Tuesday of this week Finney Law Firm attorneys Isaac T. Heintz and W. Z. “Dylan” Sizemore present “5 Pillars of Success” for the Anderson Chamber of Commerce.

The course addresses the foundations of business success through carefully establishing and planning the success of your business with legal strategies in corporate law, real estate law and estate planning.

A video of the course will soon be available on line.

Even with proper estate planning, clients can take actions that unintentionally “undo” their estate planning desires.

Joint Accounts

It is not uncommon for an elderly client to set up a joint account with a child or other caretaker to facilitate such party’s handling of the client’s financial affairs.  In such situations, the joint account will transfer to the joint account holder without probate of the account.  Frequently, a client will not consider this aspect of setting up a joint account which may result in an imbalance in the division of a client’s estate.

Life Time Gifts

From time to time, a client will make monetary gifts to a child when the child is in need.  It is often the intention of the client (and the understanding of the family) that these gifts should be considered part of the child’s inheritance; however, without putting into place the appropriate paperwork, these gifts will not “legally” be considered in connection with the division of the client’s estate.


As with gifts, a client will make loans to a child when the child is in need, and it is the intention of the client (and the understanding of the family) that these loans will be paid back to the client.  Unless such loans are properly documented, it is difficult to determine the amount of the loans, and/or to enforce repayment of the same.  Even if the loans are documented between the client and the borrower, the documentation may be misplaced or destroyed prior to repayment.  Without repayment of the loan, it could result in the loan amount remaining with the borrower and the reduction of the estate of the funds that would have otherwise been received.

Updating Beneficiaries

Life insurance policies and retirement accounts will be distributed to the named beneficiaries.  If there is not a named beneficiary, then such amounts will most likely be payable to the client’s estate.  Clients do not revisit the beneficiary designations on a regular basis.  This can lead to the payment of these amounts to individuals designated years ago who the client no longer would want to receive such funds.  For example, a client may designate a brother or sister as a primary or secondary beneficiary of a life insurance policy with the idea that the brother or sister will see that the funds are used to take care of a client’s minor children.  However, the funds may not be paid until years later and the payee may not remember or appreciate the purpose for the payment.

Advancement Clauses

One way to address these types of issues is the inclusion of an advancement clause within a client’s estate planning documents.  An advancement clause creates the presumption that gifts given to a person’s heir during that person’s life are intended as an advance on what that heir would inherit upon the death of the client.  The concept of an advancement clause could be extended to assets received on the death of the client from a non-probate asset.

Sharing Information

Another way to help address these types of issues is by sharing information with the client’s beneficiaries and legal counsel.  If the client’s beneficiaries are aware of the intention of the client by creating joint accounts and/or making gifts, loans, and/or beneficiary designations, then the client’s wishes will be known to the affected parties, which could lead to the beneficiaries working together to see that the client’s wishes are honored.  A client’s sharing of information with his or her attorney can help the attorney advise the client on how to document and address such items within the client’s estate planning.


For help with planning the disposition of your estate according to your intentions, please contact Isaac T. Heintz at 513-943-6654.

Under Ohio law, individuals can avoid probate in connection with real estate by executing and recording a Transfer On Death (TOD) Designation Affidavit. A TOD Designation Affidavit is an “effective upon death deed” allowing the owner to transfer the ownership of real estate upon the owner’s death to whomever the owner designates by name. On the death of the owner, the transfer of the real estate to the transfer on death beneficiary is accomplished by filing a certified death certificate and an Affidavit in the applicable County Recorder’s Office.

During the life of the owner, the designated beneficiary has no rights to the real estate, and the recording of a TOD Designation Affidavit does not create a present entitlement to the real estate. The TOD Designation Affidavit can be revoked at any time without the consent of the TOD beneficiary. The TOD beneficiary only becomes entitled to the real estate if the TOD Designation Affidavit remains in effect on the death of the owner.

An individual can designate more than one party as a TOD beneficiary. If multiple TOD beneficiaries are designated, the division of the ownership can be varied among the beneficiaries (e.g. 10% to John Doe and 90% to Jane Roe).

The TOD beneficiary can be the trustee of the owner’s revocable trust. There are advantages and disadvantages to making a trustee a TOD beneficiary as opposed to directly transferring the real estate to the trustee to hold for the trust.

A TOD designation will lapse if the TOD beneficiary predeceases that owner; however, it is possible to designate a contingent TOD beneficiary as a means of addressing this possibility (e.g. to John Doe, if living; otherwise to Jane Roe).

Individuals who own property in “joint and survivorship” can designate a TOD beneficiary of their real estate. Only upon the death of the last surviving survivorship tenant will real estate pass to the TOD beneficiary or beneficiaries designated in the TOD Affidavit.

Please contact us if you would like to determine if a TOD Designation Affidavit is right for your estate plan.

If a tenant files for bankruptcy, an automatic stay goes into effect. The automatic stay immediately prohibits a landlord from taking any action against the tenant or its property. The landlord cannot send default notices, file or continue an eviction action, collect a judgment against the tenant, demand the payment of delinquent rent or other amounts, or terminate the lease (even if the lease provides that the landlord may terminate if the tenant files bankruptcy) without first obtaining relief from the bankruptcy court.

If a landlord violates the automatic stay, the landlord can face damages for such a violation. The tenant may seek actual damages, punitive damages, attorney’s fees and costs. Further, the landlord can face consequences for contempt (violating a court order) because the automatic stay is a court order. The sanctions a court can order for contempt include fines, attorney’s fees and damages.

Despite the automatic stay, the tenant must pay rent first coming due after the bankruptcy filing, but the landlord must be prepared to enforce this right in the bankruptcy court. Bankruptcy Code Section 365(d) requires debtors to perform all commercial lease obligations until the lease is assumed or rejected. If the tenant fails to pay rent or other amounts first coming due after the bankruptcy filing and thereafter, the landlord can move for the bankruptcy court to compel payment.

The tenant has three options for dealing with the lease in the bankruptcy case.

One option is to assume the the lease. If the tenant elects to assume the lease, it must cure all defaults under the lease and the lease will otherwise continue in accordance with its terms.

A second option is to assume and assign the lease to a third party. This is likely to happen if the tenant is selling its business as part of the bankruptcy. If the tenant elects to assume and assign the lease, the tenant must cure all defaults, and the assignee must demonstrate the ability to perform all future obligations under the lease.  Generally, the tenant may assign the lease regardless of any assignment prohibitions in the lease or requirement for landlord’s consent.  If the lease is assigned, the tenant will be relieved of all future obligations under the lease, and the assignee will be the new tenant under the lease.

The third option is to reject the lease. If the lease is rejected, all obligations of the tenant will cease, the landlord may retake the space, and the landlord may file a claim for damages just like any other creditor.

If a tenant files bankruptcy, it does not render a landlord helpless.  Instead, the landlord must work within the framework of the bankruptcy laws in exercising its rights and remedies.  Since bankrupt tenants are often permitted to disregard valid lease provisions absent an objection from the landlord, landlords should consult with experienced counsel to ensure their rights are enforced in the bankruptcy case.

High-income taxpayers need to be aware of the Net Investment Income Tax (NIIT).  The NIIT is a tax passed in 2010 to help pay for the Affordable Care Act, a.k.a. ObamaCare.  Below is a summary of the NIIT, and a few planning opportunities to consider to avoid/minimize NIIT.

The NIIT applies at a rate of 3.8% to certain net investment income of individuals, estates, and trusts that have income above certain thresholds.  The NIIT went into effect for tax years beginning on or after January 1, 2013.

Individuals will owe the tax if they have Net Investment Income and also have modified adjusted gross income over the following thresholds:

Filing Status Threshold Amount
Married filing jointly $250,000
Married filing separately $125,000
Single $200,000
Head of household (with qualifying person) $200,000
Qualifying widow(er) with dependent child $250,000


At this time, the threshold amounts are not indexed for inflation.

In general, estates and trusts are subject to the NIIT if they have undistributed Net Investment Income and also have adjusted gross income over the dollar amount at which the highest tax bracket for an estate or trust begins (for tax year 2014, this threshold amount is $12,150).

In general, investment income includes, but is not limited to: interest, dividends, capital gains, rental and royalty income, non-qualified annuities, income from businesses involved in trading of financial instruments or commodities, and businesses that are passive activities to the taxpayer (meaning the taxpayer does not “materially participate” in the business).  To calculate your Net Investment Income, your investment income is reduced by certain expenses properly allocable to the income. 

To the extent that gains are not otherwise offset by capital losses, the following gains are examples of items taken into account in computing Net Investment Income: (i) gains from the sale of stocks, bonds, and mutual funds; (ii) capital gain distributions from mutual funds; (iii) gain from the sale of investment real estate (including gain from the sale of a second home that is not a primary residence); and (iv) gains from the sale of interests in partnerships and S corporations (to the extent the partner or shareholder was a passive owner). 

The NIIT does not apply to any amount of gain on the sale of a personal residence that is excluded from gross income for regular income tax purposes.

In order to arrive at Net Investment Income, Gross Investment Income (items described in items 7-11 above) is reduced by deductions that are properly allocable to items of Gross Investment Income.  Examples of deductions, a portion of which may be properly allocable to Gross Investment Income, include investment interest expense, investment advisory and brokerage fees, expenses related to rental and royalty income, tax preparation fees, fiduciary expenses (in the case of an estate or trust) and state and local income taxes.

Some planning opportunities to consider to help avoid/minimize the NIIT include: (i) receiving the purchase price from a sale of your closely held business or real estate over more than one year; (ii) generating losses to offset gains; (iii) renting property to your business; (iv) lending money to your business; and (v) take an active role in your closely held business.

Preparing the appropriate estate plan for an individual requires the legal skills of an attorney to put together the right documents in the right combination.  At a minimum, the following estate planning documents are recommended by most attorneys:

Last Will and Testament.  A Last Will and Testament is a legal declaration that directs the distribution of probate assets upon the death of an individual (“testator”).  Probate assets are assets held in an individual’s name at the time of his or her death that do not otherwise transfer by contract (e.g., transfer on death designations, joint and survivorship, etc.).

Probate assets are subject to the oversight of Probate Court and administered in the County in which the decedent resided at the time of death.

The Last Will and Testament includes a provision for the designation of the personal representative (Executor) of the testator’s choosing, to be appointed by Probate Court.

Without a Last Will and Testament, the property passes in accordance with the Ohio Statutes of Descent and Distribution.

Durable Power of Attorney.  A durable Power of Attorney is an instrument by which one person (the principal) appoints another person (the attorney-in-fact) as an agent authorized to perform specific or general acts for the principal.  This financial power of attorney can be a very simple document, but one that gives significant powers to the attorney-in-fact.  This estate planning tool is capable of facilitating the management of an individual’s affairs during incompetence.

 Durable Power of Attorney for Health Care.  Ohio law permits an individual to execute a Durable Power of Attorney for Health Care.  With this document, an individual can designate a person to make health care decisions if the individual is unable to make such decisions on his or her own behalf.

The individual signing the Durable Power of Attorney for Health Care must be of sound mind.  The decision maker may not be the attending physician or the administrator of any health institution involved in the patient’s care.

Generally, the person appointed in the Durable Power of Attorney for Health Care will have the authority to give informed consent, refuse to give informed consent, and to withdraw consent for any medical treatment.  However, the person holding the Power of Attorney will not be able to refuse or withdraw consent to health care needed to maintain life, except in very limited circumstances.

Living Will.  A Living Will is a document that provides a means for an individual to declare his or her intentions regarding the withholding or withdrawal of life-sustaining treatment, including CPR, when he or she is no longer competent to make an informed medical decision and is in a terminal condition or a permanently unconscious state.

Ohio’s Living Will law distinguishes between patients who are terminally ill and those who are permanently unconscious.  Although both conditions must be verified by two (2) doctors, in Ohio there are additional protective measures for the permanently unconscious.  Food and water may not be withheld from a permanently unconscious individual unless the patient has signed a Living Will with a special section in capital letters, which special section must be signed or initialed.

Under no circumstances may an individual be denied comfort care.  Comfort care is defined as the minimum amount of care administered to alleviate pain and suffering, but not to prolong life.

Last Will and Testament. A Last Will and Testament directs the distribution of probate assets upon the death of an individual (“testator”).  Probate assets are assets held in an individual’s name at the time of his or her death that do not otherwise transfer by contract (e.g., transfer on death designations, joint and survivorship, etc.).

Probate assets are subject to the oversight of Probate Court and administered in the County in which the decedent resided at the time of death.

The Last Will and Testament includes a provision for the designation of the personal representative (Executor) of the testator’s choosing, to be appointed by Probate Court.

Trust.  A Trust is a legal relationship whereby property is held by one party for the benefit of another.  There are two (2) basic categories of written Trusts; Living Trusts (Inter Vivos Trusts) and Testamentary Trusts.

The primary difference between a Testamentary Trust and a Living Trust in Ohio is that the Testamentary Trust is under the supervision of the Probate Court from the appointment of the Trustee to final distribution.  In connection with a Living Trust, the Trustee administers the Trust without the involvement of the Probate Court, except under certain special circumstances.  An advantage of a Living Trust is that the Trust, Trust assets, and distributions are not of public record.

Living Trusts are revocable or irrevocable, and are set up during the lifetime of the Grantor.  Trusts are also very useful for setting up funds for the benefit of someone who is handicapped or incompetent.  They are frequently used by parents and siblings for a “special” family member.  Trusts can also be used in Medicaid planning.

Living Trusts are often used in moderate and large estates to assist management and to avoid incurring Executor fees and reduce attorney fees at death.

Testamentary Trusts are established in the Grantor’s Last Will and Testament, and are funded, if ever, after the death of the testator.  A Testamentary Trust may never be funded because the testator may make funding contingent upon certain circumstances; for example, the Last Will and Testament may state that the Executor funds the Trust only if the testator and the testator’s spouse both die while their children are minors.

Ohio law gives Probate Court the exclusive power to direct and control the conduct of the Testamentary Trustee.   The Testamentary Trustee is required to prepare and file with Probate Court, an account of the Trustee’s administration of the Trust at least once in each two (2) years, or at any other time upon order of the Probate Court.  The account must include an itemized statement of all receipts of the Testamentary Trustee, and of all disbursements and distributions made by the Testamentary Trustee during the accounting period

An important component of almost any estate planning is a general durable Power of Attorney for financial matters.  Such a Power of Attorney allows the person granting the power (the “Principal”) to designate an attorney-in-fact to perform specific duties as enumerated in the document.  Unless a Limited Power of Attorney is being granted, the attorney-in-fact is typically granted full power, authority and discretion to do all things required or permitted to be done in carrying out the purposes for which the Power of Attorney is granted as fully as the Principal could do if personally present.

Typically, some of the specific powers granted to the attorney-in-fact include, but are not limited to, the authority to sell, exchange, lease and otherwise dispose of the Principal’s property, to execute and deliver deeds, leases, assignments and other instruments, to sign and perform contracts and written instruments, to endorse and receive payment for checks payable to the Principal, to sign and deliver checks on accounts of the Principal, to withdraw from and deposit to the Principal’s accounts, and to add property to a revocable trust that has been created or may be created by the Principal.

As an attorney-in-fact is granted broad powers to act on behalf of the Principal, it is imperative that the attorney-in-fact understands that he or she is acting as the agent of the Principal in a “fiduciary” capacity.  A fiduciary must act in the highest good faith for the Principal’s benefit.

The attorney-in-fact must follow the instructions set out in the Power of Attorney, must use ordinary care and diligence in everything he or she does on the Principal’s behalf, and can only do the things the Principal has empowered him or her to do.  The attorney-in-fact is held to a high standard of care when acting for the Principal.  Therefore, any transaction that may be suspect, if viewed by a third party, should be avoided, which would include checks written to the attorney-in-fact and signed by the attorney-in-fact, or even signed by the Principal.  The attorney-in-fact should not do anything that does not benefit the Principal.

If you are interested in talking to our Estate Planning team regarding a Power of Attorney or any other estate planning matters, please don’t hesitate to contact us.  We look forward to making a difference for you and your family.



Kevin J. Hopper is an experienced estate planning attorney whose practice has been in Anderson Township.   He has been in practice since 1978.

In August, he joined his practice with the Finney Law Firm, LLC, and brought with him his experienced paralegal, Tammy C. Wilson and their many satisfied clients.

They join attorney Isaac T. Heinz in providing advanced and sophisticated services in the areas of will, trusts, estate planning, and estate administration, and the tax and succession planning advice that comes with that practice area.  They provide these services for individuals with both large and small estates.

Please ask us how these experienced professionals can “make a difference” in planning for your future.

Unless a couple has assets in excess of five million dollars, estate taxes are no longer a concern for Ohio residents.  This is because Ohio has done away with its estate tax, and the Federal estate tax exemption is now over five million dollars.  For such couples, the new estate “tax” planning is income tax planning.  The income tax planning includes allocating assets between the couple to take advantage of the step up of basis on each of the individuals passing in order to minimize any capital gains taxes due.