The settling of the estate of the late artist Prince,provides a look into a high-asset situation where the decedent did not leave a will. For Ohio residents considering their estate plans, the Prince case highlights the consequences of neglect. In the end, more than half of the late artist's estate will go towards state and federal estate taxes.
Ohio residents may want to learn from the mistakes that celebrities have made about estate planning. Avoiding these mistakes may help to make certain that people's wishes are followed and that they may avoid substantial taxes, probate costs, attorneys' fees and potential litigation.
As our parents age, we have to begin to think about how best to take care of them. We start with the basics, such as ensuring they already have an estate plan in place that is current with their wishes. We don't expect to have to worry too much about their health until after they retire. But what if their health starts to decline before retirement, before they qualify to receive Medicare?
Trusts are financial instruments that are used by many Ohio residents to manage their assets. People may set up a trust to manage property while they are alive or as part of an estate plan that will go into effect when they pass away. Trusts do not last forever, and the arrangements may come to an end for a number of different reasons.
Ohio parents who are worried that their heirs may not be great at managing money or other assets may want to consider an incentive trust. When they die, assets go into the trust as opposed to going directly to an heir. A trustee oversees the trust and distributes assets when heirs meet conditions spelled out in the document.
Ohio residents who live in more than one state throughout the year should keep this in mind when they are making their estate plan. Generally, people have official residence in only one state even if they spend part of the year in another one. They whether either state where they spend their time has an estate tax. There is a federal estate tax, but in 2016, there is an exemption of $5.45 million. There might also be some states, like Florida, that do not have an estate tax but have other taxes when a person dies.
Angel investors in Ohio may use careful estate planning in order to pass more of their assets on to their children or other beneficiaries. The federal government currently has a lifetime exemption amount of $5.45 million for estate taxes. For couples, that amount is $11 million. People who have substantial assets may use estate planning laws to their advantage in order to reduce the size of their estates and lower their tax burden.
It is important for people to make sure they have a plan in place to have their assets distributed according to their wishes in the event of their death. Ohio homeowners may want to consider placing the home in a living trust.
Ohio residents who are creating an estate plan may want to consider the role that trusts might play. Trusts can be helpful in a variety of situations and at many different income levels. There are many different types of trusts as well. For example, there are revocable and irrevocable trusts. The former can be altered during a person's lifetime while the latter cannot. Both can help provide estate tax protection, but an irrevocable trust can also protect assets from creditors and lawsuits.
Not everyone has the ability to manage their finances well. Some Ohio parents may have concerns about whether their children are responsible enough to handle a significant inheritance. Even people who usually make wise financial choices can make mistakes when they suddenly acquire a large sum of money. However, there are financial vehicles that parents can use to ensure that their minor and adult children will not waste away a legacy.