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Medina Legal Issues Blog

Handling unusual final arrangements

Many Ohio residents aren't concerned over family members or friends granting their final requests. However, some may want some guarantee that a final wish will be carried out even if it is unusual. For instance, there is a story involving the inventor of the Pringles can who asked that his ashes be placed in such a can before being buried.

While there is no way to know for certain if that story is true, individuals do have options when it comes to making sure that unusual last wishes are granted. Typically, these arrangements will be included as part of an individual's estate plan. It used to be customary to include final requests in a will, but there is no guarantee that a will is found before a burial or cremation takes place.

Commercial real estate loans now have higher standards

Entrepreneurs in Ohio who are interested in obtaining a loan so that they can purchase a property might have to face higher standards to get approved. The Federal Reserve reported that commercial real estate loans were more tightly restricted in the second quarter of the fiscal year. Nonetheless, owners who are interested in business loans will find that the standards are the same and have not become more restrictive.

The Federal Reserve conducted a survey of banks' loan activities, and they found that loans for multifamily residential properties, land development and construction were facing tightening standards. The survey also found that there was a decrease in the demand for loans of these types. Policy makers from the Federal Reserve are wary of higher prices in commercial real estate as increasing prices could exacerbate any lows the economy might face.

The use of beneficiary designations

Ohio residents can designate loved ones to be beneficiaries of accounts such as life insurance policies and IRAs. They should carefully consider their designations and should know what should and should not be done. Emotion may play a significant part in how investors choose their beneficiaries. Investors should consider who they care for the most and would want to ensure are financially stable.

People should also understand how spousal beneficiaries may be taxed if they are left certain types of property. In some cases, it may be more sensible to name a spouse as beneficiary. Surviving spouses may receive better tax benefits than a surviving sibling if they receive 401(k)s and IRAs, which they can transfer to their own accounts.

Businesses and estate planning

Ohio business owners should have certain documents on hand in the event certain decisions regarding their company have to be made in the future. These documents, which can include a living trust, a financial power of attorney and a last will and testament, will help protect the business in which the owners have invested time and money.

According to a survey of over 500 entrepreneurs, 80 percent had not completed a financial power of attorney. Only 24 percent had drafted a last will and testament, and a mere 13 percent had established a living trust. Sixty-five percent of the entrepreneurs had no legal documents in place in case they were unable to operate their business.

Uses and types of irrevocable trusts

Ohio residents who are planning their estates might want to consider creating an irrevocable trust. While an irrevocable trust has a disadvantage over a will or revocable trust in that it cannot be changed, there are a number of advantages to it as well. Furthermore, setting up an irrevocable trust in a will that comes into effect on a person's death allows the trust to be modified during the person's lifetime.

An irrevocable trust can also be created while a person is still alive. The trustee is then in charge of following the trust terms. A trust contribution may count against a person's lifetime gift exclusion, but if it appreciates in value, the estate will not owe taxes.

Estate planning pitfalls to keep in mind

When Ohio residents are planning their wills, there are a few key areas that are important to consider in order to make sure a will holds up in court after death. Estate planning can be complicated, and it can be critical to be aware of a number of factors that go into a will to enable an orderly distribution of the estate.

While it is true that the purpose of a will is to make sure that the wishes of the deceased are implemented, it is possible for close family members to challenge it in court if they are excluded. It made easier to challenge if they are not mentioned at all in the document. Testators should thus consider including their close family members' names and addresses, even if they will receive no bequest.

The benefits of an estate plan

Many Ohio couples live together but don't get married. However, just because someone doesn't have a spouse or children is no reason to avoid creating an estate plan. In fact, it may make it more important to create one. For example, if a person is incapacitated and unable to make certain health care decisions, a partner may not be able to make them on that person's behalf.

However, this may not be the case if a power of attorney was created. A power of attorney may give a partner the ability to make decisions on behalf of someone who is unable to do so. Those who have bought a home together may wish to account for that property using a will or by giving both individuals joint tenancy with survivorship rights.

Involving family in estate planning

Ohio residents who are preparing their estate plan should not neglect the step of talking to their family members about it. In many cases, despite careful planning, assets are lost and conflicts are serious after a person's death. Therefore, communication can be as important as this planning in ensuring that a person's wishes are carried out.

There are a number of questions that people should consider. One is whether family members are familiar with the estate plan. People may want to think about how much information they are comfortable sharing and when. This may include allowing them to read the will and other estate planning documents. People may also want to consider how much their beneficiaries know about the net worth of the estate and when to share that information.

A proposed tax law change could influence CRE projects

Commercial real estate developers in Ohio and around the country generally base their decisions on market data, experience and intuition, but their actions are also influenced by the nation's financial regulations and tax laws. Financial experts have paid little attention to the tax rules pertaining to hedge fund carried interests as they have remained stable for decades, but changes proposed by the Internal Revenue Service would almost double the the tax rate. Industry analysts say that the IRS proposal, if it were to be enacted, could severely impact the entire commercial property sector.

Carried profits are earned by general partners, and financial reforms introduced during the 1990s changed the way that they are taxed. Since the 1990s reforms went into effect, general partners have been paying capital gains tax rather than income tax on carried interests. However, the IRS now wants to revert back to treating them as ordinary income, which would push the tax rate up from 20 percent to 39.6 percent for high earners.

Tips for estate planning

One purpose of an estate plan for Ohio residents may be addressing family conflict. This conflict may spring from disputes over property, or it may be a more longstanding interpersonal dispute. Some people might avoid creating an estate plan because of this, but this only means that when the estate is settled, there will be even more. Working with professionals in creating an estate plan may help people find ways they were unaware of to resolve this.

Communicating with loved ones about the intention behind the estate plan may also help ensure that a person's wishes are carried out. However, there are situations in which a person might not be comfortable doing this, and if that is the case, a professional may be able to have this conversation with family members. A person who is concerned about how family members will manage assets can set up a trust. While making an estate plan is a task many people would like to do once and not think about again, regularly reviewing and updating the plan is important as well.

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