Tuesday, September 19, 2017

In estate planning for your minor children, think beyond just money

By Andrew Zashin*

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

Do you have minor children? Do you know what would happen to them if you were to pass away unexpectedly? This is never a pleasant topic to think about, but it is one of the most important estate planning decisions you can make.

Depending on your specific situation, the answer may be obvious. If a minor loses one parent, most often the surviving parent would simply assume custody. If the parents are divorced, or if they were never married, the domestic relations or juvenile courts may need to get involved depending on formal parenting plans that may already be in place. But from a legal perspective, it may be a simple matter.

On the other hand, if the surviving parent is estranged, unfit, or otherwise not around or uninvolved, the answer could become more complex. In that case, it may be necessary to seek the appointment of a “guardian.”

In general, anyone with some ties to the child could apply in the appropriate probate court to become the child’s guardian. Once appointed, that guardian would be expected to care for the child’s well-being just as a parent would, providing food, shelter, and clothing, and ensuring schooling and medical care. If the child has any assets, a guardian would be expected to manage those on behalf of the child as well.

In Ohio, as in many states, a person can be named as the guardian “of the person” or the guardian “of the estate.” A guardian of the person would be responsible for providing necessities and care and for decision-making regarding the child’s health and well-being, while a guardian of the estate would be tasked with management of the minor’s financial affairs, such as managing monies held in trust for the child. One person could feasibly fulfill both roles, or a different person might fulfill each. And, if the child has no significant assets, there may be no need for a guardian of the estate to be appointed at all.

Ideally, your wishes as to who should serve as your child’s guardian, and maybe a “backup,” or successor, guardian will be spelled out in your will. A probate court would not be required to follow a guardianship designation made in a will, but generally would, so long as that designation is in the interest of your child. It is also important to understand that just because you choose to name someone does not obligate them to accept the responsibility; they could decline to serve in that capacity.

For these reasons, it is important to consider carefully who you would trust with such responsibility and, ideally, discuss in advance if he or she would be willing to take on the job should it become necessary. If a significant inheritance or other monies could be involved, consider who you believe would handle those funds appropriately and in a manner that you would be satisfied with. And, if you have a spouse or co-parent, it is very important to discuss with him or her the identity of a successor guardian in the – however unlikely – event that neither of you would be around to care for your child. Any disputes will likely ultimately be resolved by a court, and it is far better to tackle this issue in advance via a clear and concise estate plan, rather than in a court of law after legal challenges.

Friday, August 18, 2017

Take common sense precautions with social media

By Andrew Zashin*

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

Although social media has been around for decades, the benefits – and pitfalls – of it continue to make headlines. Facebook, Snapchat, Instagram, Twitter, LinkedIn, Google+ and Pinterest are household names and just a sampling of the many available services. All of this social connectedness has spawned considerable research and opinion, but also some unexpected legal questions.

In relatively recent headlines was the case of a British nature photographer whose equipment captured a number of selfies taken by a group of Celebes crested macaque monkeys. Those images have since been widely distributed and reproduced and a number of lawsuits regarding ownership of their copyright have been fought. The photographer has claimed financial ruin as a result.

In 2014, singer Courtney Love won a landmark suit regarding alleged libel posted on her Twitter account. Ultimately, her statements that her lawyer had been “bought off” were determined by a Los Angeles jury to be untrue, but they did not constitute libel because she did not know them to be untrue at the time she made them.

Earlier this year, a number of so-called celebrity “influencers” were sued for using their social media presence to promote the now-infamous Fyre Festival, allegedly in violation of federal law.

In the context of family law, social media posts have uncovered wrongdoing, including bigamy. Smart litigants and attorneys will mine an opposing party’s social media presence for useful nuggets.

Photos that go viral and become internet memes are especially tricky and their subjects unintentionally find their lives altered in unexpected ways. Sometimes this is for the better (such as “Success Kid,” who was able to leverage his image’s popularity for a GoFundMe campaign to pay for his father’s kidney transplant), but often it is for the worse, when an unflattering image is ridiculed or given a fake backstory and is forwarded by thousands or millions of nameless and faceless strangers.

What does all of this mean to the non-celebrity, non-criminal, non-monkey-photographing person? Here is some food for thought:

Most of us will never have copyright issues from photos that we have taken. Go ahead and post those photos of the Rock & Roll Hall of Fame and don’t worry if you caught the Cleveland Indians’ logo in your family photo at the ballpark.

Photos taken in public that happen to include bystanders generally will be fine. But, please don’t be like the former model that made headlines and lost gigs for posting negative commentary attached to a photo of someone changing in a gym locker room – a place where people generally have some expectation of privacy.

If you are going to take and use a photograph that you did not create, know that someone else may own the copyright and someone else may take you to task for using it.

Know that you cannot put the toothpaste back in the tube and once that image or language is out there in cyberspace, assume it will live on forever (perhaps even in the U.S. Library of Congress)

Always assume that whatever you put out there will have a wider audience than you anticipate. It is impossible to control where the information goes once it is out there, even if your Facebook settings are set at the strictest level.

It’s almost enough to make you want to shut down all your accounts and turn off your devices. Almost. These stories do highlight the importance of taking precautions in posting online, but with precautions, social media can still be a safe place.

Thursday, July 27, 2017

Reverse mortgages: predatory lending or valuable planning tool?

By Andrew Zashin*

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

“Are you over the age of 62?”

“Do you have equity trapped in your home?”

“Having trouble making your monthly mortgage payments?”

“Supplement your retirement savings and make that money work for you.”

Targeted advertisements tout the benefits of reverse mortgages.

A reverse mortgage is a special type of loan offered to homeowners over the age of 62, generally with at least 50 percent equity in their home. Under this type of loan, borrowers pay property taxes and homeowner’s insurance, but no mortgage payment, and get immediate access to the home equity that has built up. The borrower keeps the home and will generally never be forced out of it.

It differs from other loan products like home equity loans or home equity lines of credit in that the borrower makes no monthly mortgage payment. Instead, repayment of the loan – including the interest that has compounded each month – is deferred until the home is sold or the borrower dies.

In general, the home is the collateral for the loan, and the borrower, or borrower’s estate, is not responsible for repaying interest that exceeds the home’s value. Given the way these loans are structured, it should come as no surprise that there may or may not be any equity left in the home when it is time to sell it.

This type of loan – known more formally as a home equity conversion mortgage – was first made available under the Reagan administration in 1988. In the subsequent decades, reverse mortgages have been criticized for many reasons, including confusing terms that make predatory lending a concern, high initiation costs, higher interest rates than conventional mortgages or home-equity loans, and compounding interest that can quickly deplete home equity, leaving little wealth to pass on to heirs.

AARP has been rather vocal in its efforts to advocate and educate consumers about this planning tool. While the terms of a reverse mortgage prevent foreclosure on the borrower, before 2014 those protections did not extend to a surviving spouse who was under the age of 62. The law was subsequently changed, making it a less risky option for borrowers with spouses below the age limit.

Reverse mortgages have developed a stigma as being a “last-resort” option for those who desperately need money because they have insufficient retirement savings to meet expenses or unexpected bills. It is certainly true that this type of loan can help with those things. But the recent recession is still fresh in everyone’s mind and has proven that real estate is not the sound, guaranteed return investment that it was historically thought to be. While this loan product can certainly help people with cash flow concerns, even if you have more than enough saved to last and sustain a few retirements, rising home values may make a reverse mortgage a smart financial tool to – just like advertisements say – make your money work for you.

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.