who inherits from them. Even if they verbally made their wishes known to the family, not having a valid will in place means their assets will be distributed by the probate court according to state law – the Statute of Descent and Distribution. Essentially, the administrator is required to follow a schedule written into the statute that determines who inherits from the estate. It doesn’t matter if the person receiving an inheritance was estranged from the decedent; they are still legally entitled to their inheritance.

The bottom line; only very low asset estates should be considered safe to be intestate. Even low value estates can be caught up in lengthy, expensive delays when there is no will. No one wants to pay a bond, pay an attorney, pay court costs, and wait weeks or months just to close out a checking account with a balance of just a few thousand dollars.

Dying Testate

In contrast, people who die having put a will in place leave behind a more streamlined process for their family to probate their estate. The same basic rules apply: assets will be frozen, the probate court must open a case and appoint someone to administer the estate, etc. But, when a person dies testate there is much more leeway to the rules, allowing the estate to be handled more efficiently and cheaply.

Part of writing a will includes naming an executor. This is the person you are choosing to administer your estate. (intestate estates have administrators, testate estates get executors). You can specify in your will that your executor does not need to be bonded. It is difficult for multiple family members to fight over who should have the job of administrator because the court will generally honor your wishes and appoint the person you named in your will to be the executor.

Many basic tasks of administering the estate are easier for executors compared to administrators. You can write specific powers into your will that the court will honor, such as the power to sell real estate for just one example. Where an administrator would have to go through a multi-step complicated process to get a court order permitting them to the sell the property, an executor of a well-written will can simply hire a realtor and sell the property, and then include the sale information in their eventual report and accounting to the court.

Additionally, the primary benefit of writing a will – deciding who will inherit from you – will be in place. Any specific gifts you listed will be honored by your executor and the probate court (assuming they are valid gifts of items you still own when you die), and you get to decide who gets the remainder of your estate (with some limitations).

The key takeaway should be the understanding that it is always better to have a will than to not, and if you are going to make a will, getting an experienced estate planning and probate attorney to write it will mean the will is worth its weight in gold.

Wills that work with Trusts

A companion will to a trust, also known as a pour-over will, is a legal document that works in conjunction with a trust as part of an individual’s estate plan. The purpose of a companion will is to ensure that any assets not already transferred to the trust during the individual’s lifetime are “poured over” into the trust upon their death.

Here’s how a companion will to a trust typically functions:

Asset Transfer: During the individual’s lifetime, they establish and fund a revocable living trust by transferring assets into the trust. These assets may include real estate, bank accounts, investments, and other valuable property.
Pour-Over Provision: The companion will contains a pour-over provision that directs any assets held outside of the trust at the time of the individual’s death to be transferred into the trust. These assets are then distributed according to the terms and provisions outlined in the trust document.
Backup Plan: The pour-over will serves as a backup plan to capture any assets that were inadvertently left out of the trust or acquired after the trust was established. It ensures that all of the individual’s assets are consolidated within the trust for efficient management and distribution after their death. Additionally, a will can be written to include provisions for the executor to create a new trust with the same terms as the old one if the original trust no longer exists for some reason.
Probate Administration: While the pour-over will helps transfer assets into the trust, it does not necessarily avoid probate. Assets transferred into the trust through the pour-over will may still be subject to probate administration, but they will ultimately be distributed according to the terms of the trust rather than the default rules of intestate succession.
Executor and Trustee Roles: The executor named in the pour-over will is responsible for initiating probate proceedings, identifying assets, paying debts and taxes, and transferring assets to the trust. The trustee of the trust then assumes control of trust assets and administers them according to the trust provisions.

Overall, a companion will to a trust is an integral component of a comprehensive estate plan, especially for individuals who have established revocable living trusts to manage their assets during their lifetime and streamline the estate administration process after their death. It ensures that the individual’s wishes regarding asset distribution are carried out efficiently and effectively, while also providing flexibility and control over the disposition of their estate. Working with an experienced estate planning attorney, such as Attorney Parks, can help ensure that your companion will and trust are properly drafted and coordinated to achieve your estate planning goals.

Trust Planning

Trust planning is the term used to describe the creation of legal instruments that manage and distribute assets during a person’s lifetime and after their death in accordance with their wishes and objectives. The easiest way to describe a trust is to think of it like a business – a person can own a business, but they are not the business itself – the business is an “entity” separate from the person. A trust is similar; it is a separate legal entity from the person who creates it.

Trusts can own property, financial assets, business interests, even other trusts. Trusts can be named as a beneficiary on retirement plans and life insurance policies, and a trust can take legal action when necessary. Trusts are defined and controlled by a document called a “declaration of trust” or “trust agreement”. The person or persons who create a trust are called the “grantor”. Persons who are entitled to receive income or assets from the trust are called “beneficiaries”. The person or persons named as the manager of the trust, obligated to perform all the duties and take all the actions spelled out in the trust agreement is referred to as the “trustee”. It is common for trusts to be created in which the grantor, the beneficiary, and the trustee are all the same person.

Trust planning is an essential component of comprehensive estate planning and offers various benefits, including asset protection, probate avoidance, tax efficiency, and control over the distribution of assets.

Here are key elements and considerations involved in trust planning:

Trust Creation: Trust planning begins with the creation of one or more trust instruments, which are legal arrangements that allow a person (the grantor or settlor) to transfer assets to a trustee for the benefit of designated beneficiaries. The grantor establishes the terms and conditions of the trust, including the distribution of assets, trustee powers, and beneficiary rights.
Types of Trusts: Trust planning encompasses a wide range of trust structures designed to achieve specific objectives and address unique circumstances. Common types of trusts include:

– Revocable Living Trusts: Flexible trusts that can be modified or revoked by the grantor during their lifetime and become irrevocable upon their death, serving as a foundational tool for probate avoidance and incapacity planning.

– Irrevocable Trusts: Trusts that cannot be modified or revoked once established, offering benefits such as asset protection, tax minimization, and eligibility for government benefits.

– Testamentary Trusts: Trusts established through a person’s will and take effect upon their death, allowing for the management and distribution of assets to designated beneficiaries.

– Special Needs Trusts: Trusts designed to provide financial support and protect the eligibility of individuals with disabilities for government benefits and services.

– Charitable Trusts: Trusts established to support charitable organizations and causes, offering potential tax benefits and philanthropic impact.

3. Asset Protection: Trusts can offer asset protection benefits by shielding assets from creditors, lawsuits, and potential claims, especially when structured as irrevocable trusts or asset protection trusts in certain jurisdictions.

4. Probate Avoidance: Trust planning allows assets held within trusts to bypass the probate process, resulting in faster distribution to beneficiaries, reduced costs, and increased privacy compared to assets passing through a will.

5. Tax Efficiency: Certain types of trusts, such as irrevocable life insurance trusts (ILITs) and qualified personal residence trusts (QPRTs), can help minimize estate taxes, gift taxes, and generation-skipping transfer taxes by leveraging tax exemptions, deductions, and other strategies.

6. Control and Flexibility: Trust planning provides grantors with greater control over the distribution of assets and the management of trusts during their lifetime and after their death. Trust instruments can include provisions for discretionary distributions, spendthrift protection, successor trustees, and conditions on inheritance based on specific criteria set by the grantor.

7. Succession Planning: Trust planning allows individuals to plan for the orderly transfer of wealth and assets to future generations, ensuring the preservation of family legacies and values.

Trust planning is a dynamic and customizable process that requires careful consideration of individual goals, family dynamics, asset profiles, and legal and tax implications. It is advisable to work with an experienced estate planning attorney, such as myself, Attorney Parks, to develop a tailored trust plan that reflects your objectives and provides protection, flexibility, and peace of mind for you and your loved ones.

Avoiding Probate

A trust helps avoid probate by transferring assets outside of the probate process through a mechanism known as “funding the trust.” When assets are placed into a trust during the grantor’s lifetime, they are legally owned by the trust rather than the individual, which means they do not pass through probate upon the individual’s death.

Here’s how a trust helps avoid probate:

Ownership Transfer: When a trust is created, the grantor (the person establishing the trust) transfers ownership of assets, such as real estate, bank accounts, investments, and personal property, into the trust’s name. The trust becomes the legal owner of the assets, and the grantor retains control over the trust during their lifetime as the trustee or co-trustee.
Trust Administration: The trust document specifies how trust assets are to be managed, distributed, and administered during the grantor’s lifetime and after their death. The grantor designates successor trustees to manage the trust in the event of their incapacity or death, ensuring seamless transition of trust administration without the need for court involvement.
Beneficiary Designations: Trusts allow the grantor to designate beneficiaries who will receive the trust assets upon the grantor’s death. Because the assets are held in the trust and distributed according to the trust document, they bypass the probate process and are transferred directly to the designated beneficiaries.
Privacy: Unlike probate proceedings, which are matters of public record and subject to court oversight, trust administration occurs privately and outside of the court system. Trust documents and asset distributions remain confidential, protecting the privacy of the grantor, trustees, and beneficiaries.
Cost Savings: Probate proceedings can be time-consuming, costly, and subject to court fees, attorney fees, and executor commissions. By avoiding probate, trust administration can result in significant cost savings for the estate and beneficiaries, allowing assets to be distributed more efficiently and with fewer administrative expenses.
Faster Distribution: Assets held in a trust can be distributed to beneficiaries more quickly and efficiently than assets passing through probate. Trust administration is not subject to court delays or probate timelines, allowing beneficiaries to receive their inheritances in a timely manner according to the terms of the trust document.

Trusts can be effective estate planning tools for avoiding probate, providing asset protection, preserving privacy, and facilitating efficient asset distribution to beneficiaries. However, it’s essential to properly fund the trust by transferring assets into the trust’s name and to work with an experienced estate planning attorney, such as myself, Attorney Parks, to ensure that the trust document accurately reflects the grantor’s intentions and complies with applicable laws and regulations governing trust administration.

Controlling Your Estate

A trust allows a person to control the distribution of their assets by providing detailed instructions and guidelines for how the trust assets are to be managed, distributed, and administered during the grantor’s lifetime and after their death. As the creator of the trust, the grantor has the flexibility to customize the trust document to reflect their specific wishes, preferences, and objectives regarding the distribution of their assets.

Here are key ways in which a trust enables a person to control the distribution of their assets:

Trust Terms and Conditions: The trust document outlines the terms and conditions governing the administration and distribution of trust assets. The grantor has the discretion to specify the rules, criteria, and parameters for how trust assets are to be managed and distributed, including the timing, frequency, and purposes of distributions.
Beneficiary Designations: The grantor designates one or more beneficiaries who will receive the trust assets upon the grantor’s death or at other specified times. Beneficiaries may include family members, friends, charities, or other individuals or entities chosen by the grantor. The trust document can specify the share of assets allocated to each beneficiary and any conditions or restrictions on distributions.
Trustee Selection: The grantor appoints one or more trustees to manage the trust assets and carry out the terms of the trust. Trustees have fiduciary duties to act in the best interests of the beneficiaries and administer the trust according to the grantor’s instructions. The grantor may designate family members, friends, financial institutions, or professional trustees as trustees, depending on their preferences and level of trust.
Discretionary Distributions: The trust document may grant the trustee discretion to make distributions to beneficiaries based on specific needs, circumstances, or other factors outlined in the trust. Discretionary distributions allow trustees to respond to changing circumstances, unforeseen expenses, or beneficiary needs while adhering to the grantor’s overall intentions and objectives.
Spendthrift Provisions: Trusts can include spendthrift provisions that protect trust assets from the creditors and claims of beneficiaries. Spendthrift clauses restrict beneficiaries from transferring or encumbering their beneficial interests in the trust, providing added protection and security for trust assets.
Control Over Timing and Conditions: The grantor can specify the timing and conditions for asset distributions, such as reaching a certain age, achieving specific milestones, completing education, or meeting other criteria outlined in the trust document. By incorporating conditions and requirements for distributions, the grantor can promote responsible financial management and stewardship among beneficiaries.
Flexibility and Amendment Powers: While a trust is sometimes irrevocable once established, the grantor can retain certain powers to amend, modify, or terminate the trust under specific circumstances outlined in the trust document. This flexibility allows the grantor to adapt the trust to changing circumstances, family dynamics, or legal requirements over time.

Trusts can be a powerful tool for controlling the distribution of their assets and ensuring that their wishes are carried out according to their intentions. By working with an experienced estate planning attorney, such as myself, Attorney Parks, individuals can create trusts that accurately reflect their goals, protect their assets, and provide for their loved ones in a manner that aligns with their values and priorities.

Protecting the Future

A trust can protect future generations of your family in several ways by providing a structured and sustainable framework for the management, preservation, and distribution of family assets. Here are ways in which a trust can safeguard the financial security and well-being of future generations:

Asset Preservation: A trust can protect family assets from creditors, lawsuits, divorces, and other potential threats that may arise in the future. By holding assets within the trust, rather than in individual names, the trust shields assets from external claims and preserves them for the benefit of future generations.
Generation-Skipping Transfer Tax Planning: Trusts can be structured to minimize or avoid generation-skipping transfer taxes (GSTT) that may apply when assets are passed directly to grandchildren or more remote descendants. Generation-skipping trusts (GSTs) allow assets to be transferred to multiple generations while maximizing tax-efficient wealth transfer strategies.
Asset Management and Growth: Trusts provide a mechanism for the ongoing management and growth of family assets over multiple generations. Trustees are responsible for prudently investing trust assets, diversifying investments, and maximizing long-term growth and wealth accumulation for the benefit of current and future beneficiaries.
Controlled Distributions: Trusts allow grantors to control the timing, frequency, and purposes of distributions to beneficiaries, including future generations. The trust document can include provisions for staggered distributions, milestone-based distributions, or discretionary distributions based on specific needs, circumstances, or goals.
Education and Support: Trusts can support the educational, vocational, and personal development needs of future generations by funding college tuition, vocational training, internships, travel experiences, and other enriching opportunities. Educational trusts or provisions within the trust document can ensure that beneficiaries have access to resources and support for lifelong learning and personal growth.
Incentive Structures: Trusts can incorporate incentive structures to encourage positive behaviors, values, and achievements among beneficiaries. Incentives may include matching funds for educational expenses, rewards for entrepreneurship or charitable endeavors, or distributions tied to achieving specific goals or milestones outlined in the trust.
Family Governance and Values: Trusts can serve as vehicles for promoting family governance, communication, and shared values across generations. Family meetings, trustee appointments, and beneficiary education programs can facilitate discussions about financial stewardship, charitable giving, philanthropic initiatives, and the preservation of family legacies and traditions.
Charitable Giving and Philanthropy: Trusts can include provisions for charitable giving and philanthropic initiatives that reflect the values and priorities of the grantor and future generations. Charitable trusts, donor-advised funds, or provisions for charitable distributions within the trust document can support meaningful causes and leave a lasting impact on the community.

Trusts offer a powerful tool for protecting and perpetuating family wealth, values, and legacies across multiple generations. By working with an experienced estate planning attorney, such as Attorney Parks, individuals can create trusts that promote financial security, foster intergenerational relationships, and empower future generations to thrive and make positive contributions to society.