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A special needs trust provides financial support for a disabled person without affecting their eligibility for benefits like SSI or Medicaid. Families or caregivers can fund the trust with cash, investments, life insurance and other assets. The trust covers expenses not paid by government programs, such as education, housing and personal care. A financial advisor […]

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","

What Is a Special Needs Trust?

","

A special needs trust is a legal arrangement designed to manage and protect assets for the benefit of a person with a disability. Its primary purpose is to supplement, rather than replace, government benefits such as Social Security or Medicaid.

","

This type of trust is structured to hold funds or other assets that can be used to enhance the beneficiary’s quality of life without disqualifying them from government assistance. There are two main kinds of special needs trusts:

","

A first-party trust is funded using the disabled individual’s own assets, often from a legal settlement or inheritance.
A third-party trust is created and funded by someone other than the beneficiary, such as a parent or grandparent, and is typically part of an estate plan. After the beneficiary’s death, any remaining assets can be passed on to beneficiaries.

","

The trust is overseen by a trustee, who manages the assets and distributes funds according to the trust’s terms. These distributions are typically used for things like medical care, education and recreation.

","

The distributions must be carefully managed to avoid jeopardizing the beneficiary’s eligibility for public benefits. Properly structuring a special needs trust requires careful planning and legal expertise to ensure compliance with state and federal laws.

","

What Types of Assets Can Go into a Special Needs Trust?

","

A special needs trust can be funded with a wide range of assets. Common assets include:

","

Cash: Direct contributions of money, often from family members or settlements.
Investments: Stocks, bonds, mutual funds and other investment vehicles..
Life insurance proceeds: Payouts from life insurance policies that are directed into the trust upon the policyholder’s death.
Real estate: Real property such as a home to provide housing for the beneficiary.
Personal property: Valuables like jewelry, artwork or other tangible assets.
Annuities: Regular payments from annuity contracts, structured to provide income for the trust over time.

","

Funding a Special Needs Trust

","

Funding a special needs trust involves transferring assets into the trust to ensure the financial well-being of the beneficiary. The process can vary depending on the type of assets and the specific terms of the trust. Here are five general steps that could help guide your funding:

","$42","

Risks and Challenges of Special Needs Trusts

","

Setting up a special needs trust carries risks, particularly around compliance with complex legal rules. If not handled properly, the trust could jeopardize the beneficiary’s eligibility for government programs like Medicaid or Supplemental Security Income (SSI). For example, direct cash distributions to the beneficiary could be counted as income, which could potentially reduce or disqualify their benefits.

","

The rules for special needs trusts are strict, especially about how the funds are used. Distributions should cover supplemental expenses like education, therapy, or personal care; not basic needs like food or housing, which public benefits cover. Breaking these rules can result in penalties or loss of benefits.

","

Additionally, trustees carry significant responsibility. Mismanaging trust funds, whether through poor investments or improper distributions, can lead to legal issues and put the beneficiary’s financial future at risk.

","

Bottom Line

","

","

Setting up a special needs trust offers families a way to provide for a loved one with a disability while preserving their access to public benefits. By carefully selecting assets and structuring the trust correctly, caregivers can help improve the individual’s quality of life. With the help of legal and financial professionals, families can handle the complexities of compliance and manage the trust responsibly.

","

Tips for Estate Planning

","$43","

Photo credit: ©iStock.com/beest, ©iStock.com/SeventyFour

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Estate planning can help you manage and distribute your assets. In Utah, you can use common estate planning tools like living trusts and beneficiary designations. But, you must follow specific state requirements, such as having witness signatures on wills. There are many different estate planning strategies that can help you and your family save time […]

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","

1. Establish a Living Trust

","

A living trust allows you to transfer ownership of your assets into a trust while you are still alive. Inheritance laws in Utah, as in other states, permit you to use these trusts to maintain control over your estate while avoiding the lengthy probate process. This arrangement can be particularly beneficial for those with complex estates or specific distribution wishes, as it offers flexibility that a standard will might not provide.

","

In Utah, establishing a living trust can offer several advantages beyond avoiding probate. One is the ability to maintain privacy. Trusts are not public records, unlike wills that go through probate. This means that the details of your estate and its distribution remain confidential.

","

Additionally, a living trust can be a valuable tool for incapacity planning. Should you become unable to manage your affairs, the trustee you appoint can step in to handle your financial matters, ensuring continuity and protection of your assets.

","

2. Keep Beneficiary Designations Up to Date

","

Life events such as marriages, divorces, births and deaths can significantly impact your estate plan and require beneficiary designation updates. In Utah, as in other states, failing to keep these designations current can lead to unintended consequences, such as assets being allocated to an ex-spouse or bypassing a new family member. Prevent these issues by regularly reviewing and updating your beneficiary designations on accounts like life insurance policies, retirement plans and bank accounts.

","

Another reason to keep beneficiary designations current is to avoid potential probate complications. In Utah, assets with designated beneficiaries typically bypass the probate process, allowing for a more efficient transfer of wealth. This saves time, reduces legal expenses and provides privacy for your heirs, as probate proceedings are public records.

","

3. Create a Valid Will

","

Creating a valid will can help distribute your assets after passing. In Utah, a will must meet specific legal requirements to be considered valid. It must be in writing, signed by the testator (the person creating the will) and witnessed by at least two individuals who are not beneficiaries. These witnesses must also sign the will in the presence of the will’s creator.

","

While it is possible to draft a will on your own, a financial advisor or an estate planning attorney can provide guidance to personalize your will and make it legally compliant. They can also recommend different strategies to minimize taxes and protect or grow your assets.

","

4. Plan for Long-Term Care

","

As life expectancy increases, more individuals find themselves requiring assistance with daily activities or medical care in their later years. Long-term care can be expensive. Without a plan, these costs can quickly deplete your estate, leaving less for your heirs. Long-term care insurance, Medicaid planning and setting aside specific assets can help mitigate these costs.

","

In Utah, living wills and healthcare directives can be integrated into your estate plan to clearly outline your wishes regarding long-term care.

","

5. Seek Professional Advice

","

Estate planning involves complex legal and financial considerations that can be difficult to navigate without expert assistance. Every individual’s estate planning needs are different, and professional advisors can offer personalized solutions that address your specific circumstances.

","

An estate planning attorney can help you understand Utah’s estate laws so that your assets are distributed as you wish. Financial advisors can also offer guidance on tax implications and investment strategies that fit your estate planning goals and thereby reduce potential conflicts.

","

Bottom Line

","

","

Knowing Utah’s estate laws can help you make better decisions. Setting up a living trust is one way to simplify the probate process, giving you privacy and control over your estate while avoiding probate. Utah also has favorable estate tax laws, as it does not impose an estate tax, allowing more of your assets to be passed on to your heirs.

","

Tips for Estate Planning

","$57","

Photo credit: ©iStock.com/fcafotodigital, ©iStock.com/Rockaa

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\n","featuredImage":{"id":"cG9zdDoyNjU3NjY=","databaseId":265766,"altText":"A woman in Ohio looking up estate planning tips.","date":"2024-10-22T13:41:07","fileSize":146765,"mimeType":"image/jpeg","modified":"2024-10-22T13:41:43","sourceUrl":"https://smartasset.com/wp-content/uploads/sites/2/2024/10/iStock-1578885592.jpg","__typename":"MediaItem"},"modified":{"datetime":"2024-10-22","readable":"October 22, 2024"},"multipleBylinesByRole":{"editedBy":{"id":"dXNlcjoxMTc=","databaseId":117,"userId":117,"avatar":{"url":"https://secure.gravatar.com/avatar/9fffe2eb35204e151b68731435d247c5?s=96&d=mm&r=g","size":96,"__typename":"Avatar"},"description":"Arturo Conde is a senior editor at SmartAsset. He has a master’s from the Graduate School of Journalism at Columbia University and a bachelor’s from the College of Arts and Science at New York University. 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If you live in Ohio, estate planning will require you to manage your assets in a way that complies with state laws. Ohio residents can use wills, trusts and powers of attorney to make sure that their property is managed and distributed according to their preferences. It is also helpful to understand Ohio’s probate process, which oversees the handling of estates after death. Each strategy can be customized to fit individual goals, family dynamics and financial circumstances. These are our best tips for Ohio estate planning to handle the future of your estate.

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A financial advisor can help you create a personalized estate plan to manage and distribute your assets.

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1. Understand Ohio’s Probate Process

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Probate in Ohio is the legal process through which a court validates a deceased person’s will and supervises the distribution of assets. However, not all assets are subject to probate. Assets that are jointly owned or those with designated beneficiaries, such as life insurance policies or retirement accounts, often pass outside of probate. Ohio residents may want to focus on minimizing probate costs by using these non-probate transfer options.

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2. Create a Valid Ohio Will

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One of the most fundamental components of Ohio estate planning is drafting a valid will. Ohio law requires that a will be written and signed by the testator, the person making the will. It must be witnessed by at least two people who are physically present to witness the testator sign the document. If you fail to meet these requirements, your will could be ruled invalid, greatly complicating the probate process.

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3. Be Aware of Ohio’s Elective Share Rights

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Ohio law provides for an elective share for surviving spouses, meaning that a spouse has the right to claim a portion of the deceased’s estate, even if they were left out of the will. The Buckeye State allows surviving spouses to receive up to one-half of the net estate unless two or more of the decedent’s children or their lineal descendants survive. In this case, the surviving spouse may not take more than one-third of the net estate.

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4. Consider Ohio’s Estate and Inheritance Tax Rules

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Ohio has no estate tax or inheritance tax, but federal estate tax laws may still affect larger estates. In 2024, the federal estate tax exemption is $13.6 million per individual and $27.2 million for married couples. You should review estate tax laws regularly for possible changes to keep your estate plan updated and compliant.

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5. Designate a Durable Power of Attorney

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In Ohio, appointing a durable power of attorney (POA) allows you to name someone who can manage your financial affairs should you become incapacitated. This person can act on your behalf in a variety of matters, such as managing bank accounts, signing documents or handling real estate transactions.

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6. Set Up a Medical Power of Attorney and Living Will

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Ohio law permits individuals to create a medical power of attorney, which appoints someone to make healthcare decisions for you if you are incapacitated. Additionally, you can use your living will to specify your preferences for medical treatment, including end-of-life care. These documents ensure that your healthcare wishes are followed and help avoid disputes among family members.

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7. Establish Ohio Transfer on Death (TOD) Designations

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Ohio offers transfer on death (TOD) designations, which can be used for various assets, including real estate, vehicles and financial accounts. By setting up a TOD designation, you can specify beneficiaries who will receive the asset upon your death without going through probate.

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8. Use Ohio’s Guardianship Designation for Minor Children

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If you have minor children, you should designate a guardian in your will so that your children are cared for in the event of your death. Ohio courts give significant weight to a parent’s wishes when appointing a guardian. Failing to name a guardian can leave the decision up to the court, which may not align with your preferences.

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9. Plan for Special Needs Beneficiaries

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For families with special needs individuals, creating a special needs trust can help provide for the financial needs of beneficiaries without jeopardizing their eligibility for government benefits, such as Medicaid or Supplemental Security Income (SSI).

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10. Understand Ohio’s Trust Options

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Trusts can allow Ohio residents to manage the distribution of assets and potentially avoid lengthy probate. A revocable living trust, for example, allows the grantor to manage the trust during their lifetime while designating beneficiaries to receive the assets after death. Since Ohio law recognizes various types of trusts, working with an estate planning attorney can help you determine which trust best fits your needs.

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11. Plan for Digital Assets

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Ohio has adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which allows individuals to designate someone to access their digital assets after death. Providing instructions for digital accounts, such as social media, online banking and email, can make it easier for your loved ones to manage or close these accounts.

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12. Name a Reliable Executor

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The executor of your will manage your estate after your death. Ohio law allows you to name any adult individual or financial institution to serve as your executor. It is essential to choose someone who is trustworthy and capable of handling the various responsibilities involved, such as paying off debts, distributing assets and managing probate if necessary.

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13. Consider Gifting to Reduce Estate Size

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For those looking to reduce the size of their estate to avoid federal estate taxes or simplify asset distribution, gifting is an option. Ohio does not impose a gift tax, so you can give away a certain amount of money or assets each year without facing tax consequences. However, it is important to stay within federal gift tax limits to avoid triggering hefty taxes.

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14. Plan for Long-Term Care Costs

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Long-term care can be a significant expense, especially for older individuals. Ohio offers Medicaid programs to help with these costs, but qualifying for Medicaid often requires careful planning, as there are strict income and asset limits.

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15. Review and Update Your Estate Plan Regularly

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Ohio residents should review and update their estate plans periodically, especially after major life events such as marriage, divorce, birth of a child or significant changes in financial circumstances. Laws and personal circumstances may change, and regularly updating your estate plan ensures that it continues to reflect your current wishes and financial situation.

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Bottom Line

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Residents in Ohio can take advantage of several estate planning strategies to avoid probate, and manage and distribute their estate efficiently to beneficiaries. Knowing state-specific rules could help you keep your plan updated and compliant.

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Estate Planning Tips

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Next of kin and power of attorney (POA) serve different roles in managing someone’s affairs. A POA gives legal authority to an appointed agent to make financial or healthcare decisions. Next of kin, the closest living relative, has no legal authority unless formally granted through a POA or court order. A financial advisor can help […]

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Understanding Next of Kin

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The term “next of kin” refers to a person’s closest living relative, often determined by familial ties like blood relationships or marriage. This role generally includes spouses, children, parents or siblings, depending on the family structure and specific jurisdiction. Next of kin is a designation primarily used to identify someone who may be contacted in case of emergencies, handle certain administrative matters or inherit assets if there is no will.

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It’s important to note that the rights of a next of kin are not automatically all-encompassing. For example, while a next of kin might be notified in medical emergencies or handle funeral arrangements, they do not have automatic legal authority over financial or healthcare decisions unless explicitly named in a legal document.

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In inheritance cases, next of kin may have rights if someone dies intestate (without a will), but their role depends on state laws and family circumstances. Unlike a POA, next of kin status does not grant legal authority.

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What Is Power of Attorney?

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POA is a legal document that grants someone, known as an “agent” or “attorney-in-fact,” the authority to act on another person’s behalf. The individual granting this power, called the “principal,” can specify the extent of this authority, allowing the agent to manage tasks like financial transactions, property dealings or healthcare decisions.

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Unlike informal roles such as next of kin, a POA is enforceable by law, with clearly outlined duties and responsibilities. Here are four types of POA to consider:

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It’s important to note that regardless of the type, POA authority ceases upon the principal’s death, at which point the executor of the estate will usually take over. This distinction ensures that POA powers are strictly bound to the principal’s living circumstances.

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Does Next of Kin Override Power of Attorney?

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Next of kin cannot override a POA because it’s a legal document that grants specific decision-making authority to an appointed agent. The principal formally names this agent to handle responsibilities such as financial or medical decisions, and this legal authority takes precedence over any informal relationship, including next of kin.

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For example, if someone has named an agent through a durable POA for healthcare, that agent has the exclusive right to make medical decisions on the principal’s behalf, even if the next of kin disagrees. The next of kin may only step in if no POA exists or the appointed agent is unable or unwilling to act.

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If disputes arise between a POA holder and the next of kin, courts usually uphold the POA unless there is evidence of fraud or incompetence. While next of kin status holds emotional significance, it does not provide legal authority unless formally granted through a court order or similar legal process.

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Can Anyone Override a Power of Attorney?

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POA can be overridden, but only in specific cases. The principal can revoke it at any time if they are mentally competent. If the principal is incapacitated, family members or others can challenge the POA in court if the agent is suspected of acting against the principal’s best interests or abusing their authority.

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Courts may revoke or override a POA if there is evidence of fraud, coercion, or neglect by the agent. If the agent is unable to fulfill their duties and no replacement is named, the court may appoint a guardian or conservator to take over.

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Overriding a POA requires following legal procedures and providing solid evidence to protect the principal’s well-being.

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Bottom Line

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Next of kin and POA serve different purposes in managing someone’s affairs. Next of kin is based on family relationships and has no legal authority unless formally granted, while a POA is a legal designation with specific rights and responsibilities. Understanding the difference helps determine who has decision-making authority in healthcare or financial matters and how actions align with the individual’s wishes.

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Tips for Estate Planning

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