Legal journals and law school textbooks are filled with horror stories covering nearly every facet of law. Some of those stories involve probate cases and the lengths to which some families are forced to go in order to settle a loved one’s probate estate.
Two Types of Assets You’ll Leave Behind
When a person dies, that individual will leave behind two types of assets: probate and non-probate. The distinction is an important one when it comes to estate planning. Probate assets are those that are covered under the terms of a will. If a person dies without a will, state law will determine how those assets will be distributed among the relatives.
Non-probate assets bypass this process altogether. Non-probate assets are those that are covered under a will substitute. Examples of will substitutes include life insurance policies, payable-on-death accounts, and trusts.
What Are the Advantages of Making a Will?
First, with respect to probate assets, one of the chief advantages of having a will is the ability to direct who gets what upon your death rather than having such matters dictated by state law.
For example, in the event you die before your parents, perhaps you’d like some of your property to go to them. You can spell all of that out in your will. But if you die without a will, and you have a nuclear family of your own, your parents will get nothing. Ohio law assumes that you would want your assets to pass to your spouse and children unless you have specified otherwise.
What Are the Advantages of Non-Probate Assets?
For many families, establishing non-probate assets is a more attractive option in making a comprehensive estate plan. Under a life insurance policy, for example, the policyholder names a beneficiary, and that person will be paid regardless of the existence of a will. It’s a pretty straightforward way of providing for a significant other at what will surely be a difficult time. The same holds true of assets held in a payable-on-death bank account.
A trust is another way to create non-probate assets. The trust is overseen by a trustee who is then responsible for paying out claims and distributing the assets. A “probate avoidance trust” exists on its own and may be modified or revoked by the person who created it. The “probate avoidance trust” is to be distinguished from a trust created under a will (a “testamentary trust”) or a trust funded by a will (a “pour-over will”). By definition, neither the testamentary trust nor the pour-over will avoid probate.
Uniform Probate Code Is The Law in Ohio
In an effort to make this whole process easier, many states have adopted what is known as the Uniform Probate Code. The code is a series of statutes designed to establish a basic common ground in the area of probate law. The idea is that if all states utilized the Uniform Probate Code, all of these rules of succession would then be consistent from coast to coast, making everything easier for attorneys and families alike.
Ohio was the 16th state to formally adopted the Uniform Probate Code. Nevertheless, no state (including Ohio) has adopted the Uniform Probate Code as written, and each state (including Ohio) have modified the Code somewhat. So much for uniformity.
Local Help Is Available
Because state laws differ, it is important for residents of our area to contact an attorney well-versed in Ohio law when making an estate plan and one who has experience in probate and estate administration.
Attorney John C. Grundy has been serving the residents of Akron, Warren, Youngstown, Aurora and surrounding communities for decades and is ready to assist you with your financial affairs. Feel free to contact the office with your estate planning questions.