Ohio’s New Legacy Trust Act
The Ohio Legacy Trust, enacted in March of 2013, allows entities to place trust assets beyond the reach of creditors. This helps people to avoid or reduce federal estate taxes.
A Legacy Trust is an irrevocable trust and it must be in writing. It must comply with the Ohio Legacy Trust Act.
It is subject to a spendthrift provision.
- A person, the trust maker, can create an Ohio Legacy Trust, fund the trust with his or her own assets, and be a beneficiary of the trust.
- Future creditors cannot access the trust maker’s trust assets if the trust is properly formed.
- Any adult, business, or corporation can form an Ohio Legacy Trust. Investment or financial accounts, mutual funds, investment real estate, shares of stock, LLC membership interests, artwork or personal property can be put into an Ohio Legacy Trust.
- IRAs and retirements cannot be put into an Ohio Legacy Trust.
- The assets must be titled in the name of the Ohio Legacy Trust.
- The purpose of the trust is to hold assets to provides for family education expenses or income to a beneficiary and bar claims of creditors against those who are received qualifying this position from the trust.
- A transferor who transfers assets to a legacy trust may benefit from the assets.
- A transferor cannot revoke the trust or transfer an interest in that trust.
- A transferor may retain the power to 1) terminate the transfers rights to mandatory income or principal upon the happening of a specified condition, 2) veto a distribution from the trust, 3) receive trust income, 4) consumer or appropriate up to five percent of the trust principal, 5) remove and appoint trustees and advisors, 6) reside in real property or used tangible personal property held by the trust, 7) require or permit the trust to pay income taxes due on the income of the trust, 8) pour back trust property to the transferor’s estate or any trust.
- A transferor may not be a qualified trustee.
- A transferor may act as an advisor but only in connection with investment decisions.
Ohio also increased the homestead exemption which exempts $125,000 of a home’s value from execution, garnishment, attachment or sale to satisfy a judgment or order. Ohio also recently exempted 529 plans for future education from creditors claims. Ohio eliminated the estate tax for all persons dying after Jan. 1 2013.
For more information about setting up an Ohio Legacy Trust, or for any other questions or concerns related to estate planning or probate law, contact the Law Firm of Richard M. Lewis today.