What are the basic tools used in an Estate Plan in Ohio?
The four basic estate planning tools used for Ohio residents are:
1. A Will: a written document that appoints your Executor, can nominate a guardian for minor children, and gives instructions for the distribution of your property after your death.
2. A Trust: a written document under which a Trustee holds legal title to property for the benefit of beneficiaries, and administers that property according to the terms of the trust. Trusts can be revocable (changeable), or irrevocable (can't be changed). They can be used during your life, or only become active after you die. They can provide tax benefits, and in certain cases can assist in avoiding probate.
3. General Power of Attorney: a written document that grants another person authority to make non-health care decisions and sign documents on your behalf.
4. Living Will and Health Care Power of Attorney: documents that express your wishes regarding end of life decisions, and nominate an agent to help make those decisions.
Do I need to use a lawyer to create those documents?
No. There are many sources of basic estate planning documents available on the Web, in software programs, in your library and at bookstores. Many of these sources have forms that are self-explanatory, and are adequate and appropriate for basic situations. However, if you have any complications in your life (second marriage, disabled beneficiaries, tax problems, etc.), or have complex assets, a lawyer with estate planning experience can advise and guide you regarding how to handle those special situations.
What are some common mistakes people make when planning their estate?
One of the most common mistakes is that people fail to make sure the titles to their assets are consistent with their estate plan. For example, many people hold title to their bank account or house as joint tenants with right of survivorship. For a husband and wife, this makes perfect sense. However, I often see a surviving spouse add one of the children to their bank account - so they can help with the banking. Unfortunately, the bank usually designates that account as a survivorship account, so when the parent dies, only the child on the account receives the money. Not only does this create a problem with the other children, it causes a lot of confusion. So, review the titles to your assets with your estate planner, and be sure they are coordinated and consistent with your plan.
What other mistakes do you see?
Lots of people fail to update their beneficiary designations. Whether it is a life insurance policy, an annuity, a 401(k) plan, or another benefit plan, they all have designated beneficiaries. For young, unmarried people, a parent may be the beneficiary. For married couples, the surviving spouse is usually the primary beneficiary. But what happens when someone gets married, or divorced, or a spouse dies? If the beneficiary designations are not updated, unintended consequences often occur. Be sure to review your beneficiary designations periodically.
What other suggestions do you have?
In Ohio, there is now a form available that allows people to designate a representative to make funeral arrangements for them. The form permits general selections of preferences regarding services, disposition of remains, selection of funeral director and similar information that is valuable to your family in their time of grief, and also clearly states your wishes (which may help avoid conflict). In addition, I like for people to make lists of personal items they wish to leave to certain beneficiaries, such as collections, furniture, jewelry, and the like. These statements, which I file with the Will, are very helpful in reducing the likelihood of disagreement over items that may have great sentimental value.
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