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February 2007
Vol. 1, Issue 1
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Welcome to the Trusts
& Estates Bulletin
By:
David W. Woodburn
Welcome to the first
issue of Trusts & Estates Bulletin, the
new newsletter of the Buckingham, Doolittle & Burroughs,
LLP Trusts & Estates Practice Group. Our purpose in
assembling this newsletter is to provide updates on
developments, tips, and planning opportunities in all
areas of trusts and estates law.
This first issue addresses a wide variety of topics but
places particular emphasis on the new Uniform Trust Code
adopted in both Florida and Ohio. This new trust code
goes into effect in 2007 and significantly impacts the
ways in which living trusts will be administered
throughout each state. The Uniform Trust Code resolves
numerous issues involving trusts by providing specific
guidelines on how to form trusts, modify revocable and
irrevocable trusts, protect assets against creditors,
and even direct trustees on legal duties and reporting
requirements.
This newsletter also allows us to introduce you to the
many new members of our practice group. In the past
year, we have added several new lawyers to our Canton,
Columbus, and Akron offices. These additions have
allowed our group to nearly double in size. These
new members bring with them
particular strengths in Medicaid planning, disability
and special needs planning, guardianship administration,
and probate litigation. When combined with our existing
expertise in these areas and sophisticated estate
planning and estate administration, there is no doubt
that we have set ourselves apart as one of the premier
trusts and estates groups in Ohio and Florida. Our
attorneys are well known for their professional skills
and dedication to their clients, as well as for their
cutting-edge planning techniques.
We hope that you enjoy this newsletter and those that
will follow. Please call one of our practice group
members if you have a question concerning one of the
articles or any other trusts and estates matter.
David Woodburn
is a Shareholder and Chair of the
Trusts & Estates Practice Group. He
can be contacted at
dwoodburn@bdblaw.com
or
330.258.6506. |
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Landmark Trust
Legislation Will Affect and Govern Trusts in Ohio and
Florida
By:
Ronald F. Wayne
Perhaps the most significant
legislative change ever affecting trusts has been
enacted in both Florida and Ohio. The Uniform Trust Code
has been adopted with some minor changes in both states,
with the Ohio legislation being effective on January 1,
2007 and the Florida changes taking effect on July 1,
2007. Ohio and Florida are now aligned with 17 other
states that have adopted some form of the Uniform Trust
Code.
Background
Recognizing the national proliferation of trusts as
wealth-transfer and probate-avoidance devices across the
United States, the National Conference of Commissioners
on Uniform Laws completed the Uniform Trust Code (UTC).
Shortly thereafter committees were formed in both Ohio
and Florida, comprised of the state bar association,
members of the legislature and the bankers'
associations. They studied the utility and desirability
of implementing a uniform law that might eventually be
nationally applicable to an ever more mobile population.
After years of study both Legislatures adopted a form of
the UTC with varying, but generally limited, changes to
the UTC.
Why It Matters
Although the nationwide use of trusts as a
probate-avoidance and estate and gift tax-reduction
technique has exploded in recent years, there existed
only a patchwork quilt of various statutes, case law,
and rough comparisons to the laws of wills to guide
practitioners, trust creators, trustees and
beneficiaries.
Great uncertainty existed in various jurisdictions.
Lawyers and trustees disagreed about what was
permissible and what was not, especially in the areas of
administration, reporting and accountability. Worse yet,
there were numerous conflicting decisions and practices
in various jurisdictions and even counties within the
same state, even on similar fact patterns. The emphasis
of probate-type litigation shifted away from will
contests to trust contests and complaints about the
administration and reporting, or lack thereof, to
various classes of beneficiaries. Hence, the need for a
one-stop shopping place for a body of trust law that
could be reliably and consistently applied across
numerous, and perhaps some day all, state jurisdictions
was evident.
Lawyers in both Ohio and Florida are now better equipped
to answer typical trust questions from clients, whether
the clients are the creators of the trust (the
grantors), the trustees of the trust, or present or
possible future beneficiaries of the trust. Although
there are some grumblings amongst trust practitioners in
all states that have implemented the UTC (particularly
about the enhanced transparency and reporting
requirements to beneficiaries), most are delighted to
have a roadmap to navigate the troubled waters of trust
creation and administration.
What You Need to Do Now
The answer to this question remains the same as before
the enactment of the new legislation. Periodically, it
is a good idea to review your existing estate planning
documents to make sure they are still functioning as
efficiently as possible. In addition to your age, plenty
of other things may have changed: your wealth, your
health, your tax bracket, your relationships with the
beneficiaries or your trustees and especially the law
governing your trust.
The first noticeable changes will involve the trustee’s
reporting duties to the trust’s beneficiaries. These
will occur in 2008 after the law has been in effect for
a full year. In the meantime, everyone involved with
trusts will have an opportunity to catch their breaths
and digest the new law. In the meantime you owe it to
yourself to learn more about this exciting new law.
To assist you in that regard and because this
legislation is monumental in its scope and importance,
several future consecutive issues of the Trusts &
Estates Reporter will focus on topics of interest to
grantors, trustees and beneficiaries. Stay tuned! In the
meantime please feel free to contact any of the members
of the BDB Trusts & Estates Practice Group to determine
the impact of the law on your particular estate plan.
Ronald Wayne
is a Shareholder in the Trusts &
Estates Practice Group.
He can be reached at
rwayne@bdblaw.com or
216.615.7349.
Florida's New Trust Code - A Brief Summary
By:
Christopher Gagic
During the session for 2006, Florida’s legislature
passed a significant piece of legislation, which will
have an impact on almost all of our clients who have
created trusts or are currently serving as trustees. In
a nutshell, a significant portion of Florida’s Trust
Code will be replaced or modified effective July 1,
2007. Importantly, the Code does not affect any act
taken prior to the effective date.
While Florida already has a fairly extensive body of
statutory trust law, an ad hoc committee consisting of
various sections of Florida’s bar, the Florida Bankers
Association and the Florida Institute of CPAs concluded
that Florida would benefit from a more comprehensive
trust code to, among other things, simplify language
found in the current Code, cover areas not dealt with,
modernize antiquated sections and adopt a cohesive and
comprehensive code that would be in harmony with other
states’ trust code sections. So, what are the most
significant changes to Florida’s Trust Code?
Trust Creation: The requirement that the testamentary
aspects of trusts be signed with the formalities of a
will in Florida is now limited to revocable trusts of
Florida domiciliaries, regardless of the law of the
place of execution or the location of the property held
in the trust. The capacity needed to create a revocable
trust is now specified to be the same as that of a will.
This clarifies the applicability of case law, which has
discussed testamentary capacity in the context of a will
but not of a revocable trust.
Charitable Trusts: The authority the attorney general
had at common law to enforce charitable trusts was
formally codified in the new Code. The new Code expanded
the list of individuals with standing to enforce
charitable trusts to include the grantor who created the
trust and to the charitable organizations that are
beneficiaries under the trust document.
Revocable Trusts: The Code now provides that all trusts
are revocable by default unless otherwise stated in the
document. In addition, the method of revocation
expressed in the instrument is exclusive, and while the
trust is revocable the trustee owes duties to the
grantor only. The holder of an unlimited right of
withdrawal (for example, a surviving spouse) is treated
as the grantor while the power is exercisable.
Trustee Powers: A trustee’s powers are extended to cover
additional powers not specified under the old Code. For
example, the Code now authorizes a trustee to exercise
federal, state and local tax elections; to select
payment options with respect to retirement plans,
annuities and insurance contracts; to make loans,
including loans to a beneficiary on fair and reasonable
terms and conditions; and to exercise necessary powers
to wind up and distribute the trust property.
Of course, the changes to the Trust Code are too
numerous to outline in this article. We strongly
encourage our readers to contact us with any questions
regarding Florida’s new Trust Code or any other estate
planning issues.
Christopher
Gagic
is a Shareholder in the Trusts &
Estates Practice Group. He can be reached at
cgagic@bdblaw.com
or
561.241.0414.
Ohio's New Trusts Code - A Controversial Provision
By:
Hillary B. McLean
Most provisions of the new Ohio Trust Code are default
provisions. In other words, they apply unless the
creator of the trust indicates that he or she does not
want them to apply. There are, however, fourteen, mostly
common sense, mandatory provisions that cannot be
changed by the settlor.
Two of these provisions are already creating controversy
in the legal community. Both have to do with the
trustee’s duty to keep current beneficiaries of
irrevocable trusts informed of trust assets and
activities.
An irrevocable trust is one that may not generally be
changed once it is created. The beneficiaries’ rights
are generally fixed upon the creation of the trust. Even
revocable living trusts usually become irrevocable upon
the death of the creator of the trust.
Under the Ohio Trust Code the trustee of an irrevocable
trust is required to do all of the following, whether a
beneficiary knows of the existence of the trust or not:
The trustee must inform current beneficiaries, age 25 or
more, of the existence of the trust, of the identity of
the trustee and of their right to receive annual trustee
reports and other information about the trust. If
requested to furnish such information, the trustee must
respond to the request within a reasonable time. The
information would probably include the amount and nature
of the assets in the trust and the beneficiary’s share
of the trust. The names of other beneficiaries can
likely be withheld.
What makes this provision controversial is that trusts
are often created to protect assets for a beneficiary
who has various problems, such as substance abuse or a
gambling addiction. Under the Ohio Trust Code, a
settlor’s only alternative to disclosing this
information to the distressed beneficiary is to
designate a “beneficiary surrogate” to receive this
information instead of providing it directly to the
beneficiary.
What makes the “beneficiary surrogate” provision
controversial is that it is unclear who would ever be
willing to undertake this thankless duty. Nor does the
provision state what obligations the surrogate has to
the beneficiary. It is unclear why a settlor should not
be able to provide in his instrument that this provision
of the Code does not apply to his trust.
As a result of these provisions in the new law, the
traditional protections afforded by “spendthrift”
provisions (designed to protect an imprudent beneficiary
from his own indiscretions) and discretionary provisions
(which give the trustee great discretion in determining
whether a distribution should be made to a beneficiary)
will become more important than ever.
Hillary McLean
is an Associate in the Trusts &
Estates Practice
Group. She can be reached at
hmclean@bdblaw.com or
330.643.0301.
FLIT - A Timely Demise
By:
George Weinstein
Ding! Dong! The king is dead! Well, not the king, but
the Florida Intangible Tax (FLIT), which was killed by
the Florida legislature and the governor as of January
1, 2007.
The demise of FLIT removes such planning devices as
intangible tax trusts, investments in U.S. and Florida
obligations, and the myriad of other exemptions from the
tax. Thus, individuals, partnerships and corporations
can cease to worry and plan around investments that were
subject to the tax.
The demise of the tax was to be expected as the
exemptions were raised from $20,000 and $40,000 to
$250,000 and $500,000, and the tax rate was reduced from
2 mills to 1 mill to one-half mill. FLIT eventually
included an exemption if the total tax was less than $60
before discount, the discount being graduated from 4% to
0% depending on the time of filing. Furthermore, failure
to file timely resulted in severe penalties, and
applications for refunds of overpayments took forever to
be successful (if at all).
Florida thus no longer has an estate tax (prohibited by
its constitution) nor a share in the federal estate tax
revenue (since 2004), nor an intangible tax, resulting
in a considerable loss of revenues. What will Florida do
next to become an even more friendly tax state? The
Florida treasury was flush with money from transfer
taxes on real estate sales in a booming housing market
in 2005, but the boom no longer exists, so the state
will have to look elsewhere for increased revenues to
meet needs for Citizens Insurance subsidies, Medicaid
assistance, and education. Likely sources include higher
property taxes, sales taxes and gasoline taxes, but
these will face fierce taxpayer resistance, as will any
attempt to tinker with the homestead exemption or “save
our homes” laws. Maybe Florida can get in on any Vioxx
settlements, as it did with the tobacco companies a few
years ago.
One thing is sure: Florida municipalities will have a
harder time selling their obligations unless they
increase yields to make them more attractive investments
than out-of-state bonds. And, oh yes, Florida lawyers
will see their income from drafting intangible tax
trusts disappear, but maybe that’s for the best. Their
hope may be that some day Florida may find itself short
of revenues and reinstitute the intangible tax in some
form.
George Weinstein is Of
Counsel in the Trusts & Estates
Practice
Group. He can be reached at
gweinstein@bdblaw.com or
561.241.0414.
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Trusts & Estates Practice Group,
Associate
Ms. Friedmann began as a Summer
Associate with Buckingham, Doolittle & Burroughs,
LLP in 2005, joining as a full-time Associate in
2006. She served as a judicial extern for the
Honorable Judge Deborah L. Cook, United States Court
of Appeals for the Sixth Circuit, in 2004. Ms.
Friedmann was recipient of the CALI Excellence for
the Future Award for coursework including Wills,
Trusts, and Estates II and Corporations.
Previously, Ms. Friedmann was a Network Consultant
who specialized in deploying computer networks,
servers, and databases.
Mr. Kaufmann was formerly managing partner of
Kaufmann & Kaufmann in Akron, Ohio. His practice
areas include estate planning, probate,
guardianship, Medicaid planning, corporate law and
disability trusts. A graduate of Loyola University,
Mr. Kaufmann earned his J.D. in 1971 from The
University of Akron School of Law. He is a member of
the Akron (Probate Section), Ohio State (Probate
Section) and American Bar associations, and is
admitted to practice before the U.S. District Court,
Northern District of Ohio; the U.S. Tax Court; and
the U.S. Supreme Court. He is listed in the current
edition of The Best Lawyers of America and Leading
Lawyers in Northeast Ohio, and has been selected as
an Ohio Super Lawyer, Trusts. He is a fellow of the
American College of Trust and Estate Counsel.
Of Counsel
Mr. Mutersbaugh focuses his practice on estate
planning, probate, estate planning for the disabled,
elder law and corporate law. A graduate of the
University of Findlay, Mr. Mutersbaugh earned his
J.D. from The University of Akron School of Law in
2002. He is a member of the Akron (Probate Section),
Ohio State (Probate Section) and American Bar
associations and the Tax and Estate Planning Council
of Akron. He has been selected as a 2006 Ohio Super
Lawyer Rising Star.
Mr.
Peppers most recently was employed with the Franklin
County Probate Court as a General Magistrate
presiding over matters before the Court such as
adoption, guardianship, name changes, estates,
trusts, marriage applications, and civil commitments
for mental illness.
Mr. Peppers is a member of the Ohio State (Estate
Planning, Trusts, and Probate Law Section) and the
Columbus Bar Association. He is also a member
of The John Mercer Langston Bar Association.
He is a frequent speaker on probate matters before
the Ohio Judicial College, the Bar associations and
many civic groups. He also serves on the Board
of Directors to the Columbus Area American Red
Cross.
Mr. Stergios has many years of legal experience in
various areas of law including litigation in state
and federal courts, corporate and business
transaction, estate planning, and representation of
local government entities. Mr. Stergios served
as Special Counsel for the Stark County Prosecutor’s
Office from 1985 to 1988. He also served as a
Special Agent for the Federal Bureau of
Investigation from 1969 to 1972.
Mr. Stergios has over 45 years experience in
various areas of the law. His practice is
focused in health law, estate planning, business
law, and labor relations. Mr. Stergios has
served as Special Counsel to the Attorney General of
Ohio since 1995.
Trusts & Estates
Practice Group,
Partner
Ms. Swett was formerly at Stark & Knoll and Matz
Petersilge & Weimer before joining Kaufmann &
Kaufmann. She focuses her practice on estate
planning and trusts, estate administration,
guardianships, estate planning for the disabled and
elder law. A graduate of Stetson University, Ms.
Swett earned her J.D. from The University of Akron
School of Law in 1980 passing the bar exam in 1980.
She is a member of the Akron, Ohio and American Bar
associations. In addition, she has been licensed to
practice law in New Jersey since 1990.
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Kudos
Jeffrey A. Halm
(Canton),
Philip S. Kaufmann,
David J. Lewis,
Patricia A. Pacenta,
Patrick J. Weschler,
David W. Woodburn (Akron)
have been recognized by their peers in the 2007
edition of Best Lawyers in America®.
Philip S. Kaufmann,
Patricia A. Pacenta,
Patrick J. Weschler
(Akron),
Jeffrey A. Halm
(Canton),
Ronald F. Wayne (Cleveland),
Thomas J. Bonasera,
and
Thomas J. Sigmund
(Columbus)
have been recognized as top lawyers in their areas
of practice and are listed in the 2007 edition of
Ohio Super Lawyers®.
Thomas J. Bonasera
(Columbus) was appointed Chair to the Franklin County
Alcohol, Drug and Mental Health (ADAMH) Board. He
was appointed to the ADAMH Board by the Franklin County
Board of Commissioners. His appointment runs through
June 30, 2010.
Speaking Out
Save the Date for these Upcoming Presentations:
February 13,
2007 -
Thomas J. Bonasera
(Columbus)
will be speaking to the Franklin City Trial
Lawyers Association on “What Every Litigator
Needs to Know About Probate.”
March 9,
2007 -
Mary Sue Donohue
(Boca Raton)
will be speaking to a group of lawyers at Mellon Bank
regarding current trusts & estates issues.
Out and About – Recent
Presentations:
Thomas J. Bonasera
(Columbus)
presented, “Fiduciary Litigation and Legislative Update
Including Ohio’s New Trust Code” in Acapulco, Mexico.
The seminar was sponsored by the OSBA CLE Travel
Program. He also made a presentation to Sky Bank in
Westerville, Ohio regarding “Special Needs Trusts.” He
spoke to Friendship Village residents and their guests
regarding “Disability and End of Life Estate and
Financial Planning.” Mr. Bonasera made a presentation
for the Columbus Bar Association regarding the “Sale of
a Law Practice.” He also presented for the Columbus Bar
Association on “Ohio’s New Trust Code.” Finally, Mr.
Bonasera spoke at the Brain Injury Association Seminar.
His topic was “Special Needs Trust Planning.”
Mary Sue Donohue
(Boca Raton)
spoke at the National Inventor’s Hall of Fame Foundation
in Alexandria, Virginia. Her topic was charitable
giving.
Patricia A. Pacenta (Akron) spoke at the
Cleveland Estate Planning Institute meeting. Her speech
focused on “Trustee Selection and Succession.” Her
presentation formed the basis of an article for the
November/December edition of the Ohio Probate Journal.
Ronald F. Wayne (Cleveland)
presented to the Toledo School of Medicine. His topic
was entitled, “Fundamentals of Estate and Asset
Protection Planning for Physicians.”
Patrick J. Weschler (Akron)
participated in a discussion panel on family business at the
Turnaround Management Association’s annual seminar at
the Forum in Cleveland.
INFORMATION ON SEMINARS OR SPEAKERS
If you are interested in obtaining information on
upcoming seminars or would be interested in having
speakers from Buckingham, Doolittle & Burroughs, LLP
make a presentation to your organization, please
contact: Lorna
Henderson, Client Relations Administrator, at
lhenderson@bdblaw.com
or 800.686.2825 ext. 86473. |
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www.bdblaw.com
1.800.686.2825 - Buckingham Akron SM
1.800.682.2825 - Buckingham Boca Raton
SM
1.888.811.2825 - Buckingham Canton SM
1.888.843.2825 -
Buckingham Cleveland
SM
1.888.686.2825 - Buckingham Columbus
SM
1.800.682.2825 - Buckingham West Palm Beach
SM
In all of our offices, we provide skilled advice and
effective legal counsel to individuals and businesses in
virtually every industry and trade. We focus on practical
solutions that meet our clients' goals.
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Trusts & Estates Bulletin
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© 2007.
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Philip S. Kaufmann
Steven P. Mutersbaugh
