While the federal estate tax exemption is high enough that few people need to be concerned about it, others worry that the exemption, which in 2016 is $5.45 million for an individual, might one day be reduced or even eliminated. Ohio homeowners who are in the latter group might want to consider creating a qualified personal residence trust.
A trust might be one way for Ohio residents to pass assets to beneficiaries after their death. One advantage of a trust is that it can provide a flexible way for a person to control how that is done. For example, if a person felt that an heir was too irresponsible to handle a lump sum inheritance, a trust could be used to pay a certain amount each month.
Ohio residents who want to protect their legacy may choose to establish a trust. This is a legal arrangement in which a trustee carries out the settlor's wishes. If the trustee does not act in accordance with the trust instructions, the beneficiaries can take action.
People in Ohio who want to pass certain assets to their beneficiaries outside of the probate process may choose to create trusts. A trust can also be used to manage a person's finances while they are still alive should they become disabled. While the execution of a will is done in probate court and overseen by a judge, a trust is managed by one or more trustees who are chosen by the grantor.
When an individual believes that he or she is close to death, it may be a good idea to give his or her estate plan one final review. It may also be time to transfer assets or fund any trusts that may have been setup in such a plan. Most importantly, it may be worthwhile to make sure that someone has the power of attorney to act on an individual's behalf if he or she becomes incapacitated.
Ohio residents who feel that comprehensive asset protection strategies are chiefly a concern of the wealthy may be underestimating the financial perils of modern life. Individuals with stable incomes and excellent credit ratings can find themselves hounded by medical bill debt collectors after an injury or illness, and motorists who allow their minds to wander for just a few moments can face litigation and potentially ruinous damages awards if they cause an accident.
While rarely occuring, it is possible to put funds from an IRA into a trust for a future beneficiary. This may be worthwhile in the event that an Ohio parent wants to bypass the right of a second spouse to directly inherit the funds. Typically, a surviving spouse may either rollover the IRA or take the funds as part of an inherited IRA account. However, by putting the funds in a trust, the money goes to whoever is designated as the beneficiary.