There are many ways to plan your estate, and it isn’t always easy to pick which method you’re going to use to protect your family and your assets. One option is to form a living trust. If you are in Ohio, this guide will take you step by step through how to make a living trust. It will also explain why you might want to think about forming a living trust — and why it might not always be the best choice. If you’re ready to make a living trust, retaining the services of a financial advisor may be extremely helpful.
How to Create a Living Trust in Ohio
This is how you’ll go about making a living trust in the Buckeye State:
- Determine which type of trust you’ll need: If you’re single, a single trust is probably for you. A joint trust may be better for married couples, since they allow couples to place jointly owned property like cars and homes inside of it, in addition to any property either spouse owns independently.
- Take stock of your property: Make sure you know exactly what you own and how much of it should be placed in the trust. Most of your property and assets, from cash to stocks to family heirlooms, can be placed inside the trust. Also take the time now to gather relevant documents for this property, like car titles or certificates of stock ownership.
- Pick your trustee: You can name yourself as trustee or pick someone else. If you choose yourself, you’ll need to name a successor trustee to take over when you die. A trustee is generally a person’s child or another trusted relative. The trustee will distribute the contents of the trust as you direct. Now is also a good time to decide who will inherit what property when you die.
- Make a trust document: Now it’s actually time to put the legal trust document together. You can technically do this by yourself, but you may want to consult with a lawyer or financial advisor.
- Get the trust document notarized: Now you have to sign the trust in front of a notary public.
- Fund the trust by placing your property into it: You can do this yourself, but it can get tricky. Again, a lawyer may be helpful.
What Is a Living Trust?
A living trust is simply a legal framework, established by a document, into which property and assets can be placed. There is a trustee who manages and distributes the property stored in the trust. You can either name yourself as the trustee or pick someone else.
Irrevocable living trusts are permanent. The person who creates the trust, also known as the grantor, cannot remove property placed in the trust without the express permission of every person named in the trust. The trust wholly owns the property inside of it, so any taxes are paid via the trust.
Revocable living trusts, meanwhile, have more flexibility. Property can be removed and the trust modified at the grantor’s will. The grantor still owns the property and pays taxes on it like normal.
How Much Does It Cost to Create a Living Trust in Ohio?
The cost of making a living trust in Ohio depends on the method you use to set it up. You can use an online program to make the trust document yourself, and the cost will likely be a few hundred dollars. Alternatively, you can hire an attorney, which will likely end up costing you more than $1,000. The exact cost of using a lawyer depends on the fees the lawyer charges though.
Even though it’s clearly cheaper to do it yourself, there are some notable risks to DIY estate planning. Attention to detail is very important and it will take a lot of time to do all of the research needed. If you use an attorney, make sure you find someone who is a trust expert, not just an estate planner. Also take note of the fees upfront so you are not surprised.
Why Get a Living Trust in Ohio?
Ohio residents will generally get a living trust to spare their relatives from the inconvenience of probate court after they die. Probate is a time-consuming process most estates go through, and it can be an invasion of privacy. Ohio has not adopted the Uniform Probate Code, which some states have in place to simplify the probate process. For this reason, a living trust may be especially useful for residents of the state.
A living trust is also useful if you’ll be leaving property to minor children, as the trustee can manage the property inside the trust until the child reaches a certain age. A living trust can also help you avoid conservatorship if you become incapacitated, as you’ll have already selected a trustee.
Who Should Get a Living Trust in Ohio?
The idea that living trusts are just for the wealthy is a myth. In a state like Ohio that has not adopted the Uniform Probate Code, even a relatively small estate could benefit from a living trust. There are some estates, though, that will undergo a simplified probate process in Ohio — namely any estates worth less than $35,000 or estates worth less than $100,000 where the surviving spouse inherits everything. For these estates, a living trust might not be worth the time or money.
Other reasons not to get a living trust are simply that living trusts can be more complicated and likely more expensive to set up than a will. Living trusts also have a greater potential to cause complications for your family after you die, as they allow more time for a legal challenge. Whether or not you decide to get a living trust, remember that everyone needs an estate plan.
Living Trusts vs. Wills
Even if you get a living trust, you’ll still need a will to direct the fate of any property not stored in the trust. Additionally, a will can do the following things a living trust cannot:
- Provide instructions on how to pay taxes and debts
- Name an executor
- Establish guardianship for children who are minors
- Select managers for children’s property
This chart compares the abilities of will and living trusts to give you a better idea of how the two options stack up:
Living Trusts vs. Wills
|Names a property beneficiary||Yes||Yes|
|Allows revisions to be made||Depends on type||Yes|
|Avoids probate court||Yes||No|
|Requires a notary||Yes||No|
|Names guardians for children||No||Yes|
|Names an executor||No||Yes|
Living Trusts and Taxes in Ohio
Luckily, Ohio does not have an inheritance tax or an estate tax. The federal estate tax, however, you may need to account for depending on the size of your estate. More specifically, in 2022, the federal estate tax only applies to estates that are worth at least $12.06 million, or $24.12 million for married couples.
Making a living trust in Ohio is one way to plan your estate and protect your assets for your heirs. The state has not adopted the Uniform Probate Code, so it may be a good option if you want to keep your estate out of probate court. Though you certainly can plan your estate yourself, it is difficult, so getting a lawyer to help you may be a good idea.
Estate Planning Tips
- Building an estate plan can be dangerous to do on your own. In fact, it’s one of the premier times when a financial advisor may be able to help you. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- You can’t directly place your 401(k) plan into your living trust. However, you can name the trust as a beneficiary.
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