Save this PDF as:

Size: px
Start display at page:



1 INTRODUCTION W elcome to Chapter 3 of our community client letter in which we continue our efforts to communicate with our readership on legal and other issues that are relevant to the Firelands region. For those of you who are always online (like me), I invite you to take a look at the legal blog that I recently started ( Additionally, I d invite you to visit our new Facebook page (just search Freeman, Laycock & McDaniel with the Facebook search function after logging in). We ll still have our usual website (), however, my goal was to create a more interactive and value-added experience for those interested. In both cases (the blog and Facebook), the project is in its infancy, but, in my opinion, each creates a unique way to provide general information to individuals who are interested in legal or other issues that we feel are important or useful for the residents, farms and small businesses in the Norwalk area. Of course, nothing posted on the blog or on Facebook will have anything to do with specific client matters, as those are always held in strictest confidence. Rather, the content will be on general topics that may be of interest to the readership. Further, and this is especially true for potential clients, I feel that anyone interested in spending significant resources on legal services should have an opportunity to know something about the attorney and/or law firm that they hire. This is a way for people to do that. Check our facts. Investigate who we are and what we do. Our hope is that you d begin to feel comfortable with and have confidence in us, all from the comfort of your home, before you ever pick up the phone to schedule an appointment. In short, we ve got nothing to hide, so why not take advantage of a new medium to communicate that message? For current clients, we hope that you<ll see it as a source of added value, a way to get updates on current topics or be pushed to think of things you hadn<t considered. Further, it<s a mechanism that will force us to be better lawyers. Each time any person sits down to write an article on a particular topic, that person is forced to take time, understand what he or she is writing, formulate a logical thought process, and finally deliver the product. Living that process necessitates that the writer be more comfortable with and more knowledgeable of a particular subject matter. In other words, at least in my opinion, each time I post something on the blog, I<m a better lawyer than I was the moment before. You ll notice in this newsletter that my two articles were posted in substantially similar fashion on the blog. My goal is to have new content online at least once a week with perhaps smaller issues being updated via Facebook. Thanks in advance for your support. - Mark Coriell, Esq. I. THE JOINT REVOCABLE TRUST Much of the documentation for trust planning for a married couple is based upon each spouse having a separate trust document and then at the first death carving out a spousal gift and then a spouse and family gift. The former is commonly referred to as the A Trust and the latter as the B Trust. There is nothing magical in using A-B here. It could have been called Alpha-Omega, Trust 1-Trust 2 or Trust Roger-Trust Wilco. These trusts will significantly reduce the administration expenses including Probate and can, for larger estates, create the optimal estate tax plan through both spouse s lives.

2 But they can be expensive and complicated. They will work, but for many of you they may be too much documentation. You re putting a size 14 coat on a 6 petite and a 42 long on your husband s 38 inch sleeve. Yes it is still a coat that will keep you warm and dry, but it s just too big and bulky. Let s look at the Single Joint Trust (Joint Revocable Trust = JRT ). This one document signed by two people can be expressed with many variations. In the usual instance we see both spouses sign the JRT. We have had non-married live-ins, business partners, civil union partners, etc., also jointly sign the JRT. Clients can track and keep separate the property each contributes to their JRT. They can combine their separate properties at the outset, or at the death of the first client, or at the second death. The JRT can remain fully revocable through the life of the last to die, entirely irrevocable at the first death, or even partly irrevocable at the first death. Conversely, the surviving partner or spouse may control all, none or some of the JRT assets until her final passing. In like manner, amendments to the JRT can be specifically tailored to particular circumstances. A married couple - indeed any two owners of the JRT - could pass up to approximately $676, of assets through both lives without estate tax. If a husband and wife - or, once again, any two owners who want the last partner or owner to have full control over all the assets, administration expenses of approximately $14, could be saved at the second death by the use of the JRT, and at the second death the Estate Tax would be approximately $22, We have met many couples for whom a 3.35% diminution in their assets is acceptable, for assuring the surviving spouse, or partner, or co-owner of complete control and the flexibility to respond to new circumstances through the life of the second client. The more modest estate, say up to approximately $340, of value, can reduce the administration costs by about $8,050.00, can give the surviving spouse, or partner complete control and have no estate tax bill whatsoever at either death. The JRT is also an alternative to will of the younger couple who have sizable life insurance and are concerned about the use of insurance proceeds on behalf of their minor children if both couples should perish. Traditionally when wills deal with this concern, there is involved a testamentary trust which has higher administration expenses than the JRT. Remember also, that in the very simplest of wills with no testamentary trust provisions, the guardianship for minors still terminates in Ohio at 18 and these funds could all be distributed to the new 18-year old adult who has perhaps not even started college. The JRT for such a young couple would significantly reduce the Probate administration expenses, could hold the insurance funds in an educational trust for the minors to ages well beyond 18 (frequently 25 or even 30) and provide the flexibility in a private document to fund other endeavors by the children including college tuition, medical emergencies, an opportunity to start a business, support for a wedding, etc. - Jeffrey P. Laycock, Esq., AEP II. SURVEY During the past fifteen (15) months we had the opportunity to survey a wide variety of local families, teachers, farmers, professionals, business and community leaders in all. Many of you reading this Chapter III were

3 -continuedconsulted. Thank you for your insights. The sampling and other survey techniques were not scientific and often anecdotal. That said, take a minute to look at these results. QUESTIONS YES NO NOT SURE 1.) Did your parents actively convey to you their belief that you would have a better life than theirs? 78% 13% 9% 2.) Have their beliefs been justified? 72% 12% 16% 3.) Do you believe your children are likely to have a better life than you? 4.) Do you believe your grandchildren are likely to have a better life than you? 5.) W hen you were younger did you strongly consider raising your family in your hometown? 6.) When you were younger did you feel you had ample work opportunities locally? 7.) As a parent or grandparent do you believe there are ample opportunities for your children or grandchildren to make a career locally? 8.) Could you confidently guide your child in selecting a career path? 13% 32% 55% 11% 38% 51% 60% 12% 28% 55% 29% 16% 12% 52% 36% 20% 43% 37% 9.) Is your greater fear big business or big government? Big Business 44% Big Govt. 48% Not Sure 8% I compiled these from discussions with 110 people from the greater Norwalk area during the time period beginning June 15, 2009 through January 10, Neither the sampling nor the techniques were particularly scientific. I met with farmers, teachers, construction workers, laborers, professionals, real estate developers, bankers, public servants and retired people. Here are some responses: For more than four decades Janet N. Conway regularly reported the Norwalk area and was a featured columnist with the Norwalk Reflector. We asked Mrs. Conway if she would publicly give us a brief comment on the results of the survey and here they are: I read with interest the results of your survey and from 40 plus years of covering the Norwalk area for the Norwalk Reflector Herald, I believe they are fairly accurate. Opportunities for young people in our area have declined in recent years. In addition, the economic climate nationally does not offer opportunities to young people available in previous generations. In like manner we asked Jim Busek, a free-lance writer whose column Thinking Out Loud is a regular feature written for the Norwalk Reflector, for his assessment of the survey.

4 You can find his entire article discussing the survey in the Monday, March 8, 2010 edition of the Norwalk Reflector, page A-4. Here are some excerpts: Most of the people surveyed locally - 55 to 60 percent - when they were younger strongly considered raising their family in their Huron County hometown and felt they had ample work opportunities locally. But now, 52 percent of the parents and grandparents interviewed do not believe that there are ample opportunities for their children or grandchildren to make a career locally. Another 36 percent are not sure. In other words, 88 percent of the people interviewed do not have much confidence in future job opportunities. This result does not surprise me. W hat astounds me is that 12 percent of the respondents could say yes, despite our current status as a county with consistently pathetic unemployment, state-highest housing foreclosures, a classic-and-declining Rust Belt manufacturing base and countless empty storefronts and factories they think that there will be plenty of career opportunities for the youth of today. On the one hand, I don t see it. But on the other, it is probably that 12 percent who will make it happen through some sort of innovation or entrepreneurial venture that an old paradigm brain like mine cannot even envision. We re also fortunate to receive a personal letter from one of the area s most prolific authors who preferred that we not reveal any names, but gave us permission to reprint as follows: Never did I consider living elsewhere than in my hometown in that I had obligations and interests here from the time I was graduated. I do believe that the Norwalk area is a wonderful place and a good place for children. Norwalk isn t isolated from the real world, but the environment could be much worse than it is. There surely were ample work opportunities in this area when I was concerned with such things, but now it looks quite dreary. I cannot comprehend how the many local people out of work now, and the coming generation, will find the traditional factory jobs, construction work, etc., which have existed for so long. As to my greater fear - big business or big government - I fear the matter a great deal. We can t suddenly stop every program, but I do believe that many public entitlements must be contained if not terminated. My greatest concern with big business is that CEOs and the other high-powered operators are too careless with other people s money, and should think more about appearances. It wouldn t hurt any of us to think more about appearances, actually. Going back to big government, I will add that I m not necessarily in favor of term limits (they do guarantee mediocrity, you know). I suppose there is no way to keep an elected person - especially in state and federal positions - aware that he/she is responsible to the people at home who elected him/her. These elected persons can t do everything the way each elector wants, but they should remember that someone is supplying the money they are spending (and sometimes wasting) and that it is not coming out of his/her pocket personally. If any of our readers want to send us comments or reactions to the survey by they may use the following addresses: or - Jeffrey P. Laycock, Esq., AEP

5 III. NOTICE TO SUBCONTRACTORS: DON T FORGET TO FURNISH A NOTICE OF FURNISHING. It s construction season again. In our practice, it s mechanic s lien season again. Many times, payment and quality issues can be resolved without resorting to complicated real estate filings. However, it s often the case that a supplier or contractor (particularly a subcontractor) will need to file a mechanic s lien to create sufficient leverage to negotiate the desired result or, sometimes, resort to litigation. Before any subcontractor can know which kind of a project they re on (i.e., fast pay, slow pay or no pay), and even long before the date of last work, important information needs to be evaluated to ensure that lien rights are being appropriately preserved. As a general rule, the owner of a project (or sometimes the general contractor or lender) will record in the real estate record (and post in a conspicuous place on the job site) a notice of commencement (NOC) for a given commercial construction project. In response to the NOC, assuming a subcontractor does not have a direct contractual relationship with an owner and/or original contractor, a subcontractor is required to prepare and serve a notice of furnishing (NOF) upon the owner and the original contractor (this can change due to privity of contract issues). This service must take place within 21 days of the subcontractor s first work on the project. An affidavit of mechanic s lien properly drafted and filed within 75 days of the date of last work (for commercial jobs) may be meaningless if the notice of furnishing was not prepared and served in accordance with the Ohio Revised Code. What should a subcontractor do to avoid that catastrophe? One way to proceed would be to do a thorough investigation of the real estate record before, during and after the project. The problem, of course, is that in most counties in our region this is going to be time consuming and costly due to a lack of online resources. Another way would be to serve a notice of furnishing for every project, regardless of whether you find the NOC or not. The problem here is that a subcontractor may get information wrong on the NOF which can undermine the integrity of the NOF. In my opinion, the safest approach, if time allows, would be to take full advantage of Ohio Revised Code Sections (D) and (J). These sections provide that a subcontractor may make a written request to the owner of a project that the subcontractor be supplied with a copy of the notice of commencement. The owner must then serve a copy of the NOC upon the subcontractor within 10 days of the request. If the owner complies with the request, the subcontractor can prepare and serve a NOF that is sure to contain all of the accurate information. If the owner does not respond, the subcontractor is excused from serving the NOF until 21 days after the subcontractor is actually served with the NOC. Beware that this same benefit does not attain if the written demand is made upon the general contractor. In short, as soon as you walk on the job as a subcontractor, take the time to know that status of the NOC, if any, and how it will affect your lien rights. All that being said, there are always little nuances here and there in the lien statute that make each individual situation a little bit different. Use this article as a springboard to your own study, or, as always, give us a call. - Mark Coriell, Esq.

6 IV. NEW PLANNING OPPORTUNITY FOR JTRS REAL ESTATE In our practice it has become common to utilize transfer on death beneficiary designations for residential real estate to avoid the probate costs that often unnecessarily accompany the transfer of real estate that does not have a named beneficiary in the chain of title. However, until a December 28, 2009 change in the law, a married couple who held property as joint tenants with rights of survivorship (JTRS) could not do long range planning due to a curious omission in the real estate statute. Despite the fact that many married couples hold their real estate in the JTRS form, the prior statute made no provision for the naming of a transfer on death beneficiary after the second to die of the two spouses. Thus, a family is left with having to return to do more planning during the administration of the estate of the first spouse. This typically wasn t anything more than an inconvenience unless (A) the two spouses each die within 120 hours of one another (Ohio s Uniform Simultaneous Death Act); or (2) the surviving spouse is incompetent at the time the new deed needs to be executed. To eliminate those problems, and to ensure that families can have a complete plan in place before the first death, an entire new section was carved out to deal explicitly with the issue of JTRS property. Now, a husband and wife can jointly name a transfer on death beneficiary to take title to the property upon the second to die of the two JTRS owners. In short, the planning now can be done years in advance so that the property owners can have peace of mind that the property can be distributed outside of probate pursuant to their wishes without worrying about sufficient competency to undertake post-mortem planning at the first death. As an aside, and as a small point, note also that the form of the beneficiary designation is now an affidavit rather than a deed. Also, the new section cures the ambiguity in the title that would arise if one of the joint tenants executed a transfer on death affidavit without the joining of the other survivorship tenants. For example, assume that a husband named a child from a previous marriage as the transfer on death beneficiary on a piece of property that he holds as JTRS with his current spouse. If the husband predeceases the wife, his designation (without her joinder) would be a nullity at his death, i.e., 100% of the title would vest in the surviving joint tenant at his death, here, the wife. In short, it is critical to collect all of the signatures of the current joint tenants on the transfer on death affidavit in order to be assured that the intent of the affidavit is not completely frustrated at the first death. For the client who wants to have a plan in place that accounts for every contingency, the new statute (or at least this portion of the new statute) should be seen as a welcome change. - Mark Coriell, Esq. HOUSE CALLS In this recession. we recognize how difficult it is to miss work. We also understand it is not always convenient for our clients to arrange for transportation to leave their homes and drive to our office. Since the beginning of the year, Mark and I have made 27 house calls and have seen 14 additional families on Saturday or Sunday afternoons.

7 W hen we work for you we realize that work is important to you. Be sure to let Mark or me know when there are special circumstances. - Jeffrey P. Laycock, Esq., AEP THANK YOU Thanks to all of you for the interest you expressed in our first two installments. As always, we welcome your feedback. If there are things you d like to see in the newsletter, let us know. If there are things you d like us to discuss via the blog, let us know. If there are things about the practice in general that you think could be improved, again, let us know. To that end, we ve received comments in the past regarding our billing format, i.e., our invoices were confusing or difficult to read. This week we implemented different billing software to address those concerns. Assuming the technology cooperates, the new invoicing program should be implemented in time for our May, 2010 invoices. Let us know what you think. Sincerely, Your friends at Freeman, Laycock & McDaniel Jeffrey P. Laycock, Esq., AEP Mark Coriell, Esq. * THE INFORMATION PROVIDED IN THIS NEWSLETTER IS NOT INTENDED TO SUPPLANT AND MUST NOT SUPPLANT THE PROFESSIONAL ADVICE OF AN ATTORNEY, CPA, OR FINANCIAL ADVISOR. EACH PERSON S UNIQUE CIRCUMSTANCE REQUIRES A PROFESSIONAL EXAMINATION OF ISSUES NOT RAISED IN THIS NEWSLETTER. ADDITIONALLY, NO PERSON MAY RELY ON INFORMATION IN THIS NEWSLETTER IN ORDER TO AVOID TAX PENALTIES. * * * * *We couldn<t resist