In Ohio, real estate may be transferred outside of probate through the use of a transfer on death designation affidavit.  This document is an affidavit that the owner of real estate signs and has recorded with the office of the county recorder in the county in which the real estate is located.  It allows the real estate to be transferred directly to a beneficiary upon the owner’s death.

The main advantage is that use of a transfer on death designation affidavit avoids having the property pass through the probate process.  Upon the owner’s death, the property passes by operation of law directly to the beneficiary.  This is similar to how property passes at death through a survivorship deed, in that when one of the owners of a property held as tenants with rights of survivorship dies, the property then belongs solely to the surviving owner.

However, the transfer on death designation affidavit is different from a survivorship deed because the beneficiary has no ownership interest in the property until the original owner has died.  As an example, if a property owner wanted her home to pass to her daughter upon her death, outside of the probate process, she could execute a survivorship deed, adding her daughter’s name to the deed.  But as soon as that deed is signed, the daughter has an ownership interest in the property. 

This means that in order to sell the property, the daughter (and the daughter’s spouse, if she is married) must agree to the sale and sign the deed.  If the daughter and her spouse refuse, the mother would have to file a partition lawsuit to get the court to order the property sold.  In addition, should the daughter run into issues with creditors, one of the daughter’s creditors could file a lien against the property.  If the daughter should ever file for bankruptcy, the bankruptcy trustee would look to the property as an asset.

The transfer on death designation affidavit solves these issues.  The property remains solely in the mother’s name during her lifetime.  The daughter, the daughter’s spouse, and the daughter’s creditors have no interest in the property.  The mother can sell the property at any time, without having to obtain the signature of her daughter.  The mother can also change the beneficiary at any time, without notification.

The transfer on death designation affidavit is flexible in that the property owner can designate more than one beneficiary.  The property owner can also name a beneficiary and a contingent beneficiary.  A transfer on death affidavit can also be executed if the property is already titled with a survivorship deed.  The property would then pass to the beneficiary named in the affidavit on the death of the last of the survivorship tenants to die.

A transfer on death affidavit can be a very useful estate planning tool, but it is not the solution to every situation, especially when there are multiple beneficiaries.  Sometimes, a survivorship deed or a trust is a better alternative.  An estate planning attorney at Maguire Legal Group can discuss your situation and needs and advise you on the pros and cons of all your options.

Guardianship is a legal relationship between a person over the age of eighteen who has a disability that causes incapacity and a competent adult appointed by the court.   Typically, a guardianship action is initiated by the family of an elderly person who has become incapacitated by Alzheimer’s disease or other dementia. The incapacitated person is known as the ward and the person appointed by the probate court to care for the ward is known as a guardian.

All persons with disabilities are not in need of a guardian.  Only when a person is so mentally impaired that he is incapable of taking proper care of himself or his property, is a guardianship appropriate.

In Ohio, any interested person who is an Ohio resident can make an application to serve as a guardian; however, the probate court reserves the right to make the final decision on who is appointed. In order to file for guardianship, the applicant must also submit a statement from a licensed physician who has examined the proposed ward and states that a guardianship is necessary. 

There are two types of guardians that can be appointed by the probate court:  guardian of the person and guardian of the estate.  The court can appoint a guardian of the person, a guardian of the estate, or a guardian of both the person and the estate.

A guardian of the person is appointed when the prospective ward needs someone to make decisions about living arrangements and medical care.  A guardian of the estate is appointed when the prospective ward needs someone to take care of his financial affairs.  If the court finds that the prospective ward needs someone to take care of both areas, a guardian of the person and of the estate will be appointed.

Once an application for guardianship is filed, the court will send a court investigator to meet with the prospective ward, give him notice of the hearing, and make an assessment of the need for a guardianship.  The court investigator will also make a report to the court of her findings. 

After reviewing the assessment of the court investigator, the probate court will hold a hearing to determine the need for the guardianship, the type of guardianship needed, and the suitability of the applicant to serve as guardian.  If the court finds that that the person is incompetent and a guardianship is necessary, and that the applicant is suitable, a guardian will be appointed.

If you do not do any estate planning during your lifetime, the state of Ohio has already made your estate plan for you.   When an Ohio resident dies without a will, the Ohio Revised Code specifies how that person’s assets are to be distributed.

A person’s estate consists of all assets titled solely in his name, without a beneficiary.  It can also include the decedent’s share of jointly-owned real estate if the real estate is titled as tenants in common, rather than as joint tenants with rights of survivorship.

When a person dies without a will, the estate must still be probated.  Because there is no will in which an executor was named, the probate court will appoint an administrator.  The person with the highest priority to serve as administrator is the decedent’s surviving spouse, assuming the spouse is also an Ohio resident.  If there is no surviving spouse, or the surviving spouse is unwilling or unable to serve, then the decedent’s next of kin who is an Ohio resident has the next right of priority.  However, if there is no next of kin willing or able to serve, the probate court may appoint any suitable person who is an Ohio resident.  

An administrator, unlike an executor, also usually needs to be bonded.  Typically, a will will waive the bond requirement for anyone nominated in it to serve as executor.  However, when there is no will to request a bond be waived, the administrator must be bonded in order to be appointed, though there are a few exceptions.

Once an administrator is appointed, his rights and duties are similar to those of an executor, but there are a few differences.  For example, a will typically will give the executor the authority to sell real estate owned by the decedent.  When there is no will, the administrator will have to get the written approval of all of the estate’s beneficiaries to sell the decedent’s real estate.  Should one or more beneficiaries refuse, the administrator will have to file a land sale action in the probate court in order to get the court’s authorization to sell the property.

After the debts of the decedent have been paid, and the assets gathered, the administrator will distribute the remaining assets to the decedent’s heirs.  Ohio Revised Code Section 2105.06 states how the assets of someone who died without a will are to be distributed.

Generally, the statute provides that if the decedent was not married but had children, his estate will pass to his children equally.   If he was married and had no children or if he was married and all of his children are also the natural or adopted children of his surviving spouse, his entire estate passes to his spouse.

But if the decedent was married and he had at least one child that is not a natural or adopted child of the surviving spouse, the estate will be divided between the spouse and his children.  The statute also details who inherits in the case of persons who die without a spouse or children as well as who receives the share of an heir who died before the decedent.

Occasionally, the decedent’s family is surprised by the results of the statute.  A surviving spouse may assume that she will receive her husband’s entire estate, not realizing she will have to divide it with his child from a previous marriage.  Or the decedent’s surviving son and daughter are surprised to learn that they each will receive only one-third of their mother’s estate, and not one-half as they expected, because the children of their sister who died many years ago will share equally the third of the estate their mother would have received if she had lived.  Certainly, often the statute provides results that are not what the decedent might have wanted.

Having a valid will avoids these kinds of surprises.  Having a will also is the only way that you can leave a share of your probate estate to someone other than the family members dictated by law or change the proportions that different beneficiaries will receive.  A will can eliminate the expense of procuring a bond for an administrator as well as the expense of a possible land sale action.  Most importantly, a will ensures that your wishes about the disposition of your estate are honored.

As mentioned previously, if an asset goes directly to a joint owner or a beneficiary, outside of probate, that asset is a nonprobate asset and is not subject to the provisions of the decedent’s will.  This sometimes results in the final disposition of a decedent’s assets being very different than what he expected.

For example, Mrs. Smith is a widow with a will that states that she leaves her estate equally to her son and her daughter.  Her son and daughter may expect that they will each receive the same amount once their mother’s estate is probated.  Mrs. Smith owns a house worth $80,000, a car worth $10,000, a checking account containing $70,000, and a certificate of deposit worth $50,000.   Mrs. Smith named her son and daughter as equal beneficiaries on her CD.  Her daughter always helped her with her bills, so Mrs. Smith added her daughter as a joint owner to her checking account. 

Upon Mrs. Smith’s death, the house, and the car will be subject to the jurisdiction of the probate court, because those assets are titled in Mrs. Smith’s name alone.  If we assume the total of Mrs. Smith’s outstanding debts and medical bills, funeral expenses, and the costs of administering her estate to be $20,000, both her son and daughter will receive $35,000 ($80,000 (house) + $10,000 (car) = $90,000 (total gross estate) – $20,000 (costs/debts) = $70,000 ÷ 2 (# of beneficiaries) = $35,000). 

But the CD, because it has named beneficiaries, is a nonprobate asset.  It will pass directly to her son and daughter, with each receiving $25,000.  Because Mrs. Smith’s daughter is a joint owner on the checking account, it is also a nonprobate asset and will pass entirely to her daughter outside probate.   Mrs. Smith’s daughter will receive the entire amount in that account and will have no legal obligation to share any of it with her brother, even though Mrs. Smith’s will indicates her intention that they share equally.  So in the end, Mr. Smith’s son will receive $60,000, but Mrs. Smith’s daughter will receive $130,000.  Mrs. Smith’s daughter thus may be receiving a much larger share of the assets than her mother ever intended. 

As you can see, it is vitally important to take nonprobate assets into account when putting together an estate plan. Even with a will that clearly states your intentions, if you have nonprobate assets, the final distribution of your assets may be very different from what you intended, without careful planning.

When a person dies, his will controls how and to whom his assets are distributed.  If someone dies without having a will, Ohio law determines who will inherit and in what proportion.

Often, however, upon a person’s death, his heirs and family members are surprised to learn that not everything the decedent owned will pass according to the provisions of his will.  As a rule, any asset that is owned jointly with rights of survivorship or has a named beneficiary will pass directly to that joint owner or beneficiary outside of the probate process.  Assets which pass directly to a joint owner or beneficiary outside of probate are often referred to as nonprobate assets.  If the asset goes directly to someone outside of probate, that asset is not subject to the provisions of the will.  The decedent may have thought he left his estate equally to two beneficiaries, but if some of his assets had a named beneficiary(ies), the end results might be quite different.

So what kinds of assets are nonprobate assets?  It all depends on how assets are titled.

In Ohio, real estate can pass outside of probate through either a survivorship deed or a transfer on death designation affidavit (formerly known as a transfer on death deed).  A survivorship deed is a deed where the property is held in two names, often a husband and wife, which contains the language “for their joint lives, remainder to the survivor of them” or similar language.  Simply having two names on the deed will not create a survivorship deed.  There must be survivorship language in the deed.  Ohio real estate can also pass outside of probate through a transfer on death designation affidavit.  This is an affidavit executed and recorded by the property owner that states that upon his death, he leaves the property to a specific person or persons. 

Bank accounts such as checking and savings accounts and certificates of deposit can also pass outside of probate if they are held jointly with rights of survivorship.  Bank accounts titled in one name with one or more payable on death beneficiaries will also pass directly to those beneficiaries outside of the probate process.  In fact, any investment account that is held jointly with rights of survivorship or that has a named beneficiary will pass directly to that joint owner or beneficiary without going through the probate process and without passing pursuant to the terms of the owner’s will.  Even vehicle titles can be held jointly with rights of survivorship or can name a transfer on death beneficiary.

In addition to assets held jointly with rights of survivorship and with named beneficiaries, Ohio law provides for certain assets to pass to a surviving spouse, even if the spouse is not a joint owner or beneficiary.  For example, Ohio law provides that upon the death of one spouse, the surviving spouse can transfer two of the decedent’s vehicles, up to a total value of $40,000, into his or her name, even if the surviving spouse is not a joint owner or transfer on death beneficiary on the vehicle’s title.

Many people are unfamiliar with the probate process until someone close to them has died. Probate is a legal proceeding that is required when a person dies owning assets in his name alone.  The purpose of probate is to make sure that all of the person’s debts are paid and that the assets that are left are distributed to the beneficiaries named in the person’s will or, if he died without a will, to his heirs.

The person who died is called the decedent.  If the decedent had a will, the court will appoint the person nominated in the will as the executor.  If the decedent died without a will, the person appointed by the court to administer the estate is called an administrator. Executors and administrators have the same duties and are also known as fiduciaries.  The fiduciary will usually hire a probate attorney to assist him, as the process can become very complicated.

The appointment by the probate court gives the executor or administrator the authority and the duty to identify the names an addresses of the decedent’s next of kin and any beneficiaries listed in the decedent’s will, to identify and collect all of the decedent’s assets, collect any monies owed to the decedent, investigate claims against the estate, pay the decedent’s debts and the costs of estate administration out of the estate’s assets, file income tax and estate tax returns, and distribute the remaining assets to the heirs or beneficiaries.

The executor is always subject to the supervision of the probate court.  There are numerous documents that the court will require the executor to file.  These include a list of the decedent’s next of kin and beneficiaries, an inventory of the decedent’s assets, and accountings.

An estate will normally have to remain open for at least six months after the person’s date of death.  This is because creditors are given six months under Ohio law to file claims against the estate.  However, if there is a complicating factor such as a will contest, if the estate is large enough to owe Ohio estate tax, or if there is real estate in the estate that remains unsold, an estate can stay open much longer.

When a person dies, he may leave behind real estate, bank accounts, vehicles, and other assets. If these assets are not owned jointly with rights of survivorship or do not have a named beneficiary, the assets will be considered part of the person’s estate.

The court will appoint an administrator or an executor to administer the estate.  Administrators and executors are also known as fiduciaries.