“Oh, you don’t need a trust!”
By Debbie J. Papay, Attorney FLT News Columnist – Recently a client was in our office for her three-year trust review. She commented that her “banker” told her she didn’t need a trust. Change the word “banker” to any of these terms—accountant, financial advisor, insurance agent, stockbroker, hairdresser, bingo friend, or dog sitter—and I have heard this kind of armchair quarterbacking too often in my three decades of practicing law. Notice one commonality to all those identities: none of them are licensed attorneys! Sometimes even another attorney will make this comment on the fly—one who doesn’t specialize in estate planning or who hasn’t sat down with the client and discussed her finances, her family and her wishes with her in detail and under attorney-client privilege! If your doctor conducted your physical exam and ran tests, and then wrote you a prescription, but then a non-medical person, or a doctor who had not examined you said, “Oh, you don’t need that prescription,” would you put a lot of stock in that comment? I hope not!
Yes, it is true that the Ohio estate tax was recently repealed. When it was in effect, proper tax trusts saved a married couple over $22,000 in taxes on a combined estate valued at $677,000. Yet even before repeal, these same “authorities” were saying there was no need for a trust. So they didn’t know what they were talking about then. Why do they now? (And who knows with certainty what the tax laws will be for the year of your death?)
Would I suggest implementing a trust merely for potential Ohio estate tax savings? No. But then estate taxes were never the primary reason for a trust in most plans I’ve drafted. There are many other reasons, ones your “banker” might not know about. For example: this is your second marriage and you have children from your first, or your spouse does; you have family property, like a cottage or a farm or a small business; you want privacy from your assets and their values being listed in public probate court records or the newspaper; you have a son-in-law you don’t trust; you have a grandchild with “problems”; you have a daughter who likes to spend or is easily influenced, or a son who likes gambling/alcohol/drugs/women; you have beneficiaries on the verge of divorce or bankruptcy, or ones with special needs; you have minor children or grandchildren; you want to maintain stepped-up capital basis for your heirs; you want to avoid probate attorney fees or delays; you want to reduce the risk of a Will contest; you want to have a “Plan B” in case your primary beneficiary dies; you want to protect a portion of your assets from creditors and predators; you want to make yourself eligible for Medicaid or VA Pension benefits for long term care; or you have many other reasons, some of which you don’t even know about yet until you counsel with a trust attorney.
But in my opinion, the NUMBER ONE reason for having a trust plan in place is being prepared for the day you will become sick or disabled. At that point you will want some trusted person to be able to help you, without delay, without unnecessary expense, and without court proceedings. Don’t you think that making your life easier during your illness, for both you AND your loved ones, should be as important to you as what happens to your money after your death? During times of illness, Wills don’t apply and POAs don’t cut it. When it comes to estate planning or trusts, don’t listen to uninformed naysayers. Get professional, experienced, legal advice!
Debbie J. Papay and Chris E. Steiner are the attorney/co-owners of Bayer, Papay & Steiner Co., LPA, a Maumee law firm concentrating in trust-based estate, disability and legacy planning and estate administration. Call 419-891-8884 to inquire about their next free, monthly estate planning workshop.