Ohio Trust Laws & Beneficiaries in a Savings Account
A savings account is a safe place for an individual to deposit money intended for use at a later time. Unlike stocks and bonds that have to be sold or reach maturity, savings accounts provide immediate access to the money. Because some savings accounts remain untouched for years, they can grow into substantial sums. They can also be placed in a trust so that after the account holder dies, the account can continue to generate interest for years to come.
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Savings Accounts
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If the owner of a savings account dies, the account becomes part of his estate and is subject to probate. Some account holders avoid this in one of two ways. Either they name a beneficiary for the account (i.e., they sign a POD, or paid on death, document that instructs the financial institution to give the money to the named beneficiary), or they place the account in a trust. In either case, the savings account avoids probate upon the account holder's death.
Trusts
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Trusts are legal structures set up by an individual to manage some or all of his assets both during his lifetime and after his death. They are a way an individual can guarantee that his property, money and other possessions are used the way he wants after he is gone. Items like savings accounts that are placed in a trust are no longer considered part of the individual's estate, and therefore will not be subject to probate upon the individual's passing. Every trust must have one or more named beneficiaries.
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Ohio Beneficiaries
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According to the Ohio trust code, Chapter 5801, a beneficiary is someone named in a trust who enjoys a current or future benefit from the trust. Furthermore, a beneficiary has limited power separate from the trustee over assets in the trust. For example, a beneficiary may freely use revenue generated from the trust, but may not compromise the basic integrity of the trust itself by using its principal.
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Ohio Trust Laws and Beneficiaries of Savings Accounts
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Upon an Ohio resident's death, the executor of the person's estate must file an Ohio estate tax return. Ohio trust law specifies that any assets placed in a trust, including bank accounts, must be reported on the estate's return. Even though assets in a trust do not go to probate, they are still subject to estate tax laws. While Ohio trust law allows beneficiaries to enjoy use of an asset (like a savings account) in the trust, they are responsible for any federal, state or local taxes due on revenue or interest generated from the asset.
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References
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