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Explanation of Ohio Estate Planning White Paper

In this white paper, Attorney Daniel Gigiano reviews reviews Ohio estate planning issues. Planning for long term care should be considered in one’s estate plan due to the financial devastation long term care can have on one’s assets that took a lifetime to save.


The Role of Wills in Ohio Estate Planning

Wills play an important role in Ohio estate planning. Ohio wills are documents that contains instructions setting forth how a person would like to have his or her probate property distributed upon death. The person must be at least eighteen years old, of sound mind and not under undue influence. A will must be signed and properly witnessed by two people. Any changes to a will are subject to the same requirements as the original will. A will is valid as long as it is not revoked, which occurs when a new will is completed. A will can also be revoked by destroying it with the intention of revoking it. Mere destruction may not always be effective if there are exact copies of the will in existence. While probate court generally requires an original will, there are instances when they will accept the use of a copy. A will usually reduces probate costs in a number of ways. First, it can waive the bond requirement. Second, it can grant powers to the executor, reducing the need and additional expense of requesting permission from the court for such actions. Third, it can prevent the need for the heirs to fix or undo the effects of intestate distribution under Ohio law. This often occurs when the children give their share of the estate back to their surviving parent (surviving spouse).

A will, along with other forms of estate planning, should be drafted and planned by an estate planning attorney. Many people who try to do it themselves or through legal document services do not always have their intent carried out due to incomplete wording. Others leave their property to one person to distribute to others; if that designated person is in bankruptcy at the time of death, all will be lost. There are numerous other unintended consequences that can occur. An experienced estate planning lawyer can guide you through these situations in helping you to distribute your property in the manner which you intended. Many attorneys only charge a few dollars more than these online legal document companies. Therefore, the real answer to “how do you make a will” is to get the assistance of a professional.Ohio, you can now keep even more of your assets when you file for bankruptcy. Starting April 1, 2013, each person can keep up to $132,900 of equity in their home, which adds up to $265,800 for a married couple filing a joint bankruptcy. This is over five times more than people were allowed to keep previously. This exemption was increased again in 2016 to $136,925 per person.

However, this law had many opponents who argued it only applied to debt that incurred after March of 2013, which meant the old protection of $21,625 per person would apply. First, a judge in Toledo stated that we should use the exemption of $132,900. Later, the judge of the Canton bankruptcy court also ruled that this exemption should apply without any limitations. Currently, it appears that this law is here to stay. Even if the opponents had won the day at the time, eventually their argument would have become moot, as very few bankruptcies would consist of debt entirely incurred prior to 2013.


Should You Use Online Legal Document Services?

In 2014, the Florida Supreme Court ruled that a will drafted with online legal document company E-Z Legal Form failed to provide for the disposition of property not listed in the will, which left everything to a sister, then a brother. The Court also ruled that a handwritten note written and signed by the decedent was unenforceable under Florida law. Therefore, all property owned by the decedent passed to the decedent’s nieces, although neither of them were named in the will. While the will and handwritten note appeared to favor leaving everything to her brother in this particular situation, the Court was forced to resort to the Florida intestate statute to determine who was to receive all property not listed in her will. One of the justices commented that this case of using pre-printed forms and drafting a will without legal assistance “penny-wise and pound-foolish.”

“One of the justices commented that this case of using pre-printed forms and drafting a will without legal assistance ‘penny-wise and pound-foolish.’”


More Problems from Online Legal Document Services

The latest gimmick by the online legal document services is to sell you the forms for slightly less than what an attorney would charge. However, at that point, you have a bunch of unsigned forms. The legal document services are recommending that people go to an attorney to get them signed. How do I know this? I have had multiple people contact my office to “witness” their wills and they said they were told to go to a local attorney for this service. The problem with this model is that the legal document services are trying to insulate their own liability for their overpriced documents. No attorney is going to take on this task lightly. Online forms have failed in court, which means the attorney needs to find the needle in the haystack that will cause the form to fail. This involves hours worth of work. If an attorney has an hourly rate of $200, this could range from $300-$700 of legal work to review, approve and help the clients execute the documents.

Some may say, that’s still cheaper than going to the attorney in the first place. No, it is not. An online legal document company had wills and advanced directives for a couple for $300.00. I charge $400.00 for the same service, but I will review their assets and liabilities, potential heirs, and make various suggestions as to how they could best accomplish their goals. The clients make the final choices. I just make sure that they do not mistakenly disinherit someone just because they wanted to leave something special to someone. An experienced estate planning attorney spends a great deal of time fine-tuning and revising estate-planning templates. The estate planning lawyer revises the forms to comply with changes in the law. For example, just a few years ago, the transfer on death deed requirements went through some changes, along with the recording requirements for all deeds. You are paying for the attorney’s guidance, expertise, and the time spent preparing your documents and various options on an ongoing basis.

However, reviewing online legal documents involves reviewing every legal requirement, and ensure that the online document meets all the requirements. This is time-consuming and has a great chance for errors if done too quickly or if the attorney just “wings it” based on his or her general knowledge.


Ohio Estate Taxes

Tax implications are an important consideration for Ohio estate planning. Even though the Ohio estate tax was repealed effective January 1, 2013, there are still estate taxes in Ohio. A decedent’s estate may still have to pay a federal estate tax of 40% of the gross estate that is more than $5.34 million. 5.34 million dollars is the exempt amount that is not subject to federal taxation. One may deduct funeral and burial expenses, payment of debts, charitable gifts, and most transfers to the surviving spouse. One cannot exempt transfer on death or payable on death property from estate taxes.

A federal estate tax return (Form 706) does not always need to be filed. When the decedent’s gross estate is more than the exempt amount, the return must be filed, even if it shows that no tax is owed. Filing a federal estate tax return can allow a surviving spouse to combine his or her exemption with the deceased spouse, otherwise called a “portability election.” If a wife inherits five million dollars from her deceased husband and files a federal estate tax return on the unused exemption, the wife would have $10.34 million in exemptions available in her estate upon her death.


Taxes Affecting a Decedent’s Estate

Using 2014 numbers as stated above, there are no taxes on the first $5,340,000.00 of an estate. After that, the tax rate is 40%. However, one can deduct the funeral and burial costs, payment of debts, gifts to charities and most transfers to the surviving spouse. A surviving spouse may wish to file a federal estate tax return, as that may allow the surviving spouse to leave $10,680,000.00 in the estate without having to pay federal estate taxes.

Probate assets are not the only assets subject to the federal estate tax. While transfer on death or payable on death accounts may avoid probate, it does not avoid inclusion in the estate for federal estate tax purposes. Gifts made during the person’s lifetime are added to the total amount of the estate, if they exceed the amount of the annual exclusion. Currently, the annual exclusion is $14,000.00. This means that one can give up to $14,000.00 per year to each child or other person to whom they wish to give without having to file a gift tax return and still avoid adding to their estate when they die. If the donor is married, the annual exclusion can be doubled via gift splitting. This would allow a couple to give $28,000.00 per year to each child without having to file a gift tax return or adding to their estate.

Does the recipient of the gift have to pay taxes on the gift? No. The gift does not have to be reported as income. However, if the recipient sells the property, then the recipient will have to pay taxes based upon the basis of the donor. The basis is the amount a person pays to purchase a property plus any improvements on the property. If someone buys a home for $25,000.00 and gives the house to a child, when the child sells it for $75,000.00, the child will have to pay taxes on the capital gains of $50,000.00.


Ohio Estate Planning Can Include Annuities

Ohio estate planning can include annuities. An annuity can be an effective estate planning and Medicaid planning device, if done properly.

An annuity is an insurance product, which does one of the following: pays you back in payments over time; pays you back when you decide to draw the money out; or pays named beneficiaries when you die. An immediate annuity pays fixed payments over a certain number of years or over your lifetime. A deferred annuity earns interest and dividends until you decide to withdraw the money. Annuities are different than bank accounts, as they are not insured by the FDIC. Some of the money is guaranteed by the Ohio Guaranteed Insurance Fund. While the amount of gain is taxed, the original investment is not.

Annuities can be a good part of your estate planning if you are in a high income tax bracket and expect to be in lower income tax bracket when you withdraw some or all of the money. If you may need quick access to your money, an annuity may not be a good plan, as there are penalties for early withdrawal from the annuity. Early withdrawal penalties are not incurred for the set payments or for the amount permitted by the terms of a deferred annuity. The penalty is for withdrawing funds above these permitted amounts.


Punitive Damages Award against a Dead Person is Allowed

In 2016, the Ohio Supreme Court ruled that a punitive damages award against a dead person is allowed. The deceased person’s estate can be held responsible for punitive damages if a trial court awards such damages against the decedent, cutting into the share of the estate the heirs can receive.

In June 2010, a great aunt was babysitting a five year old and a two year old child. When the mother returned, she discovered the great aunt had one hand on the five year old child’s neck and a pillow over the child’s face. The mother rescued her children and sued the great aunt. A default judgment was entered against the great aunt while she was alive but she died before the hearing on punitive damages. The Ohio Supreme Court found that punitive damages were permissible because the great aunt was alive when she was found responsible. Most of the other states do not allow punitive damages against dead wrongdoers because one of the purposes of punitive damages is to punish the wrongdoer. Those other states subscribe to the notion that you cannot punish someone who is already dead.

Allowing punitive damages means such damages can be imposed as a claim in probate court. This claim would be paid out of the probate estate’s assets. While the heirs would not be held liable for the debt, the debt would be paid out of assets that the heirs stood to inherit, greatly reducing or eliminating their inheritance.


For More Information on Ohio Estate Planning

For more information on Ohio estate planning, go to or contact Daniel Gigiano at 330-336-3330 for consultation. The initial 30 minute consultation is always free.