Ohio Legacy Trusts: A Guide to the Ohio’s Newest Asset Protection

by Tim Stallings & Geoff Kunkler
Ohio recently joined the ranks of a number of other states in allowing individuals to create a Domestic Asset Protection Trust. The Ohio Legacy Trust Act became effective as of March 27, 2013. This act allows individuals to create an asset protection trust here in Ohio. Previously, in order to create this type of instrument you had to either create an expensive, risky, offshore instrument, or be subjected to the rules of the handful of states that allowed the trust before Ohio. The Ohio Legacy Trust is a new tool for Ohioans looking to shelter their assets and the attorneys at AlerStallings are now welcoming clients who wish to set up this new, sophisticated instrument.
The Ohio Legacy Trust is an important new estate planning tool for Ohioans. This instrument is not the same type of Irrevocable Legacy Trust (a type of Intentionally Defective Grantor’s Trust) AlerStallings has been providing clients for years. AlerStallings, having apparently selected the best name for an asset protection trust, has since renamed the previous trust to be known as an Irrevocable Heritage Trust.The Ohio Legacy Trust is a type of Domestic Asset Protection Trust (“DAPT”). A DAPT is an irrevocable trust that can be established in a limited number of states (now including Ohio) which allow the creator to also be the beneficiary of the trust, thereby protecting the trust assets from the creator’s creditors. The Ohio version, known as the Legacy Trust, will allow the creator to place his or her assets into the trust in order to shelter them from future creditors. This means that you can place your assets in a trust and if you later face creditors (lawsuits, outstanding debt/bills (including healthcare)), those assets will not be subject to the claims of those creditors.Importantly, an Ohio Legacy Trust allows the creator to have continued access to all income produced by the trust’s assets as well as the principal of the trust, as long as it is distributed at the trustee’s discretion or a defined standard. The trustee of this instrument has to be a third party (an Ohio resident or company), but the creator can retain the power to replace the trustee at any time. Additionally, the person who sets up this trust can also reserve the right to control all investments held in the trust, unlike traditional irrevocable trust instruments.There are many nuances to the new law and to these types of trusts. Be sure to consult an attorney at AlerStallings to learn about the limitations these instruments have as well how your particular situation can be addressed with proper estate planning.

Who Can Benefit?

This trust can benefit anyone. Any individual who is setting up a plan to preserve their wealth should consider asset protection measures such as those afforded by domestic asset protection trusts. Certain groups of people are more likely to have greater exposure to liability, and, as a result, can benefit greatly by this type of planning. Those people include lawyers, doctors, accountants, financial advisors, small business owners, and many others who engage in businesses or activities that expose them to liability.

If set up before marriage, the Legacy Trust can also be used in conjunction with, or in lieu of, a prenuptial agreement. The new trust can shelter assets from a number of expenses that can come out of a divorce including property distribution and spousal support.

What Are the Next Steps?

The Ohio Legacy Trust is a powerful estate planning tool. However, the trust cannot protect an individual from all creditors. In order to learn more about the Ohio Legacy Trust, give AlerStallings a call today at (877) 912-3464 .

When planning for asset protection, it is essential to also consider long-term care expenses. Speak with an attorney who focuses on Elder Law to make sure that your plan is set up in a manner that will allow you to obtain Medicaid and/or VA benefits in the future.