Kathryn T. Joseph & Associates, Inc.

Cleveland Estate Planning Blog

The role of an estate planning professional

An Ohio resident who is creating an estate plan may want to work with a team of professionals. This could include an attorney, financial planner, and accountant. Unfortunately, many people think an estate plan and a will are the same thing. However, there are many other components to an estate plan.

An estate owner may want to work with an attorney to create that plan. In addition to a will, there may be health care directives, trusts, powers of attorney and more. Estate plans are about more than just what happens to a person's possessions after they pass away.

Avoid conflict: Talk to your adult children about dividing assets

Your children are heading into middle age, prosperity and children of their own. Their future is important and so talking about an estate plan can be emotional.

Your children's differing viewpoints and personalities might create conflict and lead to a bumpier estate planning process. Often, however, the problem can be solved by proper communication.

Common errors in estate planning

According to a recent Wells Fargo survey, one in four older Americans do not have a plan in place to take care of their medical and financial needs in case they become incapacitated. It's important to remember that there are several ways Ohio residents can protect themselves in case of incapacity.

According to Wells Fargo, there are four documents that everyone needs. These are a will, a financial power of attorney, a health care power of attorney and an advance health care directive. A will identifies which items go to which beneficiaries. A financial power of attorney gives someone the ability to manage the estate owner's financial matters if that person is unable to do so. The latter two documents deal with the kind of health care one wants and appointing someone to make health care decisions on the estate owner's behalf if they are unable to do so.

What are the pros and cons of some common trusts?

When property such as real estate, cash, stock or other assets are placed in the control of another person to hold and manage for the benefit of another, a trust has been created. The property owner is the settlor, while the person receiving the benefit is the beneficiary. A trustee manages the trust. Title to assets are transferred from the settlor to the name of the trust.

Trusts can be very complex, and are classified for tax purposes by how and when distributions are made, whether the settlor retains control over assets or income generated, and the identity of the beneficiaries.

Using pour-over wills to round out an estate plan

Pour-over wills are used with trusts and other estate planning tools as a catchall for anything that wasn't included in the other documents. This helps the heirs and executor avoid later problems in Ohio probate court if the deceased forgot to include something or obtained other property after they formed their trust.

A pour-over will works just like any other will. The one exception is that instead of naming specific property, it says that anything not specifically included in other estate planning documents should be divided as stated in the pour-over. Usually, this is done by saying that any remaining property is left to the trust rather than to a specific beneficiary. This allows the property to be distributed along with the rest of the trust even when it was originally left out of the trust.

Reasons to create an estate plan

Roughly half of all adults in Ohio and throughout the nation do not have a will. While failing to create an estate plan is not uncommon, it can cause headaches for family members after the estate owner's death.

There are several reasons a person may want to create an estate plan. Without one, the state will decide how assets will be distributed. While there are do-it-yourself documents available online, an attorney can help a client understand the many estate planning options that are available. Controlling and managing assets is one of the main reasons to have an estate plan. The estate owner can decide which family members will receive which assets and when.

Selecting an executor

An Ohio resident should consider many factors when choosing an executor for their estate. When managing an estate, the executor will have many responsibilities, such as inventorying assets, verifying liabilities and submitting the necessary legal documents to courts. Additional duties often include the filing of tax returns, the valuation of assets and acting as an arbitrator during family disagreements.

The person who is chosen as executor may be tasked with their responsibilities for at least two years. However, their tenure could last even longer, and it will stop when the assets of the estate have been distributed and all final tax documents have been accepted by the appropriate tax entities.

Estate planning the right way

According to a Wells Fargo survey, 40 percent of older individuals in Ohio and the rest of the nation have not completed all of the necessary legal documents that should be included in their estate plans. People who do not have all of the necessary estate planning provisions in place may be susceptible to individuals taking financial advantage of them when they are older.

Experiencing financial abuse may be more likely than some people think. Research shows that 20 percent of people who are at least 65 years old will become the victims of some form of financial abuse, but just 10 percent of individuals in that age group believe that it will happen to them.

Estate planning and special needs beneficiaries

People in Ohio who are primary caregivers to relatives with special needs can develop an estate plan that will provide the support their relative with a disability may need. In order to create the most effective estate plan for a loved one with special needs, it is important that the caregivers are able to wade through the complicated eligibility rules for government benefits and are knowledge about the health care professionals, services and therapies that will be needed to provide a disabled person with support throughout their life.

The first step in creating an estate plan is to draft a letter of intent that will inform the other individuals who take part in the care of the disabled family member about that person's interests, dislikes, functional abilities, likes and routines. This letter, which is not a legal document, should be issued to guardians, advocates and trustees and should be updated on a regular basis.

How to properly structure a trust

When properly structured, a trust can be an effective estate planning tool for Ohio residents. By putting an IRA or a life insurance policy into a trust, beneficiaries gain access to an asset that can continue to grow either tax-free or tax-deferred. Individuals who create a trust can benefit because they determine how distributions are made. In some cases, distributions from a trust can change as a beneficiary ages or in other ways to meet its goals.

The trust can be written in a broad or narrow range depending on the needs and goals of the grantor. However, distributions may need to conform with IRS guidelines regardless of how the trust is structured. When creating a trust, it is a good idea to think about who will act as trustee. While most trustees are close friends or family members of the grantor, they may not be the best people for the role.

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Kathryn T. Joseph & Associates, Inc.
Executive Commons West
29425 Chagrin Blvd.
Suite 305
Cleveland, OH 44122

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Phone: 216-245-0504
Fax: 216-765-8817
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