Guardianships, Probate and Trust Administration

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Guardianships

In the event a person cannot handle their own financial and/or medical affairs, then a Guardianship may need to be ordered by the Probate Court. If this is the case, the Probate Court appoints another person, often a family member, to be the Guardian and the Court oversees the Guardian’s action. The Guardianship process is labor intensive, expensive and potentially endlessly frustrating. If it can be avoided, it should.


Frequently Asked Questions

What triggers the need for a Guardianship?

A guardianship is needed in the event a child under the age of 18 receives property (i.e. through an inheritance) or if an adult is incompetent because of advanced age or illness.

When and why does Probate Court get involved?

Probate Court will get involved when someone becomes incompetent and does not have a valid power of attorney or the power of attorney is ineffective. As individuals we are the only ones who can handle our own finances and make our own health decisions. If we become incompetent, then the Probate Court steps in to appoint another person to make these decisions for us.

How is a Guardianship avoided?

Usually, by having a valid power of attorney. However, in a small number of situations, a guardianship cannot be avoided.

Who would become my Guardian?

Ohio law has developed a hierarchy as to who has first right to be your guardian – provided he or she is an Ohio resident. Generally, the spouse is asked first, then children, parents, siblings, and so forth.

What makes a Guardianship something to avoid?

The process will be time intensive and expensive. First, the Probate Court requires that the Guardian posts a bond, essentially an insurance policy, to protect the ward’s assets. Second, the Guardian must get written authorization from the Court to expend any amount of the ward’s funds – no matter how small. Last (for the purposes of this Q&A!) the Guardian must now submit to yearly training by the Probate Court.

Is a Guardianship ever a good thing?

Yes, it can be a necessary evil. As mentioned earlier, a power of attorney is the only way to avoid the need for most guardianships. However, depending upon the individual’s personal situation, he or she may not be comfortable or able to select a power of attorney that can be trusted. This is not so unusual especially when families are small or spread across the country, or, in the case of an older adult, they no longer have many living family members or friends. In these situations, it is preferable to have the Probate Court oversee the person’s affairs to ensure that they are not be exploited.


Probate

The Probate process is shrouded in myth, mystery and misinformation. The “probate” process refers to when the local Probate Court must intervene in a living or deceased person’s medical and/or financial affairs. The Probate process does not necessarily need to be lengthy, cumbersome or expense – however it often can be. If steps can be taken to avoid the Probate process, while at the same time protecting your best interests, then this should be done.


Frequently Asked Questions

What is Probate?

When a person passes away with assets in his or her name alone, then in order to transfer that asset to the beneficiaries named in the decedent’s Will or to his or her next of kin, then the Probate Court must authorize and oversee that transfer. This in a nutshell is known as “going through probate”. This is not a simple process and involves the filing of several forms, notification of beneficiaries and next of kin and the inventory and accounting of all assets.

How long does the Probate process take?

This is highly dependent upon the type of assets going through Probate Court. The process usually takes at least 6 months and could easily last for over 1 year. Probate estates that typically take longer involve the sale of a business or real estate. Also, if beneficiaries and/or next of kin are difficult to locate, contest the will or are just not cooperative, this will slow down the process as well.

How much of my estate will the Probate Court take during the process?

The biggest myth about Probate is that the Court takes a portion of your estate. This is not true. Court costs are assessed, however, they are a flat fee and, in a typical case, amount to less than $500.00.

If I have a Will, do I avoid Probate?

Another big myth! One of the Probate Court’s function is to determine whether a document is a person’s Will. Until it does that, the Will is merely a piece of paper. The Court examines the Will to make sure it complies with the requirements under Ohio law. Once it has done that, it formerly appoints the Executor, who is then able to access the decedent’s assets.

What if I don’t have a Will?

Ohio has default laws that specify who receives your property and who will handle the administration of your estate. The hierarchy proceeds through your family tree and starts with a spouse, then your children, parents, siblings, etc.

Sounds like probate is a pain, but when is going through Probate beneficial?

Depending upon your estate, it may be preferable to have the settlement of your affairs be overseen by the Probate Court. There is a high level of transparency when dealing with the Probate Court, so if you have beneficiaries who do not normally get along, by using the Probate process, the level of suspicion and discord can be controlled. Basically, in these situations, the Probate Court Judges and Magistrates act as policeman and ensure that the wishes of the decedent be carried out in an expeditious manner.


Trusts

A trust is a type of estate planning document and is an alternate way to hold your property. Trusts essentially allow you to control how your beneficiary uses your assets beyond your death. They are very flexible and present a good option to many individuals, couples and families.


Frequently Asked Questions

Are trusts only for the very wealthy?

No. In fact, most people utilize a trust for reasons not related to their net worth. The decision to have a trust is based upon the make up of your family and if you want to maintain some control over how your lifetime savings are used by your beneficiaries.

How is a trust different?

When using a Will or other means to transfer your property (i.e. naming a beneficiary) upon your death, the recipient receives the asset outright, no questions asked. Meaning your beneficiary can do whatever he or she wants with the asset – whether it is buying a flashy car or putting it aside for a rainy day. With a trust, your assets are held “in trust” for the benefit of the beneficiary and a trustee oversees how the funds are spent.

Who can benefit from having a trust?

Clients in the following situations often benefit from having a trust:

– Have minor or young and immature beneficiaries

– Have beneficiaries that are receiving government benefits

– Beneficiary is in an unstable marriage or has creditor problems

– Desire to have privacy with regards to their assets upon their death

– Have a second marriage

– Are in a non-marital relationship

– Do not want their heirs to be subject to the probate process

– Have out of state property

If I have a trust, do I maintain control over my property?

Yes, the most common type of trust is a revocable living trust and you have full control to utilize the assets as you see fit, change the terms of the trust and completely revoke the trust.

What type of assets can I hold “in trust?”

Any type of asset can be held in trust and while you are living – such as vehicles, personal property, real estate and bank accounts. Your property is held in trust when the title of the asset changes from your personal name to the name of your trust.

Do trusts protect my assets from creditors, especially the nursing home or Medicaid?

No. Most trusts are revocable and therefore you are able to access the funds at any time. Therefore, these funds are available for the taking by creditors. However, if your beneficiary has a creditor, then his or her share are safe from their reach.

How does a trust avoid Probate?

Probate only has jurisdiction over those assets that in the name of a person alone upon his or her passing. Because your asset has been transferred to the name of your trust, it no longer is in your name alone and probate court has no authority over the trust.

Who handles the trust after I am deceased?

Your Successor Trustee, who will be designated in the trust document. The Successor Trustee gathers all of the assets, maintains and manages the assets for the beneficiary and distributes trust assets where appropriate.

If I have a trust, do I maintain control over my assets while I am living?

Yes. You can access your trust funds easily and as often as you like.

Can I make changes to the trust?

Provided you enter into a revocable trust (the most common trust), yes, you can make as many changes as you would like and also completely revoke the trust if it no longer works for you.