Six Reasons to Create a Revocable Living Trust in Ohio
By: Elliott Stapleton
The following is a list of reasons people in Ohio may need to create a Revocable Living Trust. This type of Trust can be updated and amended during life, allows you to be the Trustee so long as you are competent, avoids probate after life, limits time involved with administration, and gives you more control over your assets.
Here are some specific examples for when people need to create a Trust:
1. People with assets in excess of $100,000 (including their home value)
2. Parents with Minor Children or Children who cannot manage their money
3. Couples in their Second Marriage or Blended Families
4. Owners of Family Businesses
5. Grandparents who want to give to their Grandchildren
6. People with Unsecured Debt (Credit Card, Medical Bills, Student Loans, etc.)
The following is a list of reasons people in Ohio may need to create a Revocable Living Trust. This type of Trust can be updated and amended during life, allows you to be the Trustee so long as you are competent, avoids probate after life, limits time involved with administration, and gives you more control over your assets.
Here are some specific examples for when people need to create a Trust:
1. People with assets in excess of $100,000 (including their home value)
- Using a Revocable Living Trust funded with assets during life will allow those assets to avoid probate and will reduce the total attorneys’ fees to .5%-1%.
- Attorneys’ fees for the administration of a Probate Estate range from 3% - 5% of total probate assets.
- By way of example, a couple with a Probate Estate of $250,000 (including the value of the home) would save their children $7,750 by using a Revocable Trust. (Source: Hamilton County Probate Court Attorney Calculator)
2. Parents with Minor Children or Children who cannot manage their money
- Without a Trust, if something happens to both parents, the children will receive the funds outright at age 18. However, with a Trust, you can set a time table for when the funds are distributed.
- Additionally, there may be circumstances where you would want to control what your child can use the funds for; only allowing Health, Education, Support, or Maintenance.
- If there is a history of money management problems, you can have a Trustee review all transactions consistent with standards you established.
- If a child has disabilities you can also put a Special Needs Trust in place to ensure the assets are protected.
3. Couples in their Second Marriage or Blended Families
- You can provide income for the surviving spouse for life with the remainder to your children.
- This provides both parties with equal treatment and ensures each spouse's children receive a share. Otherwise, the children of the second spouse to die could receive everything, while the children of the first spouse to die could receive nothing.
4. Owners of Family Businesses
- People don’t always consider the value of their company as an asset, but it is valued at death.
- There are many different planning options which can be used in conjunction with Life Insurance and Trusts to account for this valuable asset and limit the risk of a forced sale or disputes among your children.
5. Grandparents who want to give to their Grandchildren
- There is a Generation Skipping Tax for assets passed below the first generation.
- A Trust to take advantage of the Generation Skipping Exemption to ensure the least amount of tax is paid.
6. People with Unsecured Debt (Credit Card, Medical Bills, Student Loans, etc.)
- Currently, in Ohio, creditors cannot attach non-probate assets unless they have a security interest or have filed suit before death.
- If all of your assets are in Trust, there is nothing for creditors to attach and liquidate. Instead, your assets go directly to the intended beneficiaries of the Trust.