Wednesday, June 21, 2017

Should you draft your own will and the risks of using software

By Andrew Zashin*

This article originally appeared as a column for the Cleveland Jewish News.

The more technology advances, the more we rely on it in our everyday lives. Where we once called first to our family doctor, we may now look first to the internet to research our symptoms. DIY is easier than ever with YouTube tutorials.

Who needs an accountant when you have tax preparation software available for a quarter of the price. And, for a fraction of the cost of attorney time, we can access software to help us self-prepare a litany of legal documents, including a last will and testament. Sounds good, right? With all the resources readily available to do it yourself on the cheap, why not?

Not so fast. Television and movies present a dramatic picture of the probate process. Family, loved ones, and others just hoping for a windfall, all assemble in an attorney’s office for the “reading of the will.” Inevitably, in a dramatic reveal that may or may not involve tears and fainting, a widow learns that her deceased husband left their entire marital estate to his mistress, or the estranged children who paid little attention to their elderly mother in her old age discover they have been written out of her will in favor of her trusted housekeeper. In real life, probate matters are significantly less dramatic, and infinitely more tedious.

In will drafting, formalities must be observed. Those formalities vary from state to state, and a software program may not necessarily alert you to these intricacies. Something as seemingly simple as not having the proper number of witnesses to the signing may make it invalid. And, the fact that you know what you mean does not prevent heirs and potential heirs from interpreting it quite differently. If a term is accidently left out, or if you fall back on language like “according to law,” you may end up with a result you never intended.

There is an old joke involving a plumber who marks an “X” on the pipe that needs tightened and then charges $500 for the work. When questioned on the seemingly outrageous cost for such a small amount of effort, he sends an itemized statement showing a charge of $5 for marking the “X” and $495 for knowing where to put it. The occupation, service and costs in this joke vary widely from telling to telling, but the point is that expertise is invaluable.

If you want to draft a simple document that leaves everything to your spouse, and then equally divides everything among your adult children if your spouse predeceases you, a simple software program could probably cut it for you.

If you want to write someone out of your will, divide assets in unequal measures, if you have minor children or may have more children after you draft it, if you have children from prior relationships, or want to include step-children, you could likely benefit from speaking with a professional. If you have some assets that get passed through other means, such as jointly titled real property, life insurance, or retirement assets, if your situation is anything but the most uncomplicated, or if you are doing more complex estate planning involving trusts and Medicaid planning, you are similarly better served to work with a knowledgeable attorney.

Ultimately, “knowing where to put the ‘X’” – or, in this case, knowing what questions to ask and how to properly reflect the answers in a valid will – may mean the difference between a relatively clean estate settlement and a bitter will contest.

Friday, May 19, 2017

Naming rights can make donations more complex

By Andrew Zashin*

This article originally appeared as a column for the Cleveland Jewish News.

Philanthropy happens at all levels of giving. Some donors are comfortable writing checks with one or two zeroes at the end. Others may add a few more zeroes or, perhaps, sponsor a table at a gala or donate a valuable item. But the pinnacle of philanthropic giving involves naming rights.

Who isn’t familiar with Carnegie Hall or Rockefeller Center? Cleveland’s local universities are filled with buildings named for donors. Naming rights can be very useful for a nonprofit institution. After all they are very expensive, and naming rights can encourage major donations. A wing, hall, or building becomes part of the local landscape, and the name lives on beyond the person. There is something very appealing about leaving a lasting legacy, and the right to do that can encourage the sort of major donation that can help an organization meet its philanthropic goals.

Large anonymous gifts get publicity. Each December, for example, we hear news blurbs about generous but anonymous donations into Salvation Army buckets. But publicity surrounding large public donations tends to be much more beneficial for the organization overall, attracting more attention and often more donations from other large donors.

But naming rights require a delicate balance between satisfying the donor’s (or donor’s heirs’) wishes for the name to live on and the need to attract future large donations by having the latitude to bestow further naming rights. After all, the things that get named require upkeep. Maybe a wealthy donor provided needed funds for a facility overhaul and negotiates naming rights as a condition of the gift. What then happens when the next overhaul is required? Do those same naming rights get bestowed on the next donor?

There are differing schools of thought surrounding the “best” way to manage these types of issues. Many donors and organizations believe that revolving naming rights are the best way to further the organization’s mission, by enticing new donations. On the other hand, many large endowments have fallen through when an organization refused to honor certain naming demands. And sometimes rights that were to be in perpetuity are bought out or otherwise terminated in some way in order to meet future goals.

For tax purposes, the Internal Revenue Service has long taken the position that public recognition does not count as a measurable benefit that would impact any tax deduction. So, a $20 million gift has the same tax benefit irrespective of whether or not the donor gets a new museum wing named after him in perpetuity, for a limited period of time, or not at all.

Ultimately, significant consideration and negotiation goes into giving at this level, both from the standpoint of the donor, as well as the nonprofit organization, and lengthy legal contracts must be drafted to carefully spell out the terms of the naming rights and the contingencies surrounding the donation.

Monday, April 17, 2017

Two ways to terminate marriage in Ohio (and one way not to)

By Andrew Zashin*

This article originally appeared as a column for the Cleveland Jewish News.

Prospective clients call my office every day, asking about a divorce, a dissolution or even a legal separation without having a clear understanding of what those terms mean.

Maybe they have done some internet research and have come across one of these terms. Typically, they know they are having marital troubles and want to end the marriage, but they have no real understanding of what the process looks like or how to start. And, so, one of the first things that we do is break down what these terms mean.

Legal separation is a frequently misunderstood concept. Spouses can be separated, that is, living in separate places, simply by moving apart. But this is different from a legal separation. Legally separated is a separate legal status and legal separation a separate legal process that allows a court to divide assets and liabilities and make provisions for child custody and parenting time without actually terminating the marriage.

Legal separation is most frequently used by couples who oppose divorce on religious grounds or where one spouse needs to be able to remain on the other’s health insurance policy. But, because it requires all of the same steps as a divorce, yet leaves the parties unable to remarry afterward, it is not a desirable option for most people.

Generally speaking, there are two primary ways to terminate a marriage in Ohio. The first is a divorce, one party files a lawsuit; he or she sues the spouse for a divorce. Grounds are required, although most commonly a marriage will terminate on no fault grounds, such as that the spouses are no longer compatible or have lived separate and apart from one another for more than a year. While the majority of divorce cases do settle, a divorce filing invokes the jurisdiction of the court and it is possible that the case will end in a trial on some or all issues. Along the way, a number of court appearances and various filings likely would be needed.

On the other hand, a dissolution requires that all of the issues between spouses be resolved up front. In a dissolution, the separating couple will reach agreements between them. This nearly always happens through a period of negotiation, either with or without third-party assistance. Those agreements are put in writing in a separation agreement and, if appropriate, a parenting plan. Only then, once agreements already have been reached, is the matter filed in the court. While courts have an independent duty and authority to review the agreements, most frequently they will be accepted.

Thought should be given to which option is right for a given case. Dissolutions are often quicker, less expensive and more amicable than divorces. Consequently, dissolution is a tempting option.

But sometimes more time and money are wasted by starting off on a path that is not likely to succeed. If restraining orders or temporary support will be necessary, if one parent is being denied access to children, or if a couple is simply too far apart in their opinions of what a constitutes an appropriate outcome, the dissolution process may be doomed to fail. A competent attorney can help to determine the best path to proceed based on the unique circumstances of a case.

Wednesday, March 15, 2017

Make pre-need funeral contract part of estate plan

By Andrew Zashin*

This article originally appeared as a column for the Cleveland Jewish News.

In thinking of an estate plan, most people think first of a will. You may think next of things like joint and survivorship deeds, life insurance, or payable on death, or POD accounts. Perhaps you have gone so far as to create a trust. Hopefully, you have double-checked the beneficiaries of your retirement accounts and you may even have long-term care insurance. But did you know that you can preplan and prepay your own funeral?

Ohio law specifically provides for something called a “preneed funeral contract.” Generally speaking, the consumer of this type of plan will work with a funeral director to do everything from selecting a coffin to making service and burial arrangements, and that consumer will have the opportunity to select all goods and services related to his or her own funeral. And, those goods and services can very often be purchased at today’s rates, even if they are not needed for years.

If you think that this type of plan may be for you, a reputable funeral home should:
  • Provide detail and pricing for all goods and services offered, and provide an itemized statement outlining your ultimate selections and the costs of each; and
  • Provide a written preneed funeral contract outlining your rights and obligations.

The written contract should address:

  • What happens if the selected goods or services are no longer available at the time they are needed?
  • Can the contract be canceled and under what circumstances?
  • Where are the prepaid funds deposited? Typically these would get invested in a vehicle like an insurance policy or an annuity, so that any increase in expense is covered without further cost to the family.
  • What happens if the price of the prepaid goods/services changes before those goods/services are needed? Are prices guaranteed?
  • If any income or interest is generated from the prepaid funds, how is that treated for tax purposes?
  • What are the geographical boundaries of the contract, and what are the options if you move (or die) outside of that geographical area?

Obviously this is an uncomfortable topic. No one wants to think about planning a funeral. Not only does this task come at a time of sorrow, but the planning is daunting in and of itself. There are so many questions to answer and decisions to make regarding how best to offer a final fitting tribute to a loved one.

There may even be disagreements between surviving family members about what should be done. And, then, there is the cost to consider. Even the simplest of arrangements can total many thousands of dollars. While it may be uncomfortable to think about, preplanning can remove that burden – both financial and emotional – from your loved ones, and can also give you more control over the execution of your last wishes.

*Andrew Zashin writes about law for the Cleveland Jewish News. He is a co-managing partner with Zashin & Rich, with offices in Cleveland and Columbus.

Thursday, February 16, 2017

Take those tax deductions, but do so carefully

By Andrew Zashin*

This article originally appeared as a column for the Cleveland Jewish News.

Tax day is just around the corner, again. Whether you hire an accountant or prepare your own returns using one of the many available software programs, or even if you do it by hand, if you itemize your deductions you will want to compile a list of your charitable contributions.

In determining whether your contributions will be deductible, the following general principles apply:

  • The donation must be to a qualified organization. Donations to political organizations and candidates will not be deductible, nor will donations to specific individuals. The Internal Revenue Service has prepared IRS Publication 526, Charitable Contributions, which outlines its rules on how to determine what constitutes a qualified organization. Note that if you are donating by cash or check, the donation must have cleared within the calendar year. If you made your donation late in December, you will want to double-check when it was deducted from your account.
  • Donations of property are generally deductible at the property’s fair market value. If you are donating smaller value items such canned goods for a food bank, toys for a charity toy drive, or household goods or clothing for a charity resale shop, your estimation of the reasonable fair market value, or a store receipt showing the purchase price, will likely suffice. However if you are donating an asset such as a vehicle, a piece of artwork, or anything else with significant value, you will want to consult with a professional to determine if you will need a certified appraisal of the item and to ensure that your donation will pass muster with the IRS.
  • If you have received something of value in exchange for your contribution, that value will have to be subtracted from the donation. So if, for example, you pay $500 for a ticket to a charity gala and receive dinner and entertainment worth $100 in return, you will likely be able to write off only $400 of the ticket amount. But if your $500 bid on a silent auction gets you a weekend getaway worth $1,000, you won’t be able to claim any of it because you received an item worth more than what you have paid.
  • Donations to that work colleague’s walk/5K/jump-rope contest or other such charitable fundraiser are generally deductible. Make sure you get a receipt for your donation; often the organization will permit online donations via credit card, which will simplify your record keeping.
  • Volunteer efforts are not deductible in terms of time spent, even if you are volunteering services – legal or medical, for example, that you would normally bill for. However, if you have incurred out-of-pocket expenses related to your volunteer work, you may be able to deduct that.

If you are trying to “go it alone” in your tax preparation, you will want to make sure you consult the available literature from the Internal Revenue Service at But if your charitable donations were significant enough to make an appreciable difference in your tax burden, consider enlisting professional assistance to help avoid an audit and to ensure you are taking advantage of all available deductions. And most importantly, document, document, document. Photographs of donated items, canceled checks, receipts and letters of acknowledgement from the charitable organization will help keep you compliant, not only in terms of preparation, but also in terms of substantiating the donation in the event a deduction is ever questioned.

*Andrew Zashin writes about law for the Cleveland Jewish News. He is a co-managing partner with Zashin & Rich, with offices in Cleveland and Columbus.

Thursday, January 19, 2017

What’s in a name? Title affects account access

By Andrew Zashin*

This article originally appeared as a column for the Cleveland Jewish News.

Clients come in all the time with questions about how title affects ownership and access to bank accounts. Maybe an account is jointly held among spouses. Maybe a spouse is named on an account with a parent. Or, perhaps someone is on an account with a child. Maybe it’s the child’s account, but since that child is a minor, a custodian has been named. In all of those cases, access to the funds will be governed by the type of account held, as well as who holds the “title” to it.

You are probably familiar with the idea of an account with an individual account holder or, perhaps, a joint account such as a checking or savings account. When the account is held in the name of an individual, that individual is the only person with access. Period.

In the event the account holder dies, the account becomes part of the estate and would be accessible by the estate administrator to pay off obligations of the estate and ultimately to divide among heirs. In a divorce situation, the account might be divided as marital property, but the non-named spouse would not be able to go to the bank to immediately access the funds. If the account is a joint one, the joint owners have full and equal access.

A POD, or payable-on-death account, is another option, and a quick and easy way to leave money from an account to a beneficiary. The creation of a POD account essentially forms a very basic revocable trust. While the primary account holder lives, he or she is the only one who can access the account.

However, upon his or her death, the beneficiary need only bring proof of identity and the primary holder’s death certificate. Benefits of a POD account include that it’s free and easy to create. If you have enough funds on deposit to make FDIC insurance limits a concern, you can double your available coverage by separating out some funds into a POD account, though these accounts cannot be used to hide money from creditors or from a spouse in a divorce case. If you die and other assets in your estate are insufficient to cover your debts, these funds will be tapped.

If the intent is to gift money to benefit a child, an UTMA, or Uniform Transfers to Minors Act, or custodial account, might be a good option. The UTMA is model statutory language that has been adopted in some form by most states, and provides an inexpensive and uncomplicated way to gift money to minors. Ohio’s version of the law is called the Ohio Transfers to Minors Act.

These accounts are sometimes used for purposes of college savings or to make sure that a child has a bit of a nest egg as he or she embarks on his or her journey into adulthood. This type of account will have a custodian who is responsible for maintaining the funds on behalf of the minor child. The funds can generally be spent for the child’s benefit and would get turned over to the child once he or she turns 21. The gift is irrevocable. Ultimately, it will not likely be a successful tool to hide money from a spouse in a divorce case. Depending on the facts of its establishment, though, it would probably be maintained intact in a divorce, as the child’s property. These custodial accounts can be a useful part of an estate plan.

Whether you are looking to open an account or access funds in an account, the identity of the person, or people, who can access the money in that account, and under what terms, is governed by the type and title of the account.

*Andrew Zashin writes about law for the Cleveland Jewish News. He is a co-managing partner with Zashin & Rich, with offices in Cleveland and Columbus.

Thursday, December 15, 2016

Life care planning – think of where to live, too

By Andrew Zashin*

This article originally appeared as a column for the Cleveland Jewish News.

When we think about life care planning, we think about many aspects of aging. Obviously, financial planning is important. A retirement plan will help to ensure income into the future. A will can ensure that your estate is passed to your heirs in the way you want it to be and a living will can ensure that your family and medical providers know and honor your wishes on dicey topics such as life supporting measures.

We think about insurance policies to provide for our loved ones. We think about our health. But living arrangements sometimes aren’t considered until someone else is faced with making the decision for us. In this area, we can plan better.

Our population is aging. Birth rates have declined even as medical advances have increased the average life expectancy. The U.S. Department of Health and Human Services estimates that around 15 percent of the population is over age 65. That number is expected to increase to about 22 percent by 2040.

Unsurprisingly, options for elder care are increasing and improving as a result. Even as prior generations thought about individuals either living at home or going into a “rest home,” thankfully the options are now much broader and can be tailored to meet the care needs of the individual.

At its most basic, elder care can be divided into two major categories: skilled care and custodial care. Skilled care is provided by trained and licensed medical personnel. Custodial care involves assistance with normal living activities such as dressing and bathing, and sometimes household tasks such as food preparation and laundry. Both types of care may be used either at the individual’s home, or in a nursing, assisted living, rehabilitation or other facility.

Home care can include one or more skilled professionals, providing a wide array of medical assistance. However, most often it involves little to no medical training requirements. A home health care provider may check an individual’s vitals and assist with in-home medical equipment and much more, but most of the provided help consists of personal care and help with errands, transportation to doctor appointments, administration of already prescribed medications and the like.

Adult day care options can be helpful to keep a loved one with family while allowing a primary caregiver to work outside the home during the day. Adult day care options typically include meals and a wide range of activities. Medical services often include a variety of therapies, and are often as robust as a nursing home facility.

Of course, live-in options can range anywhere from independent living facilities (that may provide security, transportation and recreational opportunities, but no care) to assisted living arrangements (that provide assistance with daily living tasks, recreational activities, as well as some basic health services), to facilities that offer 24/7 care, depending on how independent the individual may be. More recently, a range of continuing care communities have developed, allowing individuals to remain in a single location even as health and autonomy declines.

The options are varied. The problem is that we talk little about them until they become a necessity. But maybe these conversations should happen earlier. Whether we are talking with our parents about what they want for their golden years, or talking with our children about what we want for ours, communication and planning is important. Cases quickly can become very time consuming, expensive and contentious when loved ones disagree on a course of care. Doing as much of your life care planning as possible and encouraging your loved ones to do the same will go a long way toward preventing family arguments and allowing everyone to keep the focus on living the best life possible.

*Andrew Zashin writes about law for the Cleveland Jewish News. He is a co-managing partner with Zashin & Rich, with offices in Cleveland and Columbus.