Cincinnati Estate Planning Topics by Elliott Stapleton

Ohio Legacy Trust

3/23/2013

As of March 27, 2013, you will now be able to create an Irrevocable Legacy Trust. This device allows you to create a Trust, with your assets and for your benefit, which is protected from your creditors. Prior to 2013, if you created a Trust for your benefit (meaning you could still use the money or property) your
creditors could reach the Trust assets.

The Legacy Trust allows you to insulate a portion of your assets from creditors.
This is important for professionals who have a large amount of potential liability (or wish to protect assets from a future Medicaid spend down).

If you put assets into a Legacy Trust, there are limitations on the use of those assets. For liquid, financial assets you can only use:

(a) Current income from the Trust assets and
(b) Up to 5% of the principal (on an annual basis)

The Trust assets can be used to pay the income tax attributable to the assets. In
addition, the Trust can be used to pay debts, expenses, or taxes of your Estate
after your life.

At all times, an Ohio Legacy Trust must be managed by a third party (you cannot be
the Trustee). Even though you cannot be the Trustee you can replace the Trustee
at any time (and appoint a new third party).

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Portability and Estate Tax Update

1/15/2013

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Federal Estate Tax Update

As previously posted, the new Federal Estate Tax is at 40%. For 2013, the IRS has indexed the estate tax credit at $5.25 million dollars. This means an individual with less than $5.25 million dollars does not have to pay Federal Estate Tax on his or her assets.

The visual summary above gives you a breakdown of Estate Taxes for 2012 and 2013.

Portability

There is also a concept known as Portability. Portability allows a husband or wife to transfer upon death his or her unused Tax credit. Effectively, this provides a married couple a $10.5 million dollar tax credit for 2013.

The visual summary above explains the concept of Portability.

Ohio Estate Tax Law Update

For Ohio, the Estate Tax is abolished completely. It is important to note, the Ohio Estate Tax will still apply for those who died in 2012 even if the estate is put through Probate in 2013.

I have provided a visual summary of the Ohio Estate Tax.

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Federal Estate Tax for 2013

12/21/2012

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Federal Estate Taxes

Congress and the president, on January 1, 2013, reached a deal that averted a potential increase in the Estate Tax. This agreement avoided the "Fiscal Cliff"; which would have resulted in a considerable tax increase.

Based on reports, approximately the first $5 millions in an individual's name at the time of death will pass free of Estate Tax. For married couples, there is Portability of this credit. Portability allows one spouse, upon his or her death, to transfer any unused credit to the surviving spouse. For married couples, the effective Federal Estate Tax credit is approximately $10 million.

Any amount owned at the time of death in excess of the Estate Tax credit will be taxed at a rate of 40%.

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Ohio Legacy Trust

Portability and Estate Tax Update

Federal Estate Tax Update

Portability

Ohio Estate Tax Law Update

Federal Estate Tax for 2013

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