Bibliographic record and links to related information available from the Library of Congress catalog.
Note: Contents data are machine generated based on pre-publication provided by the publisher. Contents may have variations from the printed book or be incomplete or contain other coding.
5/20/04 Ohio Estate Planning
xv
Contents
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ix
PART I
CHAPTER 1 HOW TO USE THIS BOOK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1
1.1 Locating the Proper Form and Use of
Accompanying Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1
1.2 The Three Major Will and Trust Forms Headings. . . . . . . . . . . . . . . . . . . . . . . . . 1-1
1.3 Wills as Primary Testamentary Instruments Five Categories . . . . . . . . . . . . . . 1-2
1.4 Revocable (Living) Trusts and Pour-over Wills (Part vii)
Five Categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-3
1.5 Irrevocable Trusts (Part viii) Five Categories. . . . . . . . . . . . . . . . . . . . . . . . . . 1-3
1.6 Alternative Forms and Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-4
1.7 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-4
CHAPTER 2 ESTATE PLANNING: ESSENTIAL OBJECTIVES. . . . . . . . . . 2-1
2.1 The Essential Estate Planning Objectives: Disposition of Assets and
Tax Avoidance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1
2.1.1 Dispositive Estate Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1
2.1.2 Estate Tax Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2
2.2 Initiating the Estate Planning Process: Strategies and
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2
2.2.1 Coordinating the Different Segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2
2.2.2 Initial Client Contact: Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2
*Form 2-1: Letter to Client Following Initial Client Contact to
Accompany Estate Planning Questionnaire . . . . . . . . . 2-3
*Form 2-2 : Estate Planning Questionnaire for Married Client . . . 2-4
*Form 2-2A: Estate Planning Questionnaire For Single Client . . . 2-13
2.2.3 Effective Gathering of Client Information: The Client Estate
Planning Questionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-19
2.2.3.1 Family Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-20
2.2.3.2Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-20
2.2.4 Initial Client Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-20
2.2.4.1 Information Gathering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-20
2.2.4.2 Dispositive Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-21
2.2.4.3 Selection of Fiduciaries and Guardians . . . . . . . . . . . . . . . . . . 2-21
2.2.4.4 Wills vs. Probate Substitutes . . . . . . . . . . . . . . . . . . . . . . . . . . 2-21
*Form 2-3: Memorandum to Client Re: Advantages and
Disadvantages of Revocable Trusts . . . . . . . . . . . . . . 2-22
2.2.4.5 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-23
5/20/04 Ohio Estate Planning
xvi
2.3 Nature and Scope of the Estate Planning Engagement and Attorney's Fee . . . . 2-24
2.3.1 Discussing the Engagement and Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-24
*Form 2-4: Engagement/Fee Letter with Dual
Representation Provisions . . . . . . . . . . . . . . . . . . . . . . 2-24
2.3.2 Establishing the Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-27
2.3.3 Ethical Issues in Representing Both Husband and Wife . . . . . . . . . . . . . 2-27
CHAPTER 3 SIMPLE WILLS FOR MARRIED COUPLES WITH
ADULT CHILDREN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1
3.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1
3.1.1 Overall Summary of Dispositive Provisions for Wills in Category . . . . . 3-1
3.2 Pure "SweetHeart" Wills Outright to Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . 3-2
3.2.1 Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-2
3.2.2 When to Use These Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-2
3.2.3 Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3
3.2.4 Forms for Simple "Sweetheart" Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3
*Form SW-1H: Husband with Adult Children: Outright
Gift of Residuary Estate to Spouse, if
Surviving; if Not, Outright to Adult Children . . . . . . . . 3-3
Form SW-1W: Companion Will to SW-1H . . . . . . . . . . . . . . . . . . . . . . 3-3
3.2.5 Key Action Subjects for Strategic Planning . . . . . . . . . . . . . . . . . . . . . . . 3-8
3.3 SweetHeart/Trust Wills To Spouse in Trust Without Tax Planning . . . . . . . . . 3-8
3.3.1 Overall Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . . . 3-9
3.3.2 Terms of Marital Trusts How They Work . . . . . . . . . . . . . . . . . . . . . . 3-9
3.3.3 When to Use These Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-10
3.3.4 Comparison of Marital/QTIP vs. Marital/Power of
Appointment (POA) Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-10
3.3.4.1 Marital/QTIP Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-10
3.3.4.2 Marital/POA Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-11
3.3.5 Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-11
3.3.6 Forms for "Sweetheart/Trust" Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-11
Form SW-2H: Husband with Adult Children: Gift of Residuary
Estate to Marital (QTIP) Trust, for Benefit of
Spouse for Life, Remainder to Adult Children;
Does Not Survive, Outright to Adult Children . . . . . . 3-11
Form SW-2W: Companion Will to SW-2H . . . . . . . . . . . . . . . . . . . . . 3-11
Form SW-3H: Husband with Adult Children: Gift of Residuary
Estate to Marital POA Trust, for Benefit of
Spouse for Life, Remainder to Distributees
Appointed by surviving Spouse; upon Failure
to Exercise Power, Remainder to Adult Children;
if Spouse Does Not Survive, Outright to
Adult Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-11
Form SW-3W: Companion Will to SW-3H . . . . . . . . . . . . . . . . . . . . . 3-11
5/20/04 Ohio Estate Planning
CONTENTS
xvii
*Form SW-2/3: Simple Will with Marital Trust: Gift of Residuary
Estate to Marital (QTIP or Power of Appointment)
Trust for Benefit of Spouse for Life, Remainder
to Adult Children; if Spouse Does Not Survive,
Outright to Adult Children . . . . . . . . . . . . . . . . . . . . . 3-11
3.3.7 Key Action Subjects for Strategic Planning . . . . . . . . . . . . . . . . . . . . . . 3-24
3.4 Wills Disposing Property Outright to Children (No Provision for Spouse) . . . . 3-24
3.4.1 Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-24
3.4.2 When to Use These Wills. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-24
3.4.3 Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-25
3.4.4 Caution: Spouse's Right of Election in Ohio . . . . . . . . . . . . . . . . . . . . . 3-25
3.4.5 Will Forms for Outright Disposition of Children . . . . . . . . . . . . . . . . . . 3-25
*Form SW-4H: Male Testator with Adult Children Whose
Spouse Has Either Predeceased Him or Is Not
to Be Left Anything under Will: Outright Gift
of Residuary Estate to Adult Children . . . . . . . . . . . . 3-25
Form SW-4W: Companion Will to SW-4H . . . . . . . . . . . . . . . . . . . . . 3-25
3.4.6 Key Action Subjects for Strategic Planning . . . . . . . . . . . . . . . . . . . . . . 3-30
CHAPTER 4 SIMPLE WILLS FOR MARRIED COUPLES WITH
MINOR CHILDREN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1
4.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1
4.1.1 Overall Summary of Dispositive Provisions for Wills in Category . . . . . 4-1
4.2 Pure "Sweetheart" Wills to Spouse Outright, with Contingent
Trusts for Children. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-2
4.2.1 Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-2
4.2.2 Distribution of Separate Children's Trusts . . . . . . . . . . . . . . . . . . . . . . . . 4-3
4.2.3 Distribution of Pot Trust for Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-3
4.2.4 When to Use These Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-3
4.2.5 Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-4
4.2.6 Forms for "Sweetheart" Wills with Contingent Trusts for Children . . . . . 4-4
Form SW-5H: Husband with Minor Children Outright Gift of
Residuary Estate to Spouse, if Surviving; if Not,
to Separate Trusts for Children Complete
Distribution at Age 30 . . . . . . . . . . . . . . . . . . . . . . . . . . 4-4
Form SW-5W: Companion Will to SW-5H . . . . . . . . . . . . . . . . . . . . . . 4-4
Form SW-6H: Outright Gift of Residuary Estate to Spouse, if
Surviving; if Not, to Pot Trust for Children
until Youngest Child Attains Age of 25. . . . . . . . . . . . . 4-4
Form SW-6W: Companion Will to SW-6H . . . . . . . . . . . . . . . . . . . . . . 4-4
*Form SW-5/6: Simple Will Married Testator with Minor Children:
Outright Gift of Residuary Estate to Spouse, if
Surviving; if Not, to Children in Trust (with
Alternate Dispositive Provisions for Trusts) . . . . . . . . . 4-4
5/20/04 Ohio Estate Planning
xviii
4.2.7 Key Action Subjects for Strategic Planning . . . . . . . . . . . . . . . . . . . . . . 4-16
4.3 Sweetheart/Trust Wills To Spouse in Trust with Contingent
Trusts for Children. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-17
4.3.1 Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-17
4.3.2 Dispositive Terms of Marital Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-18
4.3.3 Distribution Alternatives for Children's Trusts . . . . . . . . . . . . . . . . . . . . 4-19
4.3.4 When to Use These Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-19
4.3.5 Comparison of Marital/QTIP vs. Marital/POA Trust . . . . . . . . . . . . . . . 4-19
4.3.6 Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-20
4.3.7 Forms for "Sweetheart Trust" Wills with Children's Trusts . . . . . . . . . . 4-20
Form SW-7H: Husband with Minor Children: Gift of Residuary
Estate to Marital (QTIP) Trust for Benefit of
Spouse for Life, Remainder to Separate Trusts
for Children Complete Distribution at Age 30;
if Spouse Does Not Survive, to Separate Trusts
for Children Complete Distribution at Age 30 . . . . . 4-20
Form SW-7W: Companion Will to SW-7H . . . . . . . . . . . . . . . . . . . . . 4-20
Form SW-8H: Husband with Minor Children: Gift of Residuary
Estate to Marital (QTIP) Trust for Benefit of
Spouse for Life, Remainder to Pot Trust for
Children Complete Distrubution when
Youngest Child Attains Age 25; if Spouse
Does Not Survive, to Children's Pot Trust . . . . . . . . . 4-20
Form SW-8W: Companion Will to SW-8H . . . . . . . . . . . . . . . . . . . . . 4-20
Form SW-9H: Husband with Minor Children: Gift of Residuary
Estate to Marital Power of Appointment Trust for
Benefit of Spouse for Life, Remainder to
Distributees Appointed by Surviving Spouse;
upon Failure to Exercise Power, Remainder to
Children in Separate Trusts Complete Distribution
at Age 30; if Spouse Does Not Survive, to Separate
Trusts for Children Complete Distribution
at Age 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-20
Form SW-9W: Companion Will to SW-9H . . . . . . . . . . . . . . . . . . . . . 4-20
Form SW-10H: Husband with Minor Children: Gift of Residuary
Estate to Marital Power of Appointment Trust for
Benefit of Wife for Life, Remainder to
Distributees Appointed by Surviving Spouse;
upon Failure to Exercise Power, Remainder to
Children in Pot Trust Until Youngest Child Attains
Age 25; if Wife Does Not Survive, to Pot Trust
Until Youngest Child Attains Age 25 . . . . . . . . . . . . . 4-21
Form SW-10W: Companion Will to SW-10H . . . . . . . . . . . . . . . . . . . . 4-21
*Form SW-7 10: Husband with Minor Children: Gift of Residuary
Estate to Marital (Alternative Clauses for QTIP
and Power of Appointment) Trust for Benefit of
5/20/04 Ohio Estate Planning
CONTENTS
xix
Spouse for Life, Remainder to Trust for Children
(Alternative Clauses for Separate Trusts and
Pot Trust); if Spouse Does Not Survive, to Trust
for Children (Alternative Clauses for Separate
Trusts and Pot Trust) . . . . . . . . . . . . . . . . . . . . . . . . . 4-21
4.3.8 Key Action Subjects for Strategic Planning . . . . . . . . . . . . . . . . . . . . . . 4-35
4.4 Wills Disposing Property Outright to Trust for Minor Children (No Provision
for Spouse) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-35
4.4.1 Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-36
4.4.2 When to Use These Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-36
4.4.3 Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-36
4.4.4 Caution: Spouse's Right of Election in Ohio . . . . . . . . . . . . . . . . . . . . . 4-36
4.4.5 Forms for Wills Disposing of Property to Trust for Minor Children . . . 4-37
Form SW-11H: Male Testator with Minor Children Whose Spouse
Has Predeceased Him, or Is to Be Given No Interest
under Will: Gift of Residuary Estate to
Separate Trusts for Children Complete
Distribution at Age 30 . . . . . . . . . . . . . . . . . . . . . . . . . 4-37
Form SW-11W: Companion Will to SW-11H . . . . . . . . . . . . . . . . . . . . 4-37
Form SW-12H: Male Testator with Minor Children Whose Spouse
Has Predeceased Him, or Is to Be Given No
Interest under Will: Gift of Residuary Estate
to Pot Trust until Youngest Child Attains
Age of 25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-37
Form SW-12W: Companion Will to SW-12H . . . . . . . . . . . . . . . . . . . . 4-37
*Form SW-11/12: Testator with Minor Children Whose Spouse
Has Predeceased Him, or Is to Be Given No
Interest under Will: Gift of Residuary Estate
to Trust for Children (Alternate Clauses for
Separate Trusts and Pot Trust) . . . . . . . . . . . . . . . . . 4-37
4.4.6 Key Action Subjects for Strategic Planning . . . . . . . . . . . . . . . . . . . . . . 4-48
CHAPTER 5 STRATEGIC PLANNING WITH CREDIT
SHELTER/BYPASS TRUSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-1
5.1 Effective Utilization of Lifetime Exemption Through Trusts . . . . . . . . . . . . . . . 5-1
5.2 Example: The Sweetheart Will Pitfall and the Credit Shelter/Bypass
Trust Solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-2
5.3 Workings of the Bypass Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-3
5.4 Alternatives for Structuring Bypass Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-4
5.5 The "A-B" Will System and Formula Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-5
5.6 The Ohio Estate Tax and the Bypass Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-6
CHAPTER 6 TAX PLANNING WILLS WITH CREDIT
SHELTER/BYPASS TRUSTS IN COMBINATION
WITH MARITAL BEQUEST (OUTRIGHT OR QTIP TRUST)
FOR MARRIED COUPLES WITH COMBINED
5/20/04 Ohio Estate Planning
xx
ESTATES EXCEEDING LIFETIME EXEMPTION . . . . . . . . . 6-1
6.1 Wills with Bypass Trust and Outright Marital Bequest for
Married Couples with Adult Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1
6.1.1 General Description of Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1
6.1.2 Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-2
6.1.3 Graphic Summary of Dispositive Provisions of
Credit Shelter/Bypass Trust and Estate Tax Effects . . . . . . . . . . . . . . . . . 6-2
6.1.4 When to Use These Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-4
6.1.5 Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-4
6.1.6 Will Forms with Bypass Trust and Outright Marital . . . . . . . . . . . . . . . . . 6-5
Form TP-1H: Marital bequest outright to spouse; credit shelter
bequest to Residuary/Bypass Trust with income
and principal to spouse, remainder (or entire estate
if spouse does not survive) to living descendants,
per stirpes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-5
Form TP-1W: Companion Will To TP-1H . . . . . . . . . . . . . . . . . . . . . . 6-5
Form TP-2H: Marital bequest outright to spouse; credit shelter
bequest to Residuary/Bypass Trust with spray of
income and principal to spouse and children,
remainder (or entire estate if spouse does not
survive) to living descendants, per stirpes . . . . . . . . . . . 6-5
Form TP-2W: Companion Will To TP-2H . . . . . . . . . . . . . . . . . . . . . . 6-5
Form TP-3H: Marital bequest outright to spouse; credit shelter
bequest to Residuary/Bypass Trust with income
to spouse, spray of principal to spouse and children,
remainder (or entire estate if spouse does not
survive) to living descendants, per stirpes . . . . . . . . . . 6-5
Form TP-3W: Companion Will To TP-3H . . . . . . . . . . . . . . . . . . . . . . 6-5
*Form TP-1 3: Testator with Adult Children: Outright (Pecuniary)
Marital Deduction Bequest to Spouse of Amount
in Excess of Unified Credit Equivalent; Residuary
Estate to Credit Shelter/Bypass Trust: During
Lifetime of Surviving Spouse Three Alternative
Dispositive Methods of Distribution from Trust,
Remainder Outright to Living Descendants, per
Stirpes; if Spouse Disclaims Marital Bequest,
to Bypass Trust; if Spouse Does Not Survive,
Residuary Estate Outright to Living Descendants,
per Stirpes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-5
6.1.7 Client Presentation Charts for TP-1, TP-2, and TP-3 . . . . . . . . . . . . . . . 6-16
6.1.8 Key Action Subjects for Strategic Planning . . . . . . . . . . . . . . . . . . . . . . 6-18
6.2 Wills with Bypass Trust and Outright Marital Bequest for
Married Couples with Minor Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-19
6.2.1 General Description of Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-19
6.2.2 Overall Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . . 6-19
5/20/04 Ohio Estate Planning
CONTENTS
xxi
6.2.3 Graphic Summary of Dispositive Provisions of
Credit Shelter/ Bypass Trust and Estate Tax Effects . . . . . . . . . . . . . . . . 6-19
6.2.4 When To Use These Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-24
6.2.5 Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-25
6.2.6 Forms for Bypass Trust and Outright Marital with
Trusts for Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-25
Form TP-4H: Marital bequest outright to spouse; credit shelter
bequest to Residuary/Bypass Trust with income
and principal to spouse, remainder (or entire estate
if spouse does not survive) to living descendants,
per stirpes (separate trusts for descendants
under 30) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-25
Form TP-4W: Companion Will to TP-4H. . . . . . . . . . . . . . . . . . . . . . 6-25
Form TP-5H: Marital bequest outright to spouse; credit shelter
bequest to Residuary/Bypass Trust with spray of
income and principal to spouse and children,
remainder ( or entire estate if spouse does not
survive) to living descendants, per stirpes
(separate trusts for descendants under 30) . . . . . . . . . . 6-25
FormTP-5W: Companion Will to TP-5H. . . . . . . . . . . . . . . . . . . . . . 6-25
Form TP-6H: Marital bequest outright to spouse; credit shelter
bequest to Residuary/Bypass Trust with income
to spouse and spray of principal to spouse and
children, remainder (or entire estate if spouse does
not survive) to living descendants, per stirpes
(separate trusts for descendants under 30) . . . . . . . . . . 6-25
Form TP-6W: Companion Will to TP-6H. . . . . . . . . . . . . . . . . . . . . . 6-26
Form TP-7H: Marital bequest outright to spouse; credit shelter
bequest to Residuary/Bypass Trust with income
and principal to spouse, remainder (or entire estate
of spouse does not survive) to living descendants,
per stirpes (pot trust until youngest child
attains 25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-26
Form TP-7W: Companion Will to TP-7H. . . . . . . . . . . . . . . . . . . . . . 6-26
Form TP-8H: Marital bequest outright to spouse; credit shelter
bequest to Residuary/Bypass Trust with spray of
income and principal to spouse and children,
remainder (or entire estate if spouse does not survive)
to living descendants, per stirpes (pot trust until
youngest child attains 25). . . . . . . . . . . . . . . . . . . . . . . 6-26
Form TP-8W: Companion Will to TP-8H . . . . . . . . . . . . . . . . . . . . . 6-26
Form TP-9H: Marital bequest outright to spouse; credit shelter
bequest to Residuary/Bypass trust with income
to spouse and spray of principal to spouse and
children, remainder (or entire estate if spouse
does not survive) to living descendants, per stirpes
5/20/04 Ohio Estate Planning
xxii
(pot trust until youngest child attains 25). . . . . . . . . . . 6-26
Form TP-9W: Companion Will to TP-9H . . . . . . . . . . . . . . . . . . . . . 6-26
*Form TP-4 9: Testator with Minor Children: Outright (Pecuniary)
Marital Deduction Bequest to Spouse of Amount in
Excess of Unified Credit Equivalent; Residuary
Estate to Credit Shelter/Bypass Trust (with Three
Alternative Methods for Distribution from Trust),
Remainder to Living Descendants, per Stirpes
(with Alternatives of Separate Trusts or Pot Trust);
if Spouse Disclaims Marital Bequest, to Bypass
Trust; if Spouse Does Not Survive, Residuary Estate
to Living Descendants, per Stirpes (with
Alternatives for Separate Trusts or Pot Trust) . . . . . . 6-26
6.2.7 Client Presentation Charts for TP-4, TP-5, TP-6, TP-7,
TP-8, and TP-9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-40
6.2.8 Key Action Subjects for Strategic Planning . . . . . . . . . . . . . . . . . . . . . . 6-46
CHAPTER 7 STRATEGIC TAX PLANNING WITH MARITAL/QTIP
TRUSTS ("A" SHARE) IN COMBINATION WITH
BYPASS TRUST ("B" SHARE): THE "A-B" TRUST
STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1
7.1 Description of the "A-B" Trust Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1
7.2 The Marital Trust in General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1
7.3 The Unlimited Marital Deduction and Strategic Planning with QTIP Trusts . . . . 7-2
7.4 Federal Tax Requirements of QTIP Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-3
7.5 Ohio Tax requirements of QTIP Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-3
CHAPTER 8 TAX PLANNING WILLS WITH QTIP AND BYPASS
TRUSTS: FOR MARRIED COUPLESWITH
COMBINED ESTATES EXCEEDING LIFETIME
EXEMPTION (PECUNIARY FORMULA) . . . . . . . . . . . . . . . . . 8-1
8.1 Wills with QTIP and Bypass Trusts for Married Couples with
Adult Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1
8.1.1 General Description of Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1
8.1.2 Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1
8.1.3 Summary of Dispositive Provisions and Estate Tax
Effects of Marital and Credit Shelter/Bypass Trusts . . . . . . . . . . . . . . . . . 8-2
8.1.4 When to Use These Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-2
8.1.5 Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-3
8.1.6 Form Wills with QTIP and Bypass Trusts
Married Couple with Adult Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-3
Form TP-10H: Marital bequest to QTIP Trust; credit shelter
bequest to Residuary/Bypass Trust with income
and principal to spouse; remainder (or entire estate
if spouse does not survive) to living descendants,
per stirpes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-3
5/20/04 Ohio Estate Planning
CONTENTS
xxiii
Form TP-10W: Companion Will to TP-10H. . . . . . . . . . . . . . . . . . . . . . 8-3
Form TP-11H: Marital bequest to QTIP Trust; credit shelter
bequest to Residuary/Bypass Trust with spray of
income and principal to spouse and children;
remainder (or entire estate if spouse does not
survive) to living descendants, per stirpes . . . . . . . . . . . 8-3
Form TP-11W: Companion Will to TP-11H. . . . . . . . . . . . . . . . . . . . . . 8-3
Form TP-12H: Marital bequest to QTIP Trust; credit shelter
bequest to Residuary/Bypass Trust with income
to spouse, spray of principal to spouse and
children; remainder (or entire estate if spouse
does not survive) to living descendants,
per stirpes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-3
Form TP-12W: Companion Will to TP-12H. . . . . . . . . . . . . . . . . . . . . . 8-3
*Form TP-10 12: Testator with Adult Children: Marital
(Pecuniary) Bequest to Marital (QTIP) Trust
for Benefit of Spouse of Amount in Excess of
Unified Credit Equivalent; Residuary Estate to
Credit Shelter Bypass Trust: During Lifetime
of Surviving Spouse Three Alternative
Dispositive Methods of Distributions from
Trust, Remainder Outright to Living Descendants,
per Stirpes; if Spouse Disclaims Marital Bequest,
to Bypass Trust; if Spouse Does Not Survive,
Residuary Estate Outright to Living Descendants,
per Stirpes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-4
8.1.7 Client Presentation Charts for TP-10, TP-11, and TP-12 . . . . . . . . . . . . 8-16
8.1.8 Key Action Subjects for Strategic Planning . . . . . . . . . . . . . . . . . . . . . . 8-20
8.2 Wills with QTIP and Bypass Trusts Married Couples with Minor Children . 8-21
8.2.1 General Description of Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-21
8.2.2 Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-21
8.2.3 Summary of Dispositive Provisions and Tax Effects of
Marital and Credit Shelter/Bypass Trusts . . . . . . . . . . . . . . . . . . . . . . . . 8-22
8.2.4 When to Use These Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-22
8.2.5 Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-23
8.2.6 Form Wills with QTIP and Bypass Trust for
Married Couples with Minor Children . . . . . . . . . . . . . . . . . . . . . . . . . . 8-23
Form TP-13H: Marital bequest to QTIP Trust; credit shelter
bequest to Residuary/Bypass Trust with income
and principal to spouse; remainder (or entire estate
if spouse does not survive) to living descendants,
per stirpes (separate trusts for descendants
under 30) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-23
Form TP-13W: Companion Will to TP-13H. . . . . . . . . . . . . . . . . . . . . 8-23
Form TP-14H: Marital bequest to QTIP Trust; credit shelter
bequest to Residuary/Bypass Trust with spray
5/20/04 Ohio Estate Planning
xxiv
of income and principal to spouse and children;
remainder (or entire estate if spouse does not
survive) to living descendants, per stirpes (separate
trusts for descendants under 30). . . . . . . . . . . . . . . . . . 8-23
Form TP-14W: Companion Will to TP-14H. . . . . . . . . . . . . . . . . . . . . 8-23
Form TP-15H: Marital bequest to QTIP Trust; credit shelter
bequest to Residuary/Bypass Trust with income
to spouse and spray of principal to spouse and
children; remainder (or entire estate if spouse
does not survive) to living descendants, per
stirpes (separate trusts for descendants under 30) . . . . 8-23
Form TP-15W: Companion Will to TP-15H . . . . . . . . . . . . . . . . . . . . 8-23
Form TP-16H: Marital bequest to QTIP Trust; credit shelter
bequest to Residuary/Bypass Trust with income
and principal to spouse; remainder (or entire estate
if spouse does not survive) to living descendants,
per stirpes (pot trust until youngest child
attains 25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-24
Form TP-16W: Companion Will to TP-16H. . . . . . . . . . . . . . . . . . . . . 8-24
Form TP-17H: Marital bequest to QTIP Trust; credit shelter
bequest to Residuary/Bypass Trust with spray of
income and principal to spouse and children;
remainder (or entire estate if spouse does not
survive) to living descendants, per stirpes
(pot trust until youngest child attains 25). . . . . . . . . . . 8-24
Form TP-17W: Companion Will to TP-17H . . . . . . . . . . . . . . . . . . . . 8-24
Form TP-18H: Marital bequest to QTIP Trust; credit shelter
bequest to Residuary/Bypass Trust with income
to spouse and spray of principal to spouse and
children; remainder (or entire estate if spouse
does not survive) to living descendants, per stirpes
(pot trust until youngest child attains 25). . . . . . . . . . . 8-24
Form TP-18W: Companion Will to TP-18H. . . . . . . . . . . . . . . . . . . . . 8-24
*Form TP-13 18: Testator with Minor Children: Marital
(Pecuniary) Bequest to Marital (QTIP) Trust for
Benefit of Spouse of Amount in Excess of
Unified Credit Equivalent; Residuary Estate to
Credit Shelter/Bypass Trust: During Lifetime
of Surviving Spouse Three Alternative
Dispositive Methods of Distributions from
Trust, Remainder Outright to Living
Descendants, per Stirpes (with Alternatives
of Separate Trusts or Pot Trust); if Spouse
Disclaims Marital Bequest, to Bypass Trust; if
Spouse Does Not Survive, Residuary Estate to
Living Descendants, per Stirpes (with
Alternatives for Separate Trusts or Pot Trust) . . . . . 8-24
5/20/04 Ohio Estate Planning
CONTENTS
xxv
8.2.7 Client Presentation Charts for TP-13, TP-14, TP-15,
TP-16, TP-17, and TP-18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-40
8.2.8 Key Action Subjects for Strategic Planning . . . . . . . . . . . . . . . . . . . . . . 8-50
CHAPTER 9 TAX PLANNING WILLS WITH MARITAL ("A")
AND CREDIT SHELTER ("B") SHARES: USE OF
PECUNIARY CREDIT SHELTER AND RESIDUARY
MARITAL BEQUESTS (REVERSE PECUNIARY
FORMULA) WHERE ONE SPOUSE HAS PROBATE
ESTATE IN EXCESS OF TWO TIMES
LIFETIME EXEMPTION ($3,000,000 IN 2004) . . . . . . . . . . . . . 9-1
9.1 Overview and Practical Considerations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-2
9.2 "Reverse Pecuniary" Wills with Bypass Trust and Outright Marital
Bequest Married Couples with Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-2
9.2.1 General Description of Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-2
9.2.2 Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-2
9.2.3 When to Use These Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-2
9.2.4 Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-3
9.2.5 Form Reverse Pecuniary Wills with Bypass Trust and
Outright Marital Bequest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-3
*Form TP-19H: Husband with Adult Children: Pecuniary Bequest
to Credit Shelter/Bypass During Lifetime of
Wife, Spray Trust for Benefit of Wife and
Descendants, Remainder Outright to Living
Descendants, per Stirpes; Residuary Estate
(Amount in Excess of Unified Credit Equivalent)
to Wife; if Wife Disclaims Marital Bequest, to
Credit Shelter Trust; if Wife Does Not Survive,
Residuary Estate Outright to Living Descendants,
per Stirpes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-3
Form TP-19W: Companion Will to TP-19H. . . . . . . . . . . . . . . . . . . . . . 9-3
9.2.6 Client Presentation Chart for TP-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-14
9.3 "Reverse Pecuniary" Wills for Married Couples with Adult Children
(with QTIP Trust) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-14
9.3.1 General Description of Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-14
9.3.2 Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-15
9.3.3 When to Use These Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-15
9.3.4 Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-16
9.3.5 Form Reverse Pecuniary Wills with QTIP and
Bypass Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-16
*Form TP-20H: Husband with Adult Children: Pecuniary
Bequest to Credit Shelter/BYPASS Trust
During Lifetime of Wife, Spray Trust for
Benefit of Wife and Descendants, Remainder
Outright to Living Descendants, per Stirpes;
Residuary Estate (Amount in Excess of
5/20/04 Ohio Estate Planning
xxvi
Unified Credit Equivalent) to Marital (QTIP)
Trust for Benefit of Wife, Remainder to
Living Descendants, per Stirpes; if Wife
Disclaims Marital Bequest, to Credit Shelter
Trust; if Wife Does Not Survive, Residuary
Estate Outright to Living Descendants, per Stirpes . . 9-16
Form TP-20W: Companion Will to TP-20H. . . . . . . . . . . . . . . . . . . . . 9-16
9.3.6 Client Presentation Chart for TP-20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-28
9.4 "Reverse Pecuniary" Wills with Bypass Trust and Outright Marital
Bequest for Married Couples with Minor Children. . . . . . . . . . . . . . . . . . . . . . . 9-29
9.4.1 General Description of Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-29
9.4.2 Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-30
9.4.3 When to Use These Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-31
9.4.4 Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-31
9.4.5 Form Reverse Pecuniary Wills with Bypass Trust and
Outright Marital Bequest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-32
Form TP-21H Pecuniary credit shelter bequest to Bypass Trust
for benefit of spouse and children; marital bequest
outright to spouse; remainder (or entire estate if
spouse does not survive) to living descendants,
per stirpes (separate trusts for children under 30) . . . . 9-32
Form TP-21W Companion Will to TP-21H. . . . . . . . . . . . . . . . . . . . . 9-32
Form TP-22H Pecuniary credit shelter bequest to Bypass Trust
for benefit of spouse and children; marital bequest
outright to spouse; remainder (or entire estate if
spouse does not survive) to pot trust until youngest
child attains 25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-32
Form TP-22W Companion Will to TP-22H. . . . . . . . . . . . . . . . . . . . . 9-32
*Template Form TP-21/22: Married Testator with Minor Children:
Pecuniary Bequest to Credit Shelter/Bypass
Trust During Lifetime of Wife, Spray Trust for
Benefit of Wife and Descendants, Remainder to
Trusts for Children (Alternative Clauses for
Separate Trusts or Pot Trust); Residuary
Estate (Amount in Excess of Unified Credit
Equivalent) to Spouse; if Spouse Disclaims
Marital Bequest, to Credit Shelter Trust; if
Spouse Does Not Survive, Residuary Estate
to Trusts for Children (Alternative Clauses
for Separate Trusts or Pot Trust) . . . . . . . . . . . . . . . . . 9-32
9.4.6 Client Presentation Charts for TP-21 and TP-22 . . . . . . . . . . . . . . . . . . 9-46
9.5 "Reverse Pecuniary" Wills for Married Couples with Minor
Children (with QTIP Trust) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-49
9.5.1 General Description of Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-49
9.5.2 Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-49
9.5.3 When to Use These Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-50
5/20/04 Ohio Estate Planning
CONTENTS
xxvii
9.5.4 Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-51
9.5.5 Form Reverse Pecuniary Wills with QTIP and
Bypass Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-51
Form TP-23H Pecuniary credit shelter bequest to Bypass Trust;
marital bequest to QTIP Trust; remainder of trusts
(or entire estate if spouse does not survive) to living
descendants, per stirpes (separate trusts for children
under 30) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-51
Form TP-23W Companion Will to TP-23H. . . . . . . . . . . . . . . . . . . . . 9-51
Form TP-24H Pecuniary credit shelter bequest to Bypass Trust;
marital bequest to QTIP Trust; remainder of trusts
(or entire estate if spouse does not survive) to pot
trust until youngest child attains 25 . . . . . . . . . . . . . . . 9-52
Form TP-24W Companion Will to TP-24H. . . . . . . . . . . . . . . . . . . . . 9-52
*Form TP-23/24: Married Testator with Minor Children: Pecuniary
Bequest to Credit Shelter/Bypass Trust
During Lifetime of Wife, Spray Trust for
Benefit of Wife and Descendants, Remainder
to Trusts for Children (Alternative Clauses
for Separate Trusts or Pot Trust); Residuary
Estate (Amount in Excess of Unified Credit
Equivalent) to Marital/QTIP Trust for
Benefit of Wife (if Disclaimed, to Credit
Shelter Trust); if Wife Does Not Survive,
Residuary Estate to Trust for Children
(Alternative Clauses for Separate Trusts or
Pot Trust) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-52
9.5.6 Client Presentation Charts for TP-23 and TP-24 . . . . . . . . . . . . . . . . . . 9-67
9.5.7 Key Action Subjects for Strategic Planning. . . . . . . . . . . . . . . . . . . . . . . 9-70
CHAPTER 10 STRATEGIC PLANNING WITH "FLEXIBLE"
DISCLAIMER TRUSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1
10.1 Overview of the Disclaimer Trust Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-1
10.2 Requirements of a Qualified Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-2
10.2.1 Federal Tax Requirements and Consequences . . . . . . . . . . . . . . . . . . . . 10-2
10.2.2 The Ohio Disclaimer Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-3
10.2.2.1 Classes of Individuals Who May Disclaim under Ohio Law . . 10-3
10.2.2.2 Time Limits and Place for Filing Disclaimer . . . . . . . . . . . . . . 10-3
10.2.2.3 Other Requirements under Ohio Law . . . . . . . . . . . . . . . . . . . 10-4
Form 10-1: Disclaimer of Shares of Stock under Will . . . . . . . . . 10-4
Form 10-2: Disclaimer of Interest under Revocable Trust . . . . . . 10-5
10.3 When Is a Disclaimer used In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10-6
10.4 Reducing the Martial Deducation Through a Disclaimer: A Case Study . . . . . . 10-7
10.5 Increased Use of Disclaimer Trusts under EGTRRA . . . . . . . . . . . . . . . . . . . . . 10-9
5/20/04 Ohio Estate Planning
xxviii
10.5.1 The Impact of the Increasing Lifetime Exemption on Formula
Clause Wills and Revocable Trusts "the EGTRRA Trap" . . . . . . . . . 10-9
10.5.2 The Flexible Disclaimer Trust Solution. . . . . . . . . . . . . . . . . . . . . . . . . . 10-9
10.5.3 Some Pitfalls and Disadvantages of Disclaimer Approach. . . . . . . . . . 10-10
CHAPTER 11 TAX PLANNING WILLS WITH DISCLAIMER TRUSTS . . . 11-1
11.1 Disclaimer Wills for Married Couple with Adult Children. . . . . . . . . . . . . . . . . .11-1
11.1.1 Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-1
11.1.2 Summary of Dispositive Provisions and Tax Effects of Disclaimer Trust 11-1
11.1.3 When to Use These Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-4
11.1.4 Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-4
11.1.5 Form Wills with Disclaimer Trusts Married Couples
with Adult Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-5
Form DW-1H: Gift of residuary estate outright to spouse with
disclaimer option to "Disclaimer Trust" for
benefit of spouse, remainder (or entire estate if
spouse does not survive) to living descendants,
per stirpes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-5
Form DW-1W: Companion Will to DW-1H. . . . . . . . . . . . . . . . . . . . . 11-5
Form DW-2H: Gift of residuary estate outright to spouse with
disclaimer option to "Disclaimer Trust" for benefit
of spouse and descendants during spouse's life
(preference to spouse), remainder (or entire estate
if spouse does not survive) to living descendants,
per stirpes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-5
Form DW-2W: Companion Will to DW-2H. . . . . . . . . . . . . . . . . . . . . 11-5
Form DW-3H: Gift of residuary estate outright to spouse with
disclaimer option to "Disclaimer Trust" (income
to spouse, spray of principal to spouse and
descendants), remainder (or entire estate if
spouse does not survive) to living descendants,
per stirpes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-5
Form DW-3W: Companion Will to DW-3H. . . . . . . . . . . . . . . . . . . . . 11-5
*Form DW-1 3: Testator with Adult Children: Outright Gift of
Residuary Estate to Spouse with Option to
Spouse to Disclaim with Bequest Passing to
"Disclaimer Trust" (with Alternate Distribution
Methods), Remainder to Living Descendants,
per Stirpes: if Spouse Does Not Survive, to Living
Descendants, per Stirpes . . . . . . . . . . . . . . . . . . . . . 11-5
11.1.6 Key Action Subjects for Strategic Planning . . . . . . . . . . . . . . . . . . . . . .11-16
11.2 Disclaimer Wills for Married Couples with Minor Children. . . . . . . . . . . . . . . .11-16
11.2.1 Dispositive Provisions of Wills in Category . . . . . . . . . . . . . . . . . . . . . .11-17
11.2.2 Summary of Dispositive Provisions and Tax Effects of
Disclaimer Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-17
5/20/04 Ohio Estate Planning
CONTENTS
xxix
11.2.3 When to Use These Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-22
11.2.4 Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-22
11.2.5 Form Wills with Disclaimer Trusts for Married Couple
with Minor Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11-23
*Template Form DW-4 9: Testator with Minor Children: Outright
Gift of Residuary Estate to Spouse with Option to
Spouse to Disclaim with Bequest Passing to
"Disclaimer Trust" (with Alternative Distribution
Methods), Remainder to Living Descendants,
per Stirpes (with Alternative Provisions for
Trusts for Children); if Spouse Does Not Survive,
to Living Descendants, per Stirpes (with
Alternative Provisions for Trusts for Children) . . . . 11-24
11.2.6 Key Action Subjects for Strategic Planning . . . . . . . . . . . . . . . . . . . . . .11-38
CHAPTER 12 STRATEGIC PLANNING WITH GENERATION-SKIPPING
TRUSTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-1
12.1 Overview of Generation-Skipping Transfer Tax (GST) . . . . . . . . . . . . . . . . . . . 12-1
12.2 Sheltering the Tax Through the GST Exemption . . . . . . . . . . . . . . . . . . . . . . . . 12-2
12.3 Effective Use of the GST Exemption Benefits to Children
and Tax Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-2
Form DW-4H: Gift of residuary estate outright to spouse with disclaimer
option to "Disclaimer Trust" for benefit of spouse,
remainder (or entire estate if spouse does not survive)
to living descendants, per stirpes (separate trusts for
descendants under 30)
Form DW-4W: Companion Will to DW-4H
Form DW-5H: Gift of residuary estate outright to spouse with disclaimer option to "Disclaimer Trust"
spray of inco
and principal to spouse and descendants; remainder (or entire estate if spouse does not survive) to liv
descendants, per stirpes (separate trusts for descendants under 30)
Form DW-5W: Companion Will to DW-5H
Form DW-6H: Gift of residuary estate outright to spouse with disclaimer option to "Disclaimer Trust"
income
spouse, spray of principal to spouse and children, remainder (or entire estate if spouse does not survive)
living descendants, per stirpes (separate trusts for descendants under 30)
Form DW-6W: Companion Will to DW-6H
Form DW-7H: Gift of residuary estate outright to spouse with disclaimer option to "Disclaimer Trust" for
benefit
spouse, remainder (or entire estate if spouse does not survive) to pot trust until youngest child attains 2
Form DW-7W: Companion Will to DW-7H
Form DW-8H: Gift of residuary estate outright to spouse with disclaimer option to "Disclaimer Trust"
spray of inco
and principal to spouse and descendants; remainder (or entire estate if spouse does not survive) to pot tr
until youngest child attains 25
Form DW-8W: Companion Will to DW-8H
Form DW-9H: Gift of residuary estate outright to spouse with disclaimer option to "Disclaimer Trust"
income
spouse, spray of principal to spouse and descendants; remainder (or entire estate if spouse does not s
vive) to pot trust until youngest child attains 25
Form DW-9W: Companion Will to DW-9H
5/20/04 Ohio Estate Planning
xxx
12.4 Allocation of GST Exemption to Assets with Greatest
Appreciation Potential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-3
12.5 Structure of Wills with Generation-Skipping Trusts . . . . . . . . . . . . . . . . . . . . . . 12-4
12.6 The "Reverse QTIP" Election: Allocating First Spouse's GST
Exemption Marital Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-6
12.7 Use of the First Spouse's nonexempt Martial Trust to Allocate
GST Exemption of Surviving Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-7
12.8 Ramifications and Drafting Considerations in Light of EGTRRA . . . . . . . . . . . 12-8
CHAPTER 13 TAX PLANNING WILLS WITH GENERATION-SKIPPING
TRUSTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-1
13.1 Wills with Generation-Skipping Trusts for Married Couples with
Adult Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-1
13.1.1 General Description of Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-1
13.1.2 Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-1
13.1.3 Form Wills with Generation-Skipping Trust . . . . . . . . . . . . . . . . . . . . . . 13-4
*Form GST-1H: Husband with Adult Children: Marital Deduction
Bequest to Marital (QTIP) Trust of Amount in
Excess of Unified Credit Equivalent; Marital
Bequest to Be Divided into Exempt Marital (Reverse
QTIP/Generation-Skipping) Trust and Nonexempt
Marital Trusts; Residuary Estate to Credit Shelter
(Bypass/Generation-Skipping) Trust for Benefit
of Wife, Children, and Descendants of Deceased
Child During Lifetime of Wife; upon Death of
Wife, Remainder of Exempt Marital Trust and
Residuary Trust to Children in Separate Trusts for
Life, Remainder to Grandchildren with Limited
Power of Appointment to Children; upon Death
of Wife, Remainder of Nonexempt Marital Trust
Outright to Living Descendants, per Stirpes . . . . . . . . 13-4
Form GST-1W: Companion Will to GST-1H . . . . . . . . . . . . . . . . . . . . 13-4
*Form GST-2H: Husband with Adult Children: Marital Deduction
Bequest to Marital (QTIP) Trust of Amount in
Excess of Unified Credit Equivalent; Marital
Bequest to Be Divided into Exempt Marital
(Reverse QTIP/Generation-Skipping) Trust and
Nonexempt Marital Trusts; Residuary Estate to
Credit Shelter (Bypass/Generation-Skipping) Trust
for Benefit of Wife, Children, and Descendants of
Deceased Child During Lifetime of Wife; upon
Death of Wife, Remainder of Exempt Marital Trust
and Residuary Trust to Children in Separate Trusts
for Life, Remainder to Grandchildren with Limited
Power of Appointment to Children; upon Death of
Wife, Remainder of Nonexempt Marital Trust
Divided into 2 Parts Wife's GST Exemption
5/20/04 Ohio Estate Planning
CONTENTS
xxxi
Amount Passes to Exempt Trust for Children, Rest
Passes to Outright to Living Descendants,
per Stirpes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-4
Form GST-2W: Companion Will to GST-2H . . . . . . . . . . . . . . . . . . . . 13-4
Form GST-3H: Marital bequest divided into exempt GST and
nonexempt trusts; credit shelter bequest to separate
exempt GST trusts for children; remainder exempt
marital to exempt children's trusts, nonexempt trust
to living descendants, per stirpes . . . . . . . . . . . . . . . . . 13-4
Form GST-3W: Companion Will to GST-3H . . . . . . . . . . . . . . . . . . . . 13-4
Form GST-4H: Marital bequest divided into exempt GST and
nonexempt trusts; credit shelter bequest to separate
exempt GST trusts for children; remainder of
exempt trusts to exempt children's trusts, nonexempt
to living descendants, per stirpes (with flexibility
for distribution of remainder of nonexempt trust
to children's GST trusts) . . . . . . . . . . . . . . . . . . . . . . . 13-4
Form GST-4W: Companion Will to GST-4H . . . . . . . . . . . . . . . . . . . . 13-4
Form GST-5H: Marital bequest divided into exempt GST and
nonexempt trusts; credit shelter bequest to exempt
GST bypass trust for benefit of spouse; remainder
exempt trusts to GST spray trust for children and
descendants, nonexempt to living descendants,
per stirpes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-4
Form GST-5W: Companion Will to GST-5H . . . . . . . . . . . . . . . . . . . . 13-4
Form GST-6H: Marital bequest divided into exempt GST and
nonexempt trusts; credit shelter bequest to exempt
GST bypass trust for benefit of spouse; remainder
exempt trusts to GST spray trust for children
and descendants, nonexempt to living descendants,
per stirpes (with flexibility for distribution of
remainder of nonexempt trust to children's
GST trusts) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-4
Form GST-6W: Companion Will to GST-6H . . . . . . . . . . . . . . . . . . . . 13-5
Form GST-7H: Marital bequest divided into exempt and nonexempt
trusts; credit shelter bequest to spray GST trust
for descendants; remainder exempt marital
to descendant's trust; remainder of nonexempt
trust to living descendants, per stirpes . . . . . . . . . . . . . 13-5
Form GST-7W: Companion Will to GST-7H . . . . . . . . . . . . . . . . . . . . 13-5
Form GST-8H: Marital bequest divided into exempt and nonexempt
trusts; credit shelter bequest to spray GST trust
for descendants; remainder exempt marital
to descendant's trust; remainder of nonexempt
trust to living descendants, per stirpes (with
flexibility for distribution of remainder of
nonexempt trust to children's GST trusts) . . . . . . . . . . 13-5
5/20/04 Ohio Estate Planning
xxxii
Form GST-8W: Companion Will to GST-8H . . . . . . . . . . . . . . . . . . . . 13-5
13.1.4 Client Presentation Charts for All GST Wills . . . . . . . . . . . . . . . . . . . . 13-37
13.1.5 Key Action Subjects for Strategic Planning . . . . . . . . . . . . . . . . . . . . . 13-64
CHAPTER 14 WILLS FOR UNMARRIED INDIVIDUALS (SINGLE,
WIDOWED, DIVORCED) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-1
14.1 Overview and Overall Dispositive Summary of Wills Selected . . . . . . . . . . . . . 14-1
14.2 Simple Wills for Unmarried Person with Adult Children . . . . . . . . . . . . . . . . . . 14-3
14.2.1 Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-3
14.2.2 When to Use These Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-3
14.2.3 Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-3
14.2.4 Form Simple Wills for Unmarried Persons with Adult Children . . . . . . 14-3
*Form UM-1M: Unmarried Male Testator with Adult Children:
Outright Gift of Residuary Estate to Adult
Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-3
Form UM-1F: Corresponding Will to UM-1M for testatrix . . . . . . . . 14-3
14.3 Wills for Unmarried Person with Minor Children. . . . . . . . . . . . . . . . . . . . . . . . 14-8
14.3.1 Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-8
14.3.2 Distribution of Separate Trusts for Children . . . . . . . . . . . . . . . . . . . . . . 14-8
14.3.3 Distribution of Pot Trusts for Children . . . . . . . . . . . . . . . . . . . . . . . . . . 14-9
14.3.4 When to Use These Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-9
14.3.5 Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-10
14.3.6 Form Simple Wills for Unmarried Persons with Minor Children . . . . . 14-10
Form UM-2M: Unmarried Male Testator with Minor Children:
Gift of Residuary Estate to Separate Trusts for
Children Complete Distribution at Age 30 . . . . . . 14-10
Form UM-2F: Corresponding Will to UM-2M for testatrix . . . . . . . 14-10
Form UM-3M: Unmarried Male Testator with Minor Children:
Gift of Residuary Estate to Pot Trust until
Youngest Child Reaches 25 . . . . . . . . . . . . . . . . . . . . 14-10
Form UM-3F: Corresponding Will to UM-3M for testatrix . . . . . . . 14-10
*Form UM-2/3: Unmarried Testator with Minor Children: Gift
of Residuary Estate to Trust for Children
Alternative Dispositive Provisions for Separate
Trusts and Pot Trust . . . . . . . . . . . . . . . . . . . . . . . . . 14-10
14.4 Will For Unmarried Individuals Without Children . . . . . . . . . . . . . . . . . . . . . . 14-21
14.4.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-21
14.4.2 Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-21
14.4.3 When to Use These Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-21
14.4.4 Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-22
14.4.5 Form Wills for Unmarried Individuals without Children . . . . . . . . . . . 14-22
*Form UM-4M: Unmarried Male Testator Who Desires to Benefit
Friend/Companion: Gift of Residuary Estate to
Trust for Friend/Companion for Life, Remainder
5/20/04 Ohio Estate Planning
CONTENTS
xxxiii
to Nieces and Nephews (Separate Trusts if
under 30) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-22
Form UM-4F: Corresponding Will to UM-4M for testatrix . . . . . . . . . 14-22
14.5 Pour-Over Will to Revocable Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-33
14.5.1 Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-33
14.5.2 When to Use These Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-33
14.5.3 Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-33
14.5.4 Form Pour-over Will . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-33
*Form UM-5M: For Unmarried Male Testator Pour-over Will to
Revocable Trust Created During Lifetime . . . . . . . . 14-33
Form UM-5F: Corresponding Will to UM-5F for unmarried
testatrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-33
14.6 Wills for Single Individual with Generation-Skipping Trusts . . . . . . . . . . . . . . 14-38
14.6.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-38
14.6.2 Overall Summary of Dispositive Provisions . . . . . . . . . . . . . . . . . . . . . 14-39
14.6.3 Objective of GST Wills for Unmarrieds . . . . . . . . . . . . . . . . . . . . . . . . 14-39
14.6.4 Detailed Summary of Dispositive Provisions of GST Trusts . . . . . . . . 14-39
14.6.5 When to Use These Wills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-42
14.6.6 Form Wills for Unmarried Individuals with Generation-Skipping
Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-42
Form UM-6M: Unmarried Testator with Adult Children:
Residuary Bequest to Be Divided into: (1)
Exempt Portion Separate Generation-Skipping
Trusts for Children, Remainder to Grandchildren
with Limited Power of Appointment to Children;
and (2) Nonexempt Portion Outright to Living
Descendants, per Stirpes . . . . . . . . . . . . . . . . . . . . . . 14-42
Form UM-6F: Corresponding Will to UM-6M for testatrix . . . . . . . 14-42
Form UM-7M: Unmarried Testator with Adult Children: Residuary
Bequest to Be Divided into: (1) Exempt Portion
Separate Generation-Skipping Trusts for
Benefit of Each Child and Child's Descendants
During Lifetime of Child, Remainder to Grandchildren
with Limited Power of Appointment
to Children; and (2) Nonexempt Portion Outright
to Living Descendants, per Stirpes . . . . . . . . . . . . . . 14-42
Form UM-7F: Corresponding Will to UM-7M for unmarried
testatrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-42
Form UM-8M: Unmarried Testator with Adult Children: Residuary
Bequest to Be Divided into: (1) Exempt Portion
Dynasty Generation-Skipping Trust) for benefit
of descendants for maximum Period Allowed
by Rule Against perpetuities; and (2) Nonexempt
Portion Outright to Living Descendants,
per Stirpes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-42
5/20/04 Ohio Estate Planning
xxxiv
Form UM-8F: Corresponding Will to UM-8M for unmarried
testatrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-42
*Form UM-6 8: Unmarried Testator with Adult Children: Residuary
Bequest to Be Divided into: (1) Exempt Portion
Generation-Skipping Trusts for Descendants with
Alternative Dispositive Structures Including
Dynasty Trust; and (2) Nonexempt Portion
Outright to Living Descendants, per Stirpes . . . . . . . 14-43
14.6.7 Key Action Subjects for Strategic Planning . . . . . . . . . . . . . . . . . . . . . 14-56
CHAPTER 15 STRATEGIC PLANNING WITH REVOCABLE TRUSTS
AS PRIMARY TESTAMENTARY INSTRUMENT . . . . . . . . . 15-1
15.1 Revocable Trusts as Will Substitutes: Advantages, Disadvantages,
and Practical Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-1
15.1.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-1
15.1.2 Practical Uses, Advantages, and Disadvantages . . . . . . . . . . . . . . . . . . . 15-1
15.1.2.1 Probate Avoidance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-1
15.1.2.2 Estate and Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-2
15.1.2.3 Planning for Incapacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-3
15.1.2.4 Ancillary Administration: Real Estate in More than One State 15-3
15.1.2.5 Potential for Will Contests . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-3
15.1.2.6 Probate Court Supervision . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-3
15.1.3 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-4
15.2 Mechanics and Operation of Funded Revocable Trust/Pour-over
Will Structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-4
15.2.1 Transfer of Assets to Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-4
15.2.2 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-4
15.2.3 Dispositive Provisions During Life of Settlor and upon Death . . . . . . . 15-5
15.2.4 Right to Amend or Revoke . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-5
15.2.5 Tax Identification Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-5
15.2.6 Tax Consequences of a Revocable Trust . . . . . . . . . . . . . . . . . . . . . . . . . 15-5
15.2.6.1 Gift Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-5
15.2.6.2 Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-5
15.2.6.3 Estate Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-6
15.2.7 Pour-over Will . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-6
15.3 Overall Summary of Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-6
CHAPTER 16 REVOCABLE TRUSTS AND POUR-OVER WILLS
FOR UNMARRIED INDIVIDUALS . . . . . . . . . . . . . . . . . . . . . . 16-1
16.1 Overall Summary of Forms and Dispositive Summary. . . . . . . . . . . . . . . . . . . . 16-1
16.2 Simple Revocable Trust and Pour-over Will for Unmarried Individual
with Adult Children (RT-1 and PO-1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-2
16.2.1 Summary of Dispositive Provisions of RT-1 . . . . . . . . . . . . . . . . . . . . . . 16-2
16.2.2 When to Use This Revocable Trust (RT-1) . . . . . . . . . . . . . . . . . . . . . . . 16-2
5/20/04 Ohio Estate Planning
CONTENTS
xxxv
16.2.3 Income, Gift, and Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . 16-3
16.2.4 Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-4
*Form RT-1: Revocable Trust Agreement for Unmarried
Settlor Outright Disposition to Adult Children
at Death of Settlor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-4
*Form PO-1: For Unmarried Testator/Testatrix: Pour-over
Will to Accompany RT-1 . . . . . . . . . . . . . . . . . . . . 16-4
16.3 Revocable Trust and Pour-over Will for Unmarried Individuals
Without Children (RT-2 And PO-2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-16
16.3.1 Summary of Dispositive Provisions of RT-2 . . . . . . . . . . . . . . . . . . . . 16-16
16.3.2 When to Use this Revocable Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-16
16.3.3 Income, Gift, and Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . 16-17
16.3.4 Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-17
*Form RT-2: Revocable Trust Agreement for Unmarried
Settlor Who Wishes to Benefit Friend/Companion
to Friend/Companion for Life, Remainder to
Nieces and Nephews (in Trust if under 30) . . . . . . . . 16-17
*Form PO-2: For Unmarried Testator/Testatrix: Pour-over
Will to Accompany RT-2 . . . . . . . . . . . . . . . . . . . 16-17
16.4 Revocable Trusts and Pour-over Wills For Unmarried Individuals
With Children with Generation-Skipping Trusts
(RT-3 and RT-4 and PO-3/4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-32
16.4.1 Summary of Dispositive Provisions of RT-3 and RT-4 . . . . . . . . . . . . . 16-32
16.4.2 Objective of GST Provisions for Unmarrieds . . . . . . . . . . . . . . . . . . . . 16-32
16.4.3 Detailed Summary and Estate Tax Effects of Dispositive
Provisions of GST-Exempt Trusts (after Settlor's Death)
under RT-3 and RT-4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-33
16.4.4 When to Use These Revocable Trusts (RT-3 and RT-4) . . . . . . . . . . . . 16-34
16.4.5 Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-34
*Form RT-3: Revocable Trust Agreement for Unmarried
Individual with Adult Children with GST
Trusts for Children upon Death of Settlor . . . . . . . . . 16-34
*Form RT-4: Revocable Trust Agreement for Unmarried
Individual with Adult Children with Dynasty
Trust for Descendants for Maximum
Perpetuities Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-35
*Form PO-3/4: For Unmarried Testator/Testatrix: Pour-over
Will to Accompany RT-3 and RT-4 . . . . . . . . . . . . 16-35
CHAPTER 17 REVOCABLE TRUSTS AND POUR-OVER WILLS FOR
MARRIED COUPLES WITHOUT TAX PLANNING
(COMBINED ESTATE NOT EXCEEDING LIFETIME
EXEMPTION) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1
17.1 Overview and Practical Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1
17.2 Summary of Dispositive Provisions of RT-5 . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-1
5/20/04 Ohio Estate Planning
xxxvi
17.3 When to Use This Revocable Trust (RT-5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-2
17.4 Income, Gift, and Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3
17.5 Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-3
*Form RT-5: Simple Revocable Trust Agreement for Married
Settlor Outright Disposition to Spouse upon
Death of Settlor (to Children if Spouse Does
Not Survive) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17- 3
*Form PO-5 9: For Married Testator/Testatrix: Pour-over
Will to Accompany RT-5, 6 ,7, 8, & 9 . . . . . . . . . . . 17-3
CHAPTER 18 REVOCABLE TRUSTS AND POUR-OVER WILLS
WITH CREDIT SHELTER/BYPASS TRUSTS FOR
MARRIED COUPLES WITH COMBINED ESTATES
EXCEEDING LIFETIME EXEMPTION . . . . . . . . . . . . . . . . . . 18-1
18.1 Strategic Planning With Credit Shelter/bypass Trusts . . . . . . . . . . . . . . . . . . . . 18-1
18.2 Summary of Dispositive Provisions of RT-6 . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-1
18.3 Graphic Summary of Dispositive Provisions of
Credit Shelter/Bypass Trust under RT-6 and
Estate Tax Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-2
18.4 Alternatives For Structuring Bypass Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-3
18.5 When To Use Revocable Trust RT-6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-4
18.6 Income, Gift, and Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-5
18.7 Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-6
*Form RT-6: Revocable Trust Agreement for Married
Settlor with Credit Shelter/Bypass Trust . . . . . . . . . 18-6
Form PO-5 9: Pour-over Will to Accompany RT-6 (for
Form PO-5 9, see Section 17.5) . . . . . . . . . . . . . . . . . 18-6
CHAPTER 19 REVOCABLE TRUSTS AND POUR-OVER WILLS
WITH MARTIAL/QTIP TRUST IN COMBINATION
WITH CREDIT SHELTER/BYPASS TRUST: THE
"A-B" TRUST STRUCTURE (COMBINED
ESTATES EXCEED LIFETIME EXEMPTION) . . . . . . . . . . . 19-1
19.1 Strategic Planning with "A-B" Trust Structure . . . . . . . . . . . . . . . . . . . . . . . . . 19-1
19.2 Federal Tax Requirements of QTIP Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-2
19.3 Summary of Dispositive Provisions of RT-7 . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-3
19.4 Graphic Summary of Dispositive Provisions of Credit Shelter/Bypass
Trust under RT-7 and Estate Tax Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-3
19.5 When to Use Revocable Trust RT-7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-4
19.6 Income, Gift, and Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-5
19.7 Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-6
Form RT-7: Revocable Trust Agreement for Married
Settlor with Marital and Bypass Trusts . . . . . . . . . . 19-7
CHAPTER 20 REVOCABLE TRUST AND POUR-OVER WILL FOR
MARRIED COUPLE WITH DISCLAIMER TRUST
5/20/04 Ohio Estate Planning
CONTENTS
xxxvii
OPTION UPON DEATH OF SETTLOR . . . . . . . . . . . . . . . . . . 20-1
20.1 Strategic Planning with Disclaimer Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-1
20.2 Summary of Dispositive Provisions of RT-8 . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-1
20.3 Graphic Summary of Dispositive Provisions of Disclaimer Trust
under RT-8 And Estate Tax Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-2
20.4 When to Use Revocable Trust RT-8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-2
20.5 Income, Gift, and Estate Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-3
20.6 Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20-4
Form RT-8: Revocable Trust Agreement for Married
Settlor Outright to Spouse with Option
for Disclaimer Trust after Death of Settlor . . . . . . . . . 20-5
CHAPTER 21 REVOCABLE TRUST FOR MARRIED SETTLORS
WITH GENERATION-SKIPPING TRUSTS . . . . . . . . . . . . . . . 21-1
21.1 Strategic Planning with Generation-Skipping Trusts: Benefits and
Use of GST Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-1
21.2 Three-Trust Structure of Revocable Trust Agreement with
Generation-Skipping Trust (RT-9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-2
21.2.1 Strategic Objectives under RT-9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-2
21.2.2 The Three Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-2
21.2.2.1 Residuary (Credit Shelter) Trust . . . . . . . . . . . . . . . . . . . . . . . 21-3
21.2.2.2 Exempt and Nonexempt Marital Trusts . . . . . . . . . . . . . . . . . . 21-3
21.3 The "Reverse QTIP" Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-5
21.4 Ramifications and Drafting Considerations in Light of EGTRRA . . . . . . . . . . 21-6
21.5 Summary of Dispositive Provisions of RT-9 . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-7
21.6 Graphic Summary of Dispositive Provisions of Exempt and
Nonexempt Generation-Skipping Trusts under RT-9 and
Estate Tax Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-7
21.7 When to Use Revocable Trust RT -9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21-11
21.8 Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21-11
*Form RT-9: Revocable Trust Agreement for Married
Settlor with Generation-Skipping Trusts . . . . . . . . 21-11
*Form PO-5 9: For Married Testator/Testatrix: Pour-over
Will to Accompany RT-5, 6, 7, 8, & 9 . . . . . . . . . . 21-11
CHAPTER 22 IRREVOCABLE LIFE INSURANCE TRUSTS (ILITS) . . . . . 22-1
22.1 The Life Insurance Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-1
22.2 Tax Strategies to Make Effective Uses of ILITS: Proper Crummey
Notices and Avoiding the 3-Year Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-3
22.2.1 The "Crummey" Notice and the Annual Gift Exclusion . . . . . . . . . . . . . 22-3
22.2.2 The 3-Year Rule and Strategies for Avoidance . . . . . . . . . . . . . . . . . . . 22-4
22.3 The 8-Step Procedure for Establishing and Maintaining a Life
Insurance Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-5
Form 22-1: Checklist for Establishing and Maintaining
5/20/04 Ohio Estate Planning
xxxviii
an ILIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-6
22.4 Life Insurance Trust on One Life for Married Settlor . . . . . . . . . . . . . . . . . . 22-6
22.4.1 Purposes and Uses of ILIT-1 (Standard ILIT) and ILIT-2
(ILIT with Generation-Skipping Trusts) . . . . . . . . . . . . . . . . . . . . . . . . . 22-6
22.4.2 Graphic Summary of Dispositive Provisions of ILIT-1 and
ILIT-2 with Estate Tax Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-7
22.4.3 Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-9
*Form ILIT-1: Life Insurance Trust to Hold Policy on Life of
Married Settlor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-9
*Form ILIT-2: Life Insurance Trust to Hold Policy on Life of
Married Settlor, with Generation-Skipping
Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-9
*Form 22-2: Crummey Notice to Accompany Single
Life ILITs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-9
22.5 Life Insurance Trust on One Life For Unmarried Settlor With
Children (e.g., Widowed, Divorced) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-40
22.5.1 Purposes and Uses of ILIT-3 (Standard ILIT) and ILIT-4
(ILIT with Generation-Skipping Trusts) . . . . . . . . . . . . . . . . . . . . . . . . 22-40
22.5.2 Graphic Summary of Dispositive Provisions of ILIT-3 and ILIT-4
with Estate Tax Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-40
22.5.3 Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-41
*Form ILIT-3: Life Insurance Trust to Hold Policy on Life of
Unmarried Settlor . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-41
*Form ILIT-4: Life Insurance Trust to Hold Policy on Life
of Unmarried Settlor with Generation-Skipping
Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-41
22.6 Life Insurance Trusts on Two Lives (for Second-to-Die
Policies) ILIT-5 and ILIT-6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-69
22.6.1 Purposes and Practical Uses of Second-to-Die Policies and
Special Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-69
22.6.2 Graphic Summary of Dispositive Provisions of ILIT-5
(Standard ILIT for Second-to-Die Policy) and ILIT-6
(ILIT for Second-to-Die Policy with Generation-Skipping
Trusts) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-70
22.6.3 Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-71
*Form ILIT-5: Survivorship Life Insurance Trust to Hold
Survivorship Policy . . . . . . . . . . . . . . . . . . . . . . . . . . 22-72
*Form ILIT-6: Survivorship Life Insurance Trust to Hold
Survivorship Policy with Generation-Skipping
Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-85
*Form 22-3: Crummey Notice to Accompany Second-to-Die
ILITs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-100
CHAPTER 23 TRUSTS FOR MINORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-1
5/20/04 Ohio Estate Planning
CONTENTS
xxxix
23.1 Practical Uses and Overall Comparisons of Trusts with Custodial Transfers
and Section 529 Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-1
23.1.1 Custodial Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-1
23.1.2 Section 529 Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-2
23.2 Section 2503(C) Minor's Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-3
23.2.1 Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-3
23.2.2 Tax Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-4
23.2.3 Planning Considerations: Extending the 2503(c)
Trust Beyond Age 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-4
23.2.4 Forms for Section 2503(c) Minor Trust . . . . . . . . . . . . . . . . . . . . . . . . . 23-4
*Form 23-1: Section 2503(c) Minor's Trust for One Beneficiary
Qualifying for Annual Gift Tax Exclusion . . . . . . . . . 23-4
23.3 Crummey Minor's Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-13
23.3.1 Requirements and Practical Uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-13
23.3.2 Combining Crummey Minor's Trusts with Generation-Skipping
Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-14
23.3.3 Summary of Dispositive Provisions of Forms for Crummey
Minor's Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-14
23.3.4 Forms for Crummey Minor's Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-16
*Form 23-2: Crummey Minor's Trust for One Child with
Withdrawal Power Distribution of Principal
to Child at Ages 25, 30, and 35 . . . . . . . . . . . . . . . . . 23-16
*Form 23-3: Crummey Minor's "Pot" Trust for Children of
Settlor with Hanging Withdrawal Powers Final
Distribution of Principal When Youngest Child
Attains Age 25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-17
*Form 23-4: Crummey Minor's Trust for One Grandchild
with Withdrawal Power Qualifying for Annual
Exclusion from Gift Tax and GST Tax
Distribution of Principal to Grandchild at
Ages 25, 30, and 35 . . . . . . . . . . . . . . . . . . . . . . . . . . 23-17
*Form 23-5: Crummey "Dynasty" Trust for Descendants of
Settlor for Maximum Perpetuities Period . . . . . . . . . 23-17
*Form 23-6: Crummey Notice to Accompany
Crummey Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-17
CHAPTER 24 TRUSTS FOR SUBCHAPTER S STOCK. . . . . . . . . . . . . . . . . . 24-1
24.1 Overview: Types of Subchapter S Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24-1
24.2 Qualified Subchapter S Trust ("QSST"): Requirements and Uses . . . . . . . . . . . 24-1
24.3 The Electing Small Business Trust ("ESBT"): Requirements and Uses . . . . . . 24-2
24.4 Eligibility of Grantor Retained Annuity Trust ("GRAT") to Hold
S Corporation Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24-3
24.5 Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24-4
*Form 24-1: Qualified Subchapter S Trust with
Generation-Skipping Provisions . . . . . . . . . . . . . . . . . 24-4
5/20/04 Ohio Estate Planning
xl
*Form 24-2: Sample QSST Election . . . . . . . . . . . . . . . . . . . . . . . . 24-4
*Form 24-3: Electing Small Business Trust ("ESBT") for
Descendants of Settlor for Maximum
Perpetuities Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24-4
CHAPTER 25 RETAINED INTEREST TRUSTS: QPRTS AND GRATS . . . . 25-1
25.1 Qualified Personal Residence Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-1
25.1.1 Requirements and Practical Uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-1
25.1.2 Illustrations and Computer Projections/Presentation Charts . . . . . . . . . . 25-2
25.1.3 Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-3
*Form 25-1: Qualified Personal Residence Trust to Hold
Residence of Grantor for 10 Years Remainder
to Child . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-3
*Form 25-2: QPRT Calculations and Graphic Illustration
from Brentmark Software . . . . . . . . . . . . . . . . . . . . . . 25-3
25.2 Grantor Retained Annuity Trusts (GRATs) . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-16
25.2.1 Requirements and Practical Uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-16
25.2.2 Illustrations and Computer Projections/Presentation Charts . . . . . . . . . 25-17
25.2.3 Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-18
*Form 25-3: Grantor Retained Annuity Trust 9% Annuity
to Grantor for 5 Years Terminating Distribution
to Grantor's Child . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-18
*Form 25-4: GRAT Calculations and Graphic Illustration
from Brentmark Software . . . . . . . . . . . . . . . . . . . . . 25-18
CHAPTER 26 TRUSTS FOR INDIVIDUALS WITH SPECIAL NEEDS . . . . 26-1
26.1 Overview: Planning Strategies for Families of Children with
Special Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26-1
26.2 The Ohio Statutory Disability Trust: Requirements and Overview . . . . . . . . . . 26-1
26.2.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26-1
26.2.2 Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26-2
26.3 The Discretionary Special Needs Trust Nonstatutory . . . . . . . . . . . . . . . . . . 26-2
26.4 Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26-3
*Form 26-1: Special Needs Trust for Disabled Child
(Nonstatutory) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26-3
CHAPTER 27 ALTERNATIVE DRAFTING FORMS. . . . . . . . . . . . . . . . . . . . 27-1
27.1 Special Testamentary Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-1
27.1.1 Trust for Family Residence (for Benefit of Surviving
Spouse for Life, Remainder to Children) . . . . . . . . . . . . . . . . . . . . . . . . 27-1
*Form 27-1: Trust of Family Residence . . . . . . . . . . . . . . . . . . . . . 27-1
27.1.2 Trust for Vacation Home (for Benefit of Children) . . . . . . . . . . . . . . . . . 27-2
*Form 27-2: Trust for Vacation Home (for Benefit of Children) . . 27-2
27.1.3 Trusts Primarily for Education of Descendants . . . . . . . . . . . . . . . . . . . 27-3
5/20/04 Ohio Estate Planning
CONTENTS
xli
*Form 27-3: Grandchildren's Educational Trust; General
Standards with Preference for Education . . . . . . . . . . 27-3
*Form 27-4: Incentive and Distribution Provisions for
Children to Attend College . . . . . . . . . . . . . . . . . . . . . 27-3
*Form 27-5: Flexible Guidelines for Trustee for Educational
Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-4
27.1.4 Credit Shelter/Bypass Trust Giving Surviving Spouse Limited
Power of Appointment of Trust Remainder . . . . . . . . . . . . . . . . . . . . . . 27-4
*Form 27-6: Credit Shelter/ Bypass Trust Giving Surviving
Spouse Limited Power of Appointment of Trust
Remainder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27- 4
27.1.5 Qualified Domestic Trust (QDOT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-5
*Form 27-7: Qualified Domestic Trust (QDOT) . . . . . . . . . . . . . . 27-5
27.1.6 QTIP Trust Provisions for Spouse in Nursing Home . . . . . . . . . . . . . . . 27-7
*Form 27-8: QTIP Trust Provisions for Spouse in a Nursing
Home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-8
27.1.7 Generation-Skipping Trust General Power of Appointment upon
Child's Death to Prevent Imposition of GST Tax . . . . . . . . . . . . . . . . . . 27-9
*Form 27-9: Generation-Skipping Trust Providing for
General Power of Appointment upon Child's
Death to Prevent Imposition of GST Tax . . . . . . . . . 27-10
27.1.8 Trust for Client's Parents after Client's Death . . . . . . . . . . . . . . . . . . . .27-11
*Form 27-10: Trust for Client's Parents after Client's Death
(Broad) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27- 11
*Form 27-11: Narrow Form (Distribution to Parents Only
after Proper Provision for Spouse and
Children) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-11
27.2 Special Provisions For Closely Held Business Interest . . . . . . . . . . . . . . . . . . 27-12
27.2.1 Closely Held Business Power for Fiduciaries . . . . . . . . . . . . . . . . . . . . 27-12
*Form 27-12: Broad Closely Held Business Power for
Fiduciaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-12
27.2.2 Right of First Refusal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-12
*Form 27-13: Right of First Refusal for Disposition of Corporate
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-13
*Form 27-14: Right of First Refusal for Disposition of Interest
in Limited Liability Company . . . . . . . . . . . . . . . . . 27-13
27.2.3 Compliance with "Buy Sell" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-14
*Form 27-15: Compliance with "Buy Sell" . . . . . . . . . . . . . . . . . . 27-14
27.3 Disposition of Bodily Parts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-15
27.3.1 Anatomical Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-15
*Form 27-17: Anatomical Gift: Statutory Form (During Lifetime) 27-15
*Form 27-18: Anatomical Gift: Confirmation and Direction
in Will . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-16
27.4 Specific Bequests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-16
5/20/04 Ohio Estate Planning
xlii
27.4.1 Specific Bequest of Tangible Personal Property of Life Estate
to Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-16
*Form 27-19: Specific Bequest of Tangible Personal Property
of Life Estate to Spouse . . . . . . . . . . . . . . . . . . . . . . 27-16
27.4.2 Specific Bequests to Grandchild under Ohio Uniform Transfers
to Minors Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-16
*Form 27-20: Specific Bequests to Grandchild under Ohio
Uniform Transfers to Minors Act . . . . . . . . . . . . . . . 27-16
27.4.3 Gift to Surviving Spouse in Trust Until Death or Remarriage . . . . . . . 27-17
*Form 27-21: Gift to Surviving Spouse in Trust until Death
or Remarriage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-17
27.4.4 Specific Bequest of Tangible Personal Property: Division
by Lot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-17
*Form 27-21A: Specific Bequest of Tangible Personal Property:
Division by Lot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-17
27.4.5 Cash Gifts to Individual Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . 27-17
*Form 27-21B: Cash Gifts to Individual Beneficiaries
Contingent upon Survival . . . . . . . . . . . . . . . . . . . . . 27-18
*Form 27-21C: Cash Gifts to Individual Beneficiaries with
Gift over if Named Beneficiary Fails to Survive . . . 27-18
27.4.6 Cash Gifts to Charities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-18
*Form 27-21D: Cash Gifts to Charity with Suggested Allocation
of Gift . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-18
*Form 27-21E: Cash Gift to Charity Limited by a Percentage
of Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-19
27.4.7 Specific Bequest of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-19
*Form 27-21F: Specific Bequest of Stock No Contingent
Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-19
*Form 27-21G: Specific Bequest of Stock Contingent
Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-19
27.4.8 Outright Bequest of Residuary Estate to More than One
Legatee in Equal Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-19
*Form 27-21H: Outright Bequest of Residuary Estate to More
than One Legatee in Equal Shares . . . . . . . . . . . . . . . 27-20
27.4.9 Transferring Property Subject to Mortgage . . . . . . . . . . . . . . . . . . . . . 27-20
*Form 27-21I: Direction to Executor to Pay Mortgage
from Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-20
*Form 27-21J: Authorization to Pay off Mortgage . . . . . . . . . . . . . . 27-20
27.5 Special Provisions Where Estate Consists of Stock in Subchapter
S Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-21
27.5.1 Subchapter S Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-21
*Form 27-22: Subchapter S Provisions . . . . . . . . . . . . . . . . . . . . . . 27-21
27.6 Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-22
27.6.1 Specific Exercise of Testamentary Power of Appointment . . . . . . . . . 27-22
5/20/04 Ohio Estate Planning
CONTENTS
xliii
*Form 27-23: Specific Exercise of Testamentary Power of
Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-22
27.6.2 Forgiveness of Debt at Death. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-23
*Form 27-24: Forgiveness of Debt at Death (Unrecorded Debt) . . 27-23
*Form 27-25: Forgiveness of Debt at Death (Recorded Mortgage) 27-23
27.6.3 Catch-All/Ultimate Beneficiary to Various Charities . . . . . . . . . . . 27-24
*Form 27-26: Catch-All/Ultimate Beneficiary to Various
Charities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-24
27.6.4 Marital Deduction Equalization Clause . . . . . . . . . . . . . . . . . . . . . . . . 27-24
*Form 27-27: Marital Deduction Equalization Clause . . . . . . . . . . 27-24
27.6.5 Omission of Spouse Second Marriage . . . . . . . . . . . . . . . . . . . . . . . 27-25
*Form 27-28: Omission Spouse from Second Marriage . . . . . . . 27-25
27.6.6 Omission Due to Religious Affiliation or Joining of Cult . . . . . . . . . . 27-25
*Form 27-29: Omission Due to Religious Affiliation . . . . . . . . 27-25
*Form 27-30: Omission Due to Joining of Cult . . . . . . . . . . . . . 27-25
27.6.7 Request for Use of Specific Investment Advisor. . . . . . . . . . . . . . . . . . 27-26
*Form 27-31: Request for Use of Specific Investment Advisor . . . 27-26
27.6.8 Request for Use of Specific Attorney to Handle/Advise
Estate Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-26
*Form 27-32: Request for Use of Specific Attorney to
Handle/Advise Estate Administration . . . . . . . . . . . . 27-26
27.6.9 In Terrorem Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-27
*Form 27-33: In Terrorem Provision . . . . . . . . . . . . . . . . . . . . . . . . 27-27
27.6.10 Provision Specifically Naming Children in Will . . . . . . . . . . . . . . . . . 27-27
*Form 27-34: Provision Specifically Naming Children in Will . . . 27-27
27.6.11Alternative Tax Clause Apportionment for
Nonprobate Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-27
*Form 27-35: Alternative Tax Clause Apportionment
for Nonprobate Property . . . . . . . . . . . . . . . . . . . . . . 27-28
27.6.12 Alternative Tax Clause Exclusion of Certain Taxes . . . . . . . . . . . . 27-28
*Form 27-36: Alternative Tax Clause Exclusion of Certain
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-29
27.6.13Alternative Tax Clause Full Apportionment and "Split"
Apportionment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-29
*Form 27-36A: Alternative Tax Clause- Apportionment for
all Property (Unmarried Testator) . . . . . . . . . . . . . . . 27-29
*Form 27-36B: Alternative Tax Clause for Probate Property,
Property under Revocable Trust and Other
Property (Unmarried Testator) . . . . . . . . . . . . . . . . . 27-29
27.7 Provisions Dealing with Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-30
27.7.1 Compensation of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-30
*Form 27-37: Trustees to Serve Without Compensation . . . . . . . . . 27-30
*Form 27-38: Trustees to Receive Reasonable Compensation;
5/20/04 Ohio Estate Planning
Published Fee Schedule for Corporate Trustee . . . . . 27-31
*Form 27-39: Fee Schedule for Corporate Trustee; Aggregation
of Trusts to Determine Fee . . . . . . . . . . . . . . . . . . . . 27-31
27.7.2 Final Succession of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-31
*Form 27-40: Corporate Trustee as Final Successor . . . . . . . . . . . . 27-31
*Form 27-41: Named Trustees Designate Successor . . . . . . . . . . . . 27-31
*Form 27-42: Provision for Successive Trustees/Remaining
Trustee to Designate Successor/Corporate Trustee
as Ultimate (Comprehensive Clause) . . . . . . . . . . . 27-32
27.7.3 Resignation and Appointment of Trustees . . . . . . . . . . . . . . . . . . . . . . 27-32
*Form 27-43: Resignation of Trustee . . . . . . . . . . . . . . . . . . . . . . . 27-32
*Form 27-44: Designation of Co-Trustee by Settlor under
Revocable Trust Agreement . . . . . . . . . . . . . . . . . . . 27-33
*Form 27-45: Designation of Co-Trustee by Remaining Trustee
under Irrevocable Trust Agreement following
Resignation of Trustee . . . . . . . . . . . . . . . . . . . . . . . 27-34
*Form 27-46: Acceptance by Newly-Appointed Trustee under
Revocable Trust Agreement . . . . . . . . . . . . . . . . . . . 27-35
*Form 27-47: Acceptance by Newly-Appointed Trustee under
Irrevocable Trust Agreement . . . . . . . . . . . . . . . . . . 27-36
27.8 Amendments And Restatements to Revocable Trust Agreements . . . . . . . . . . 27-36
*Form 27-48: Amendment to Revocable Trust Agreement . . . . . . . 27-37
*Form 27-49: Amendment and Restatement of Revocable
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-38
27.9 Electing out of Common Law Rule Against Perpetuities . . . . . . . . . . . . . . . . . 27-39
*Form 27-50: Electing out of Rule Against Perpetuities Will
Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-39
*Form 27-51: Electing out of Rule Against Perpetuities
Trust Agreement Provision . . . . . . . . . . . . . . . . . . . 27-40
27.10 Special Trustee Powers for Survivorship Life Insurance Trust . . . . . . . . . . . . 27-40
*Form 27-52: Provision Authorizing Trustees to Sell Insurance
Policy to Children 27-40
*Form 27-53: Additional Provision Regarding Use of Insurance
Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-40
27.11 Additional Provision for Executors after EGTRRA . . . . . . . . . . . . . . . . . . . . 27-41
*Form 27-54: Authorization to Executor to Allocate Basis to
Specific Assets with Exoneration Provision . . . . . 27-41
27.12 "CAP" In Light of EGTRRA To Limit Size of Non-Marital Share . . . . . . . . 27-41
*Form 27-55: Cap to Limit Size of Non-marital Share . . . . . . . . . . 27-41
CHAPTER 28 SELECT ESTATE PLANNING SUMMARIES: OHIO
AND FEDERAL LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-1
28.1 The Ohio Law of Intestacy And Necessity of Wills . . . . . . . . . . . . . . . . . . . . . . 28-1
28.1.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-1
5/20/04 Ohio Estate Planning
CONTENTS
xlv
28.1.2 Operation of Intestacy Law Share of Surviving Spouse and Others . 28-1
28.1.3 Necessity of Will and Dangers of Dying Intestate . . . . . . . . . . . . . . . . . 28-2
28.1.4 Necessity of Will Even with Other Forms of Testamentary Disposition 28-4
28.2 Organizational Checklist of Will: Comments and Strategic Practice Pointers . . 28-5
28.2.1 Preamble/Exordium Clause (Introductory Paragraph) . . . . . . . . . . . . . . 28-5
28.2.2 Definitions and Appointment of Fiduciary (Section 1) . . . . . . . . . . . . . . 28-6
28.2.3 Funeral Arrangements (Section 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-7
28.2.4 Debts (Section 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-7
28.2.5 Specific Bequests; Disposition of Tangible Personal Property
(Section 4); Principal Residence (Section 5) . . . . . . . . . . . . . . . . . . . . . 28-8
28.2.6 Payment of Taxes (Section 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-9
28.2.7 Residuary Estate (Section 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-10
28.2.8 Dispositive Provisions (Other than Specific Bequests)
(Sections 7 and 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-10
28.2.9 The "Catastrophic"/"Catch-All" Provision (Section 10) . . . . . . . . . . . 28-10
28.2.10 Fiduciary Powers/Administrative Provisions Re: Trustees and
Executors (Section 11 for Trustees and Section 13 for Executors) . . . 28-10
28.2.11 Insurance or Pension Plan (Section 12) . . . . . . . . . . . . . . . . . . . . . . . . .28-11
28.2.12 Spendthrift and Facility of Payment Provisions (Section 14) . . . . . . . 28-12
28.2.13 Survivorship/Simultaneous Death (Section 15) . . . . . . . . . . . . . . . . . . 28-12
28.2.14 Rule Against Perpetuities (Section 16) . . . . . . . . . . . . . . . . . . . . . . . . 28-12
28.2.15Gender (Section 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-13
28.2.16Headings (Section 18) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-13
28.2.17Signature and Attestation Clauses (Final Paragraphs) . . . . . . . . . . . . . 28-13
28.3 The New Transfer Tax System under the Economic Growth
and Tax Relief Reconciliation Act of 2001 (EGTRRA) . . . . . . . . . . . . . . . . . 28-13
28.3.1 The Basics and the State of Affairs before EGTRRA . . . . . . . . . . . . . . 28-13
28.3.2 EGTRRA: Highlights and Summary . . . . . . . . . . . . . . . . . . . . . . . . . . 28-15
28.3.3 Summary Chart: Estate, Gift and GST Tax Changes under EGTRRA . 28-18
28.3.4 Planning for Unified Credit/Exemption Equivalent Amount
in a Nutshell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-21
28.3.5 Impact of EGTRRA on Forms, Formula Clauses and Appropriate
Tax Planning Trusts and Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-22
28.3.6 Drafting for Repeal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-29
28.4 Generation-Skipping Transfer Tax with New EGTRRA Modifications . . . 28-29
28.4.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-29
28.4.2 Mechanics and Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-30
28.4.3 Transfers Subject to GST Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-30
28.4.4 Transfers Exempt from GST Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-31
28.4.5 Computing GST Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-32
28.4.6 Administration and Return Requirements . . . . . . . . . . . . . . . . . . . . . . . 28-33
28.5 "Per Stirpes" and "Per Capita": Explanation and Examples . . . . . . . . . . . . . . 28-33
5/20/04 Ohio Estate Planning
xlvi
28.6 Formula Clauses for Marital and Bypass Trusts Some Technical
Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-36
28.7 Spousal Right of Election in Ohio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-37
28.7.1 Statutory Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-37
28.7.2 Statutory Share Limited to "Probate" Assets: Advantages and
Disadvantages for Surviving Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . 28-37
28.8 QDOTs and the Noncitizen Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-38
28.8.1 Citizenship of Donee and the Marital Deduction . . . . . . . . . . . . . . . . . 28-38
28.8.2 Gift Tax Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-38
28.8.2.1 Joint Tenancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-39
28.8.2.2 Joint and Survivor Annuities . . . . . . . . . . . . . . . . . . . . . . . . . 28-40
28.8.3 Estate Tax Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-40
28.8.4 The Qualified Domestic Trust (QDOT) . . . . . . . . . . . . . . . . . . . . . . . . 28-41
28.8.4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-41
28.8.4.2 Distinguishing Features of a QDOT . . . . . . . . . . . . . . . . . . . 28-42
28.8.4.3. Requirements for QDOTs under the Treasury Regulations . . 28-42
28.8.4.4 Right to Withhold Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-43
28.8.4.5 Qualified Marital Interest Requirements . . . . . . . . . . . . . . . . 28-43
28.8.4.5.1 Property Passing to QDOT . . . . . . . . . . . . . . . . . . 28-43
28.8.4.5.2 Property Passing Outright to Spouse . . . . . . . . . . . 28-43
28.8.4.6 Security and Other Arrangements for Payment of
Tax QDOTS with Assets Over $2 Million . . . . . . . . . . . . . 28-44
28.8.4.6.1 Bank Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-44
28.8.4.6.2 Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-44
28.8.4.6.3 Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-45
28.8.4.6.4 Additional Governing Instrument Requirements
for Bond or Letter of Credit Arrangements . . . . . . 28-45
28.8.4.7 Security and Other Arrangements for Payment of
Tax QDOTs with Assets of $2 Million or Less . . . . . . . . . 28-45
28.8.4.7.1 Multiple QDOTs . . . . . . . . . . . . . . . . . . . . . . . . . . 28-46
28.8.4.7.2 Look-Through Rules . . . . . . . . . . . . . . . . . . . . . . . 28-46
28.8.4.7.3 Fluctuations in Value . . . . . . . . . . . . . . . . . . . . . . . 28-46
28.8.4.7.4 Principal Residence and Related Personal Effects 28-46
28.8.5 Use of the Bypass Trust for Surviving Noncitizen Spouse . . . . . . . . . . 28-47
28.9 Assets Passing Outside the Will (Nonprobate Assets) by Operation of Law . . 28-48
28.9.1 Jointly Owned Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-48
28.9.1.1 Tenancy-in-Common . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-48
28.9.1.2 Joint Tenancy with Right of Survivorship . . . . . . . . . . . . . . . 28-48
28.9.1.2.1 Federal Estate Tax. . . . . . . . . . . . . . . . . . . . . . . 28-49
28.9.2 Bank Accounts in Ohio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-49
28.9.3 Community Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-49
28.9.4 Life Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-50
5/20/04 Ohio Estate Planning
CONTENTS
xlvii
28.9.5 Qualified Retirement Plan Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-50
28.10 Proper Will Formalities in Ohio Execution, Revocation, and
Amendment: Technical Requirements and Practical
Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-50
28.10.1 Requirements of Will Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-50
*Form 28-1: Instruction Sheet for Client Where Attorney Does
Not Supervise Execution of Will . . . . . . . . . . . . . . . . . . . 28-52
28.10.2 Who May Execute a Will and Codicil . . . . . . . . . . . . . . . . . . . . . . . . . 28-53
28.10.3 Testamentary Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-53
28.10.3.1 The Ohio Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-53
28.10.4Proper Will Revocation and Amendment . . . . . . . . . . . . . . . . . . . . . . . 28-53
28.10.4.1 Proper Will Revocation Statement of Revocation or
Obliteration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-53
28.10.4.2 Proper Will Amendment the Codicil . . . . . . . . . . . . . . . 28-54
28.10.4.2.1 Technical Requirements . . . . . . . . . . . . . . . . . . . 28-54
*Form 28-2: Sample Codicil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-54
28.10.5Other Important Considerations for Wills under Ohio Law . . . . . . . . . 28-55
28.10.5.1 Wills Executed Outside of Ohio . . . . . . . . . . . . . . . . . . . . . . 28-55
28.10.5.2 Dating and Initialing the Will . . . . . . . . . . . . . . . . . . . . . . . . 28-55
28.11Estate Tax Deduction For Qualified Family-owned Businesses . . . . . . . . . . . 28-55
CHAPTER 29 SELECTED PLANNING STRATEGIES AND TECHNIQUES 29-1
29.1 Use of "5 & 5" Powers in Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-1
29.2 Flexible Estate Planning with Limited Powers of Appointment . . . . . . . . . . . . 29-2
29.3 Trusts for Children Pot Trusts vs. Separate Trusts . . . . . . . . . . . . . . . . . . . . 29-3
29.4 The Pitfall of Joint Ownership by Spouses and Solution . . . . . . . . . . . . . . . . . . 29-4
29.5 Selection of Executors, Trustees, and Guardians: Strategies
and Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-5
29.5.1 Executors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-5
29.5.2 Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-7
29.5.2.1 Succession, Removal, and Replacement of Trustees
Tax Aspects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-7
29.5.3 Guardians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-8
29.6 Use of Disclaimers in Planning Beneficiary Designations . . . . . . . . . . . . . . . . . 29-8
29.7 Techniques to Reduce Taxes in Connection with Specific Bequests
or Cash Legacies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-9
29.7.1 Where Beneficiary Other than Spouse Is Intended Recipient
Planning for Reduction of Federal Estate Taxes . . . . . . . . . . . . . . . . . . 29-9
29.7.2 Where Charity Is Intended Recipient . . . . . . . . . . . . . . . . . . . . . . . . . . 29-10
29.8 Preserving Wealth with a Dynasty (GST) Trust . . . . . . . . . . . . . . . . . . . . . . . . 29-10
29.9 Outright Marital Bequest vs. Trust for Spouse: Planning Considerations . . . . .29-11
29.10 Revised Planning for Surviving Spouse after Death of First Spouse . . . . . . . 29-12
5/20/04 Ohio Estate Planning
xlviii
29.10.1 Planning for Remarriage: QTIP Trust/Prenuptial
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-12
29.10.2 Use of the Residence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-13
29.10.3 The QTIP Trust Tax Traps upon the Surviving Spouse's
Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-13
29.10.4 Credit Shelter/Bypass Trusts: Strategic Use During Lifetime
of Surviving Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-14
29.11The Credit Shelter/Bypass Trust: Rights and Protections Available to
Surviving Spouse and Asset Protection Considerations . . . . . . . . . . . . . . . . . . 29-15
29.11.1 Rights of Surviving Spouse in Credit Shelter
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-15
29.11.2 Selecting the Appropriate Allocation of Income and Principal
Among the Spouse and Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . 29-16
29.11.3 Structuring Credit Shelter/Bypass Trust as Asset Protection
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-17
29.12 Strategies for Financing the Payment of Estate Taxes on the Business
Entity Statutory Elections by Executors . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-17
29.12.1 Section 2032A Special Use Valuation for Farms . . . . . . . . . . . . . . . . 29-18
29.12.2 Section 303 Redemption to Pay Estate Taxes and
Administration Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-19
29.12.3 Section 6166 Deferral of Estate Taxes for Closely Held
Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-20
CHAPTER 30 DURABLE POWERS OF ATTORNEY FOR FINANCIAL
MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-1
30.1 The Durable Power of Attorney a Critical Document . . . . . . . . . . . . . . . . . . . 30-1
30.2 General vs. Limited Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-1
30.3 Fundamental Issues in Preparing a Durable General Power of Attorney . . . . . . 30-2
30.3.1 Effective Time of Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-2
30.3.2 Designation of the Attorney-in-Fact . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-3
30.3.3 Gift-Giving Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-3
*Form 30-1: Durable General Power of Attorney Effective
upon Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-4
*Form 30-2: Durable General Power of Attorney Effective
upon Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-8
*Form 30-3: Limited Power of Attorney (for Handling Real
Estate Settlement) . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-12
*Form 30-4: Limited Power of Attorney for Limited Duration . . . 30-13
*Form 30-5: Grant to Two Attorneys-in-Fact Acting Jointly
or Severally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-15
*Form 30-6: Grant to Two Attorneys-in-Fact Acting Jointly
(Not Severally) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-16
*Form 30-7: Broad Gift-Giving Power with Power to Disclaim . . 30-16
*Form 30-8: Gifts to Children and Grandchildren Limited
5/20/04 Ohio Estate Planning
CONTENTS
xlix
Annually to $10,000 plus Tuition and Medical
Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-16
*Form 30-9: Gifts to Children and Grandchildren Consistent
with Past Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-16
*Form 30-10: Broad Gift-Giving Power with Power to Disclaim;
Gifts to Attorney-in-Fact Limited to "5 & 5" Power
to Avoid General Power of Appointment . . . . . . . . . 30-16
*Form 30-11: Escrow Agreement for Durable Power of Attorney . 30-17
*Form 30-12: Affidavit as to Power of Attorney Being in
Full Force . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-17
CHAPTER 31 HEALTH CARE POWERS OF ATTORNEY AND
ADVANCE DIRECTIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31-1
31.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31-1
31.2 Health Care Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31-1
31.3 Living Will . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31-2
CHAPTER 32 CHARITABLE GIFT PLANNING . . . . . . . . . . . . . . . . . . . . . . . . . 32-1
32.1 Closely Held Corporate Charitable Contributions . . . . . . . . . . . . . . . . . . . . . . . 32-1
32.1.1 Constructive Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-1
32.1.2 Redemption of Charitable Gifts of Business Interests . . . . . . . . . . . . . . . 32-2
32.2 Individual Gifts and Bequests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-4
32.2.1 Lifetime Gifts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-4
32.2.1.1 Income Tax Deduction Limits . . . . . . . . . . . . . . . . . . . . . . . . . 32-4
32.2.1.2 Unlimited Gift and Estate Tax Deduction . . . . . . . . . . . . . . . . 32-5
32.3 Split-interest Gifts and Bequests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-6
32.3.1 General Features of CRTs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-6
32.3.2 Unique Aspects of the Charitable Remainder Unitrust (CRUT) . . . . . . . 32-8
32.3.2.1 Mandatory Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-11
32.3.2.2 Optional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-12
*Form 32-1: Inter Vivos Charitable Remainder Unitrust . . . . . . . . 32-14
32.3.3 Unique Aspects of the Charitable Remainder Annuity
Trust (CRAT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-18
32.3.3.1 Mandatory Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-19
32.3.3.2 Optional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-20
*Form 32-2: Inter Vivos Charitable Remainder Annuity Trust . . . 32-21
32.3.4 Taxation of the Donor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-25
32.3.4.1 Income Tax Deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-25
32.3.4.2 Substantiation and Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 32-26
32.3.4.3 Capital Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-26
32.3.4.4 Gift Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-27
32.3.4.5 Estate Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-27
32.3.4.6 Generation-Skipping Transfer Tax . . . . . . . . . . . . . . . . . . . . 32-27
5/20/04 Ohio Estate Planning
l
32.3.5 Taxation of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-28
32.3.5.1 Reporting Requirements for a CRT . . . . . . . . . . . . . . . . . . . . 32-28
32.3.6 Taxation of the Non-charitable Beneficiary . . . . . . . . . . . . . . . . . . . . . . 32-29
32.3.7 Prohibited Transactions Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-30
32.3.8 Planning Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-31
32.3.8.1 Funding the CRT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-31
32.3.8.2 Marital Deduction Planning -- Spousal CRT or QTIP
with Remainder to Charity . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-32
32.3.8.3 Selecting a Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-33
32.3.8.4 Choosing the CRUT or the CRAT . . . . . . . . . . . . . . . . . . . . . 32-33
32.3.8.5 Investment Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-34
32.3.9 Some Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-34
32.3.9.1 Retirement Plan Supplement or Substitute . . . . . . . . . . . . . . 32-34
32.3.9.2 Asset Diversification Opportunity . . . . . . . . . . . . . . . . . . . . . 32-35
32.3.9.3 Closely Held Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-35
32.3.9.4 Charitable Giving and Wealth Replacement. . . . . . . . . . . . . . 32-35
32.3.9.5 A Strategy for Dealing with Income in Respect of
Decedent (IRD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-36
32.4 Charitable Lead Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-36
32.4.1 Charitable Lead Trusts to Be Funded at the Grantor's
Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-36
32.4.2 Charitable Lead Trusts to Be Funded During Grantor's
Lifetime Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-38
32.4.2.1 Grantor Charitable Lead Trust . . . . . . . . . . . . . . . . . . . . . . . . 32-38
32.4.2.2 Grantor Charitable Lead Trust . . . . . . . . . . . . . . . . . . . . . . . 32-38
32.4.3 Taxation of Lead Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-39
32.4.4 Drafting Lead Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-40
32.4.5 Planning for Lead Trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-42
*Form 32-3: Provisions for Testamentary Charitable Lead
Unitrust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32-42
32.5 Gifts of Remainder Interests in Residence or Farm . . . . . . . . . . . . . . . . . . . . . 32-44
32.5.1 Split-Interests in Tangible Personal Property . . . . . . . . . . . . . . . . . . . . 32-44
5/20/04 Ohio Estate Planning
CONTENTS
li
Library of Congress Subject Headings for this publication:
Estate planning -- Ohio -- Forms.
Wills -- Ohio -- Forms.
Trusts and trustees -- Ohio -- Forms.
Estate planning -- Ohio.
Wills -- Ohio.
Trusts and trustees -- Ohio.