Legal-Ease: Keeping up with the Jones’ estate planning

Neighbors sometimes motivate us. Neighbors get a new car, and we start to consider whether we should invest in one. Similarly, if the Smith family’s trip to Disneyland last year was so good, should we do the same next year?

That human nature also applies to estate planning. In light of the money that people pay to have attorneys fix problems that could have been avoided, I always encourage clients to share their estate planning experiences with their friends and neighbors. Let’s hope every person has the chance to identify their wishes, ensure a legacy (financial or otherwise) for their surviving friends and families and have peace of mind when life’s other stresses necessarily become the only focus.

The only challenge in friends and neighbors discussing their estate planning with others is that the “others” often think that they want exactly what their neighbors have. Sometimes, your life is different enough from the neighbor that a slightly different model than theirs might be more appropriate.

A key component of many people’s estate planning are trusts. Trusts are not legal entities of the character of corporation or limited liability companies. Likewise, trusts are more than just “fancy wills.”

Trusts are written, binding contracts that govern how certain money and other assets are handled while a person is alive and after a person dies. Of course, those rules have traditionally been written in specific ways to effectively divert the flow of money in a certain manner upon a person’s death to avoid a great deal of estate/death taxes. Trusts have also allowed people’s assets to be distributed to their family and friends without probate (the formal court process usually necessary to oversee the distribution of a deceased person’s property). For the last 20 years, trusts have been a key part of estate planning for millions of people.

However, in the last 20 years, and particularly over the last few years, estate tax planning has become somewhat less important and much less complex in light of the elimination of Ohio’s estate tax and the simplification and extension of certain federal estate tax exclusions.

Likewise, recently the law has accommodated the creation of a variety of new tools to address with certain especially thorny challenges with more precision than trusts could do. For example, the process to legally real estate transfer to others after death has been streamlined and simplified in the last few years.

Also, Ohio has recently provided certain new incentives to people to encourage the purchase of long-term care insurance. Unrelated, but similarly helpful, various investment and insurance firms have developed individualized annuity plans that give parents the ability to invest and un-invest in an account that would provide a regular stream of income (not a lump sum of cash that might be too challenging to handle all at once) to certain adult children who could benefit from such an arrangement. Almost all of these changes are also independent from probate.

You do not need your neighbor’s estate plan, but you do need your own estate plan.

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Lee R. Schroeder R. Schroeder

By Lee R. Schroeder

Contributing Columnist

Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at [email protected] or at 419-523-5523. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.