Visit Us
1350 Euclid Ave., #280 Cleveland, OH 44115
The role of an estate planning lawyer extends far beyond simply drawing up familiar documents such as a Last Will and Testament (Will) or Power of Attorney (POA). Although prospective clients can typically expect that hiring an estate attorney will mean working with a knowledgeable professional who is indeed in a position to prepare the documents necessary to complete a well-rounded estate plan, an estate planning attorney often also plays a substantial role in helping their clients determine the combination of documents that will be most advantageous in light of each client’s overall estate planning goals.
Some individuals are most concerned with ensuring that they preserve generational wealth they have inherited, so that they can pass on a robust legacy to their own children; other similarly devoted parents may be focused on securing the resources and personnel needed to care for an adult child with special needs, after the parents are no longer present to give dedicated daily care themselves. Many estate planning clients, from all walks of life, can benefit from preparing advance directives for healthcare and from setting in place the appropriate documents to ensure that their affairs continue to run smoothly even if they are someday unable to oversee those affairs for themselves.
In this blog post, we discuss how an estate planning attorney may be able to advise clients on all of these matters, as well as answering common (and less common) estate planning questions.
People who consider hiring an estate attorney often do so in order to get assistance with drafting the legal documents that make up a comprehensive estate plan. While it is true that drafting such documents is a very typical part of an estate planning lawyer’s job, in many cases one of the main benefits of working with an estate planning attorney is the opportunity to take advantage of professional advice. An estate planning attorney may advise clients on a variety of legal matters related to their practice area, such as:
An estate planning attorney will also in many cases draft the legal documents and file any paperwork associated with the estate planning recommendations their clients choose to take.
There are two legal frameworks that are commonly used to facilitate the orderly transfer of property from the estate of a decedent (a deceased person) to any beneficiaries the individual has designated to receive gifts from their estate. The first of these frameworks uses as its vehicle a Last Will and Testament (commonly called a Will); the second framework is formed by establishing and funding a trust.
A major aspect of the role of an estate planning lawyer is advising clients on when to use a will vs. trust to accomplish their estate planning goals. The attorney will typically also draft the necessary legal document(s) and assist the client with any procedures needed to ensure the paperwork is properly witnessed or certified in order to be legally valid according to the laws of the jurisdiction in which the person preparing the estate plan resides.
Legal requirements for the validity of a Last Will and Testament vary from one state to another, as does the extent of the control these documents allow the individuals who create them – known legally as testators – to exercise over the distribution of the assets that make up their estates. In some states, including Ohio, an individual’s control over the disposition of his or her property via a Will may be limited to some degree by provisions under state laws that guarantee portions of decedents’ estates to certain parties (notably testators’ surviving spouses), regardless of any terms the testator sets out in the Will.
One common reason why a testator may consider hiring an estate attorney is to secure professional legal advice regarding state restrictions on the terms a testator can set for the disposition of property comprising their estate. In some cases a testator may also wish to consult with an estate planning lawyer to discuss strategies for structuring the disposition of property indicated in their Wills so as to take these state-specific requirements into account. Individuals who find the notion of state restrictions on how they can apportion their assets intimidating may find it helpful to bear in mind that state laws are, the most part, not developed with the purpose of thwarting anyone’s intent, so in many cases simply understanding what the law requires to be reserved for a specific purpose or heir can make it possible to arrange the disposition of other property contained in the estate so as to achieve the testator’s desired outcome.
A trust is a legal entity created to hold property “in trust.” The party who forms the trust becomes its settlor, trustor, or grantor (the three terms are used interchangeably), and this person uses a legal document known as a “trust instrument” to define the parameters and purpose of the trust, designate its beneficiaries, and appoint a trustee.
A trust cannot be formed without at least one trustee, but the trustor has the right to appoint two or more co-trustees if desired. Once a trustee accepts the trust, this person assumes a fiduciary duty with respect to the trust’s beneficiaries: that is to say, the trustee acquires a legal obligation to act in the beneficiaries’ best interests in managing and, as directed in the trust instrument, distributing the property in the trust.
The original grantor may or may not retain a role as one of the trust’s beneficiaries or as its trustee (or co-trustee). Ohio law does not recognize the validity of any trust for which the grantor is identified as both the trust’s sole beneficiary and its only trustee; however, the provisions made under O.R.C. § 5804.02 do allow for a grantor to enjoy the present benefits of a trust, and manage these as the trustee, while holding the property “in trust” for another designated beneficiary, who will not gain access to the “beneficial enjoyment” of the trust property until a later date. Typically, this later date is actually determined by a contingency rather than pre-specified on a calendar, and the trust instrument is written so as to update both the trustee appointment and the present beneficiary upon the contingency of the trustor’s death. The updated roles may or may not be filled by the same person.
The kind of trust described above, in which the grantor retains substantial control over (and “beneficial enjoyment” of) the trust assets during the individual’s own lifetime, offers obvious advantages and a great deal of appeal for many people developing their estate plans. However, this type of trust – which the Internal Revenue Service (IRS) calls a “grantor” trust – also has some notable limitations. Perhaps most crucially, a grantor trust is always a form of revocable trust – the control the settlor retains over the management of the trust and its assets means that he or she can “revoke” the trust, change its future (or present) beneficiaries, and add or remove assets, at any time. Precisely because the grantor can change their mind, and use up or transfer away the property contained in the trust at will, this type of trust does not offer the same level of asset protection or tax benefits as an irrevocable trust.
An irrevocable trust – one which the grantor cannot normally alter once the trust instrument has been executed – can protect assets from the settlor’s creditors as well as potentially reducing the estate’s eventual tax liability, but at the non-negligible cost of surrendering any control over the property thus protected, other than whatever terms the trustor imposed in the trust instrument as originally executed. An estate planning attorney will often work closely with a client considering the formation of a trust in order to help the client determine the most appropriate type of trust to meet his or her estate planning goals.
Individuals preparing their estate plans are often doing so, in part, with the aim of building generational wealth they can pass on to their children. At times they may be aiming to create a financial legacy they can leave to charitable organizations whose causes they have supported in life. In either case, they frequently make it a priority to ensure that the assets they leave to others are not unnecessarily diminished by excessive tax liabilities.
An important part of the role of an estate planning lawyer often involves developing a thorough knowledge of state and federal tax laws, including tax regulations specifying appropriate deductions and exemptions, in order to advise their clients regarding tax-efficient strategies for transferring property to beneficiaries while maintaining compliance with both the letter and the spirit of applicable tax laws. The reality is that both the IRS and many state governments offer a wide array of options for reducing overall liability for estate tax, inheritance tax, and even gift taxes – but people not working in the area of estate planning law may not be aware of the many opportunities available for protecting their financial legacy. A dedicated Ohio estate planning attorney with Rhodium Law may be able to help you determine which deductions and exemptions could help you to maximize the legacy you are able to leave to your loved ones.
A good estate attorney advising clients with substantial portfolios may even make it a point to stay apprised of potentially relevant tax laws in other states, as depending on the structure of a client’s holdings it may sometimes be important to assist the client in developing a plan for the tax-efficent transfer of property located in another state. Generally speaking, attorneys who choose to practice in the area of estate planning place a high value on rendering this kind of assistance to their clients, so whether you are preparing to draft a Will for the first time or getting ready to form your third trust, you should feel free to ask your estate planning attorney questions regarding wealth transfer tax strategy without hesitation.
As much as no one wants to think about the possibility of being someday unable to make their own decisions, advocate on their own behalf, and handle their own affairs, the truth is that incapacity happens to most people sooner or later – whether for a brief time, at the end of life or during a temporary medical emergency, or for years, as sometimes occurs to patients suffering from progressive disorders such as dementia. The resources and legal strategies an individual prepares early in life can often make an enormous difference in both the degree to which their own wishes are known and followed later and the kinds of stress, or peace, their family members, close friends, or medical caregivers experience while attempting to address the needs of a loved one who is no longer able to take an active role in the management of their own situation.
Estate planning attorneys support clients in directing their own futures by helping them to prepare legal documents such as:
Any combination of these documents may be used in combination with other strategies aimed at ensuring an individual’s comfort, as well as peace of mind for their loved ones.
The role of an estate planning lawyer often begins with learning what a client wants, and developing an understanding of what the client’s priorities are and why. Understanding a client’s needs from the inside out can put an estate planning attorney in a position to not only craft legal documents tightly worded and organized to achieve the desired outcomes, but to provide carefully tailored advice that gets to the heart of what each client considers most important in developing a custom estate plan.
At Rhodium Law, we are driven by our desire to make a positive impact in our clients’ lives and the peace of mind they can offer their loved ones. If you are considering hiring an estate attorney, reach out to our team to discuss whether our passionate and dedicated staff may be a good fit for your needs. Call (216) 699-8145 today to book a consultation.
