In Ohio, revocable, or living, trusts are handled in probate court, which is a division of the Courts of Common Pleas located in the 88 counties throughout the state. A revocable trust, the terms of which are established by a written agreement, consolidates property under one document for simplified management while the owner is alive and efficient distribution after the owner’s death. A trustee manages the assets that fund the revocable trust -- which may include stocks, bonds, bank accounts and property -- for the owner’s benefit.
The Ohio Trust Code defines a revocable trust as one that the creator can amend or revoke during her lifetime. The declaration of trust, or trust agreement, details the management of assets while the trust creator is still alive and provides instructions for asset distribution after the creator’s death. The person who creates a living trust is the settlor or grantor. The trustee is charged with managing the trust and the person or persons to whom ownership of the assets is transferred until the death of the owner. Ohio allows the grantor and the trustee to be the same person.
People often use living trusts to avoid the cost and complexity of probate court after the death of the property owner. In Ohio, probate is a legal proceeding that is implemented upon the death of the owner of property subject to probate court. The probate proceeding involves identifying the last valid will, assets and debts and determining distribution methods. Assets that fund a living trust usually are not under the purview of probate court before or after the grantor’s death. Assets that are owned by one person and that are not placed in a living trust that provides for distribution after death are subject to probate court.
A revocable trust allows the grantor to enjoy the benefits of the assets placed in the trust for the remainder of his life. A revocable trust may also be funded at a later date after creation and even after the death of the grantor. Assets may be distributed immediately upon the death of the grantor, unlike with a will, which requires the court to appoint an executor and implement probate proceedings. Distribution of assets under a living trust is private. Avoiding probate is especially helpful if the trust creator owns property in several states that might be subject to multiple probate laws and proceedings.
A living trust does not protect assets from creditors while the owner is alive and does not provide tax benefits, including estate tax. However; according to the Cuyahoga County Probate Court, use of a living trust and a will along with professional financial advice can mitigate the effect of estate taxes. A living trust, which normally does not undergo court review, can be challenged, and Cuyahoga County Probate Court notes that Ohio law is not clear on whether the trust assets or the trustee bears the expense of defending against a challenge. The trustee is personally liable for unpaid debt that remains after asset distribution. A living trust requires long-term effort to maintain proper transfer of property.
Tips and Warnings
Talk to your attorney about living trusts for personal recommendations. Jointly owned assets that specify right of survivorship, which means the assets pass to the surviving owner, are not subject to probate proceedings. Also not subject to probate are assets that are payable on death, such as pensions and insurance, and securities, which include a transfer on death registration.
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