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Author: James Schroeder

Author: James Schroeder

Estate planning is a critical step in ensuring your assets are protected, your wishes are honored, and your loved ones are cared for after your passing. Two common tools used in estate planning are Revocable Living Trusts and Medicaid Asset Protection Trusts (MAPTs). While both serve distinct purposes, understanding their differences, advantages, and disadvantages can help you determine which is best suited for your needs. The Schroeder Law Group in Hillsboro, Ohio, can provide expert guidance to help you make this decision as part of your overall estate planning strategy.

Revocable Living Trusts

A Revocable Living Trust is a legal entity created during your lifetime to manage and distribute assets after your death. It can be modified or revoked at any time while you are alive, offering flexibility and control.

Pros of Revocable Living Trusts

1. Avoids Probate: Assets placed in a revocable living trust bypass the probate process, saving time and money for beneficiaries.

2. Protects Privacy: Unlike wills, which become public record during probate, trusts keep asset distribution private.

3. Incapacitation Protection: If you become incapacitated, a successor trustee can manage the trust without court intervention.

4. Flexibility: You retain control over the trust and can modify its terms or dissolve it entirely during your lifetime.

Cons of Revocable Living Trusts

1. No Tax Benefits: Assets in the trust remain part of your taxable estate, offering no reduction in estate taxes.

2. No Creditor Protection: Since you retain control over the assets, they are often vulnerable to creditors or legal judgments.

3. Costly Setup: Establishing and funding a revocable living trust can be expensive and time-consuming due to the need to re-title assets.

Best Use Cases

– Individuals with complex estates or property in multiple states.

– Those who want to avoid probate and ensure privacy.

– People concerned about potential incapacitation.

Medicaid Asset Protection Trusts (MAPTs)

A Medicaid Asset Protection Trust is an irrevocable trust designed to shield assets from Medicaid eligibility calculations, ensuring you qualify for long-term care benefits while preserving wealth for beneficiaries.

Pros of Medicaid Asset Protection Trusts

1. Medicaid Eligibility: Assets transferred into the trust are excluded from Medicaid’s asset limits after the five-year look-back period, preventing "spend down" requirements.

2. Asset Protection: Assets in the MAPT are shielded from Medicaid estate recovery after your death.

3. Preserves Wealth for Beneficiaries: Protects assets from being depleted by long-term care costs.

Cons of Medicaid Asset Protection Trusts

1. Irrevocable Nature: Once established, the trust cannot be modified or revoked, and you lose direct control over the assets.

2. Look-Back Period: Transfers must occur at least five years before applying for Medicaid; otherwise, penalties may apply.

3. Restrictions on Certain Assets: Retirement accounts like IRAs cannot be transferred into a MAPT but may be designated as beneficiaries instead.

Best Use Cases

– Individuals planning well ahead for long-term care needs.

– Those seeking to protect their home or other significant assets from Medicaid estate recovery.

– Families wanting to preserve wealth for future generations.

Choosing Between Revocable Living Trusts and MAPTs

The decision between these two trusts depends on your specific goals:

– If avoiding probate, maintaining privacy, and retaining control over assets are priorities, a revocable living trust may be ideal.

– If qualifying for Medicaid while protecting assets from long-term care costs is crucial, a MAPT is likely more appropriate.

How Schroeder Law Group Can Help

The Schroeder Law Group in Hillsboro, Ohio, specializes in estate planning strategies tailored to individual needs. Their experienced attorneys can assist with:

– Drafting and structuring both revocable living trusts and MAPTs.

– Navigating complex Medicaid eligibility rules and look-back periods.

– Ensuring compliance with Ohio laws to maximize asset protection while minimizing tax burdens.

By working with Schroeder Law Group, you can gain clarity on which trust aligns with your financial goals and family needs.

Final Thoughts

Both revocable living trusts and Medicaid asset protection trusts offer unique benefits but cater to different objectives within estate planning. Consulting with professionals like those at Schroeder Law Group ensures that your estate plan protects your legacy while addressing future uncertainties effectively. Contact Schroeder Law Group today to schedule a consultation and take the first step toward securing your family’s future.

Author: James Schroeder

Picking up the pieces after a loved one passes away is difficult, compounded by the stress and grief associated with the loss itself. One of the tasks you may face is preparing a final tax return for your deceased loved one’s estate. At Schroeder Law Group in Hillsboro Ohio can help you navigate your responsibilities in settling your loved’s one’s affairs, whether you need to file in probate court or just need the advice and assistance of lawyers and attorneys who are experienced in estate planning and administration.

Do I need to file a Final Tax Return for a Deceased Person?

When someone passes away, their tax obligations don’t automatically end. The IRS requires a final tax return to account for the income earned up until the date of death. Known as the "final tax return for a deceased person," this filing is similar to a regular tax return but involves some key differences. Properly handling this process is essential to avoid future complications.

Why Is Filing a Tax Return for a Deceased Loved One Necessary?

The IRS mandates that a tax return be filed for anyone who has passed away to account for their income and any taxes owed. If the deceased was entitled to a refund, filing the return is necessary to claim it. Failure to file could result in penalties or unresolved tax issues.

Where should I start?

Schroeder Law Group can help you find an experienced tax professional to prepare the final return. Usually the best place to start is finding who prepared the deceased taxes in years past. They will have a good handle on their financial picture and a lot of the information needed to prepare the deceased persons final return.

What Information do I need to gather?

Filing a tax return for someone who has passed away follows much of the same process as filing for any taxpayer, but there are specific steps to consider:

– Gather essential documents such as W-2s, 1099s, and other income records.

– Clearly mark "DECEASED" next to the individual’s name on the tax return to notify the IRS.

– Ensure all required forms are completed correctly.

What Forms Are Needed to File a Final Tax Return?

The primary form required for filing is IRS Form 1040. Depending on the circumstances, additional forms may also be needed. For example:

– If claiming a refund on behalf of the deceased, Form 1310 (Claim for Refund Due a Deceased Taxpayer) may be required.

– Other forms might apply based on the complexity of the individual’s financial situation.

Tax Return are Due April 15th

The deadline for filing a final tax return is typically April 15th of the year following the individual’s death. If more time is needed, you can request an extension, which provides an additional six months. However, it’s important to note that any taxes owed must still be paid by the original deadline to avoid penalties or interest.

If Taxes are Owed, am I personally responsible?

If taxes are owed, they must be paid from the estate. The final tax return will determine how much is due, and it becomes the estate’s responsibility to settle this debt. Surviving family members are generally not personally liable unless there are insufficient funds in the estate.

Should I try to file on my own?

While it’s possible to handle this task independently, filing a final tax return can be complex—especially if the deceased had intricate financial affairs or if additional forms are required. Errors in filing could lead to delays or penalties from the IRS.

Working with qualified professionals along with Schroeder Law Group can save you time and stress while ensuring everything is done correctly. Our skilled team guides you through every step of this process so that you can navigate it with confidence and peace of mind.

As you take care of the affairs of your loved one, remember to prepare your estate so that your loved ones will not have a mess to clean up. Schroeder Law Group helps prepare strategic estate plans for clients from our Hillsboro, Ohio office, serving clients from nearby Mount Orab, Lynchburg, Georgetown, West Union, Washington Court House, Leesburg and Wilmington, Ohio.

Please schedule a strategy session for specific advice or go see another estate planning attorney. The above information is provided for informational purposes and you should not make any decisions about estate planning or administration without consulting an attorney.

Author: James Schroeder

Retiring within the next year is an exciting milestone, but it requires careful planning and preparation to ensure a smooth transition and secure financial future. Here’s a comprehensive guide on the steps you should take, including the importance of estate planning and asset protection using trusts.

Assess Your Financial Readiness

Before diving into retirement, it’s crucial to evaluate your financial situation thoroughly.

Review Your Retirement Income Sources

Take stock of all your potential retirement income sources, including:

– Social Security benefits

– Pension plans

– 401(k)s and IRAs

– Other investment accounts

– Rental income or other passive income streams

Calculate how much you can expect to receive from each source and when you can start taking distributions without penalties.

Analyze Your Expenses

Examine your current expenses and project how they might change in retirement. Consider:

– Essential living costs (housing, food, healthcare)

– Discretionary spending (travel, hobbies, entertainment)

– Potential new expenses (increased healthcare costs, long-term care insurance)

– Debt obligations

Create a detailed retirement budget to ensure your income will cover your anticipated expenses.

Optimize Your Retirement Accounts

As you approach retirement, it’s time to fine-tune your retirement accounts.

Review Asset Allocation

Reassess your investment portfolio to ensure it aligns with your risk tolerance and retirement timeline. Consider scaling back on higher-risk investments and increasing your allocation to more stable, income-producing assets.

Consolidate Accounts

If you have multiple retirement accounts from different employers, consider consolidating them to simplify management and potentially reduce fees.

Develop a Social Security Strategy

Deciding when to claim Social Security benefits can significantly impact your retirement income.

Evaluate Claiming Options

Consider whether it’s more beneficial to claim benefits early, at full retirement age, or delay until age 70. Delaying can result in higher monthly payments, but it may not be the best choice for everyone.

Coordinate with Your Spouse

If you’re married, coordinate your Social Security claiming strategy with your spouse to maximize your combined benefits.

Address Healthcare Concerns

Healthcare costs can be a significant expense in retirement, so it’s essential to plan accordingly.

Explore Medicare Options

If you’re nearing 65, research Medicare plans and enroll on time to avoid penalties. Consider supplemental insurance to cover gaps in Medicare coverage.

Consider Long-Term Care Insurance

Evaluate whether long-term care insurance is appropriate for your situation. It can help protect your assets from potentially catastrophic healthcare costs. Most people will find it difficult to qualify for this insurance product but it is worth investigating.

Create an Estate Plan

Estate planning is a crucial step in preparing for retirement, ensuring your assets are distributed according to your wishes and potentially minimizing taxes for your heirs.

Draft Essential Documents

Work with an estate planning attorney to create or update:

– Last Will and Testament

– Durable Power of Attorney

– Healthcare Power of Attorney

– Living Will or Advance Directive

Review Beneficiary Designations

Ensure your beneficiary designations on retirement accounts, life insurance policies, and other assets are up to date and align with your overall estate plan.

Protect Your Assets with Trusts

Incorporating trusts into your estate plan can offer significant benefits for asset protection and efficient wealth transfer.

Consider a Revocable Living Trust

A revocable living trust can:

– Help avoid probate, saving time and money for your heirs

– Provide privacy regarding your financial affairs

– Allow for easier management of assets if you become incapacitated

While a revocable living trust doesn’t offer asset protection during your lifetime, it becomes irrevocable upon your death, potentially shielding assets for your beneficiaries.

Explore Irrevocable Trusts for Asset Protection including Medicaid Asset Protection Trusts

For stronger asset protection, consider irrevocable trusts:

– Asset Protection Trusts can shield assets from creditors and lawsuits

– Irrevocable Life Insurance Trusts (ILITs) can remove life insurance proceeds from your taxable estate

– Charitable Remainder Trusts can provide income during retirement while benefiting a charity of your choice

Remember that irrevocable trusts offer more robust protection but come with less flexibility and almost no control for the grantor, as you generally can’t change or revoke them once established.

Communicate Your Plans

Open communication with your family about your retirement and estate plans can help prevent misunderstandings and conflicts later.

Discuss Your Wishes

Share your intentions regarding inheritance, healthcare decisions, and financial management with your loved ones.

Introduce Key Advisors

If appropriate, introduce your family members to your financial advisor, estate planning attorney, and other professionals who will play a role in managing your affairs.

Prepare for the Transition

As you approach your retirement date, take steps to ensure a smooth transition from work life to retirement.

Notify Your Employer

Inform your employer of your intended retirement date, giving them ample time to plan for your departure.

Review Employee Benefits

Understand what happens to your employee benefits upon retirement, including health insurance, life insurance, and any stock options or deferred compensation.

Plan for Required Minimum Distributions (RMDs)

If you’re nearing 72, prepare for RMDs from your traditional retirement accounts to avoid penalties.

Conclusion

Retiring within the next year requires careful planning across multiple fronts. By assessing your financial readiness, optimizing your retirement accounts, addressing healthcare concerns, and creating a comprehensive estate plan that includes asset protection strategies, you can set yourself up for a more secure and enjoyable retirement.

Remember that estate planning and asset protection using trusts are complex areas that often require professional guidance. Consider working with a qualified financial advisor and estate planning attorney to ensure your retirement and estate plans align with your specific needs and goals. With proper preparation, you can enter this new phase of life with confidence and peace of mind.

Are you considering retiring in the next year or two? Congratulations. Schroeder Law Group helps prepare strategic estate plans for clients from our Hillsboro, Ohio office, serving clients from nearby Mount Orab, Lynchburg, Georgetown, West Union, Washington Court House, Leesburg and Wilmington, Ohio.

Please schedule a strategy session for specific advice or go see another estate planning attorney. The above information is provided for informational purposes and you should not make any decisions about a Medicaid Asset Protection Trust or any other estate plan without consulting an attorney.

Author: James Schroeder

Many people facing the prospect of long-term care consider gifting assets to their children as a way to qualify for Medicaid assistance. While this may seem like a clever strategy to protect family wealth, it can lead to severe consequences and jeopardize your ability to receive necessary care. Understanding the risks involved is crucial before making any hasty decisions about transferring assets.

Medicaid’s Lookback Period

One of the primary dangers of gifting assets to children is running afoul of Medicaid’s lookback period. When you apply for Medicaid, the program scrutinizes your financial transactions for the previous five years. Any gifts or transfers of property made during this period for less than fair market value can trigger penalties and delay your eligibility for benefits.

The lookback period is designed to prevent people from impoverishing themselves on paper to qualify for Medicaid while preserving their wealth for heirs. If Medicaid determines that you transferred assets within the five-year window, you may face a penalty period during which you’re ineligible for benefits.

Calculating the Penalty Period

The length of the penalty period depends on the value of the assets transferred. Medicaid divides the total value of improperly transferred assets by the average monthly cost of nursing home care in your state. For example, if you gifted $120,000 to your children and the average monthly cost of care is $12,000, you could face a 10-month period of ineligibility.

During this penalty period, you would be responsible for paying for your own care out of pocket. This can quickly deplete any remaining savings and leave you in a precarious financial situation.

Loss of Control Over Assets

When you gift assets to your children, you lose legal control over those resources. Even if your children intend to use the assets for your benefit, there’s no guarantee they will do so. Life circumstances can change, and your children may face their own financial difficulties, addiction issues, divorces, or legal troubles that put your former assets at risk. These assets would be vulnerable to the predators and creditors attacking your children.

Additionally, gifted assets could impact your grandchildren’s eligibility for financial aid for college. The unintended consequences of asset transfers can ripple through multiple generations of your family.

Tax Implications for Your Children

Transferring appreciated assets like real estate or stocks to your children can have negative tax consequences for them. When you gift these assets, your children inherit your original cost basis. If they later sell the assets, they may face significant capital gains taxes that could have been avoided if they had inherited the assets through your estate instead.

Fraudulent Conveyance Risks

In some cases, nursing homes or care facilities may pursue legal action against family members who received asset transfers. If a facility believes transfers were made to avoid payment for care, they may sue for fraudulent conveyance. This can result in judgments against your children, forcing them to repay the value of the gifted assets.

Exceptions to Transfer Penalties

While most asset transfers within the lookback period are penalized, there are some exceptions. For example, transfers to a spouse or to a trust for a disabled child are generally allowed without penalty. Additionally, in some cases, you may be able to transfer your home to certain family members, such as a child who has been your caregiver for at least two years.

Alternative Strategies for Asset Protection

Instead of outright gifting, there are more sophisticated strategies for protecting assets while still qualifying for Medicaid. These may include:

1. Irrevocable Trusts: Properly structured irrevocable trusts can protect assets while potentially avoiding lookback period penalties if established early enough.

2. Medicaid-Compliant Annuities: These financial products can convert countable assets into an income stream that may not affect Medicaid eligibility.

3. Spend-Down Strategies: Using assets to pay off debts, make home improvements, or purchase exempt assets can be a legitimate way to reduce countable resources.

The Importance of Professional Guidance

Navigating Medicaid’s complex rules and regulations requires expert knowledge. Working with an experienced elder law attorney or Medicaid planning specialist is crucial to developing a strategy that protects your assets without jeopardizing your eligibility for benefits.

These professionals can help you understand the specific rules in your state, as Medicaid regulations can vary. They can also assist in developing a comprehensive plan that takes into account your unique financial situation and care needs.

Conclusion

While the desire to preserve family wealth is understandable, gifting assets to children in an attempt to qualify for Medicaid is fraught with risks. The potential for severe penalties, loss of control over assets, and unintended tax consequences make this strategy dangerous and often counterproductive.

Instead of resorting to hasty asset transfers, take the time to explore legal and ethical Medicaid planning strategies. With proper guidance and advance planning, it’s often possible to protect a portion of your assets while still qualifying for the care you need. Remember, the goal should be to ensure you receive proper care while also leaving a legacy for your family – not to impoverish yourself or put your children at financial risk.

Ultimately, the best approach to Medicaid planning is one that balances your need for care with your desire to preserve assets for your heirs. By understanding the rules and working with knowledgeable professionals, you can develop a plan that achieves your goals without running afoul of Medicaid regulations.

It’s important to note that Medicaid rules can be complex and may vary. Consulting with an experienced elder law attorney in Ohio is crucial to ensure proper establishment and compliance with state-specific regulations. Schroeder Law Group helps prepare strategic estate plans for clients from our Hillsboro, Ohio office, serving clients from nearby Mount Orab, Lynchburg, Georgetown, West Union, Washington Court House, Leesburg and Wilmington, Ohio.

Please schedule a strategy session for specific advice or go see another estate planning attorney. The above information is provided for informational purposes and you should not make any decisions about a Medicaid Asset Protection Trust or any other estate plan without consulting an attorney.

Author: James Schroeder

One of the most powerful tools for an estate planning attorney is the Medicaid Asset Protection Trust or “MAPT”.

This Irrevocable Trust is used to shelter assets from predators and creditors as well as serve to exclude certain assets including real estate or financial investments from having to be spent down prior to Medicaid coverage taking over when someone needs to go into a long term care facility.

The key principle of a MAPT is that the grantor gives up control of the real estate or financial asset starting what is known as a five year look back. The government is willing to let you exclude certain assets from being spent for your long term care but won’t let you transfer these assets on a Tuesday and go into a care facility on Thursday. Or they won’t let you transfer the assets in February and go into a care facility with the government picking up the tab in May.

When a person applies for Medicaid benefits they must disclose what assets they have and whether they have given away any significant assets in the past 60 months.

For more information on qualification limits you can look at the American Council on Aging Ohio Medicaid Income & Asset Limits for Nursing Homes & In-Home Long Term Care site.

So what if you have over the income and/or over the asset limit to qualify? There are several strategies our office employs but one of the most used is the MAPT.

In Ohio, a grantor can maintain limited control over assets in a Medicaid Asset Protection Trust while still potentially qualifying for Medicaid. Here are the key points to consider:

1. The trust must be irrevocable, meaning the grantor cannot modify or revoke it once established. They are giving up control of the asset and entrusting it to a person they appoint as the trustee.

2. The grantor cannot serve as the trustee of the MAPT. A trustee, typically a family member or trusted individual, must be appointed to manage the trust assets.

3. The grantor may retain the right to live in a home transferred to the MAPT. In most situations they remain in the home. In certain situations they might find that purchasing a second home and moving into it would be advantageous.

4. For investment assets in the trust, the grantor may continue to receive income generated from these investments if the MAPT is designed as an income-only trust.

5. The grantor cannot have direct access to the principal or assets held in the trust.

6. For tax purposes, the MAPT is typically treated as a grantor trust, meaning the grantor continues to report income, deductions, and credits from the trust on their personal tax return.

It’s important to note that Medicaid rules can be complex and may vary. Consulting with an experienced elder law attorney in Ohio is crucial to ensure proper establishment and compliance with state-specific regulations. Schroeder Law Group helps prepare strategic estate plans for clients from our Hillsboro, Ohio office, serving clients from nearby Mount Orab, Lynchburg, Georgetown, West Union, Washington Court House, Leesburg and Wilmington, Ohio.

Please schedule a strategy session for specific advice or go see another estate planning attorney. The above information is provided for informational purposes and you should not make any decisions about a Medicaid Asset Protection Trust or any other estate plan without consulting an attorney.

Author: James Schroeder

One of the tools we use when transferring real estate from parents to a child or among other family members is to purchase the property.

In Ohio real estate, lawyers use land contracts, lease purchase agreements, and real estate contracts to complete these transactions.

When sitting down and discussing the transaction before bringing it to an attorney, the family decides on a price, and the giver says, “I don’t want to charge you any interest on your payments.” They want to bless their loved one and see that the property stays in the family while getting the income they need to satisfy their financial needs.

When they bring this transaction to an attorney or their tax preparer, they find out that the IRS has an “interest” in whether they charge interest, and if they fail to charge what they consider market rate minimum interest, they may have a tax liability for that money they should be getting for interest.

The IRS has specific rules regarding interest charges on loans between individuals, including family members. These rules are designed to prevent tax avoidance and ensure that loans are treated as legitimate financial transactions rather than disguised gifts.

IRS Minimum Interest Rate Requirement

The IRS requires that a minimum interest rate be charged on loans between individuals, even if they are family members. This minimum rate is known as the Applicable Federal Rate (AFR). The AFR is published monthly by the IRS and varies based on the loan term:

– Short-term (up to 3 years)

– Mid-term (3-9 years)

– Long-term (over 9 years)

If a lender charges an interest rate below the AFR or no interest at all, the IRS considers this a "below-market loan".

Consequences of Not Charging the Required Minimum Interest

If parents sell a house to their daughter and son-in-law for $300,000 with payments over 15 years without charging the required minimum interest, several tax implications could arise:

1. Imputed Interest: The IRS will impute interest on the loan based on the AFR, even if no actual interest was charged. This means the parents would be required to report and pay taxes on the interest income they should have received, regardless of whether they actually collected it.

2. Gift Tax Implications: The difference between the AFR and the interest actually charged (in this case, zero) may be considered a gift from the parents to their daughter and son-in-law. If this imputed interest, combined with any other gifts given in the same year, exceeds the annual gift tax exclusion ($18,000 per individual as of 2024), the parents may need to file a gift tax return.

3. Original Issue Discount (OID): The loan may be treated as having OID, which is the difference between the stated redemption price at maturity and the issue price of the loan. This could result in additional taxable income for the parents over the life of the loan.

4. Potential Penalties: If the parents fail to report the imputed interest income on their tax returns, they may face penalties for underreporting income.

How to Avoid Issues

To avoid these complications, the parents should consider the following:

1. Charge at least the minimum AFR interest rate on the loan.

2. Document the loan with a formal, written agreement specifying the interest rate, repayment terms, and other conditions.

3. Treat the loan as a legitimate financial transaction, keeping records of payments received.

4. If they wish to provide financial assistance, consider charging the AFR and then gifting back the interest payments, up to the annual gift tax exclusion limit.

By following these guidelines, the parents can help ensure their loan is recognized as a legitimate transaction by the IRS and avoid potential tax complications and penalties.

Before you prepare an agreement to sell real estate with payments over time it is important you investigate your options regarding charging interest so that you don’t end up with an unexpected tax bill at the end of the year and many years after!

Schroeder Law Group advises clients who need a real estate lawyer in or near Hillsboro Ohio. We also help clients in and around Hillsboro with estate planning, general real estate, probate and business/nonprofit representation.

Call (937) 402-2348 or schedule a strategy session on our schedule page.

Author: James Schroeder

Whether you are driving the roads of Brown and Highland County or reading this newspaper on a weekly basis you probably have noticed that solar panel “farms” are a hot topic.

With the closure of local coal-fired power plants in the past few years and federal politics favoring what has been called green energy sources such as solar and wind, it is no wonder we see these projects popping up across the county and just over our borders.

Across the state, local communities and officials are dealing with solar companies and their salespeople flooding into the Buckeye state trying to sign up as many contracts as possible. In ten counties, the Commissioners have moved to ban solar and wind projects in townships and unincorporated areas of their counties, including Butler to the west and Logan to the east.

Solar developers are offering landowners profitable contracts of $2,000 per acre or more per year to sign up.

My purpose in writing this piece is not to discuss how these projects fit or fail to fit within our overall community. What I hope to provide is some information to those whom a solar company approaches to lease their land and a few basic things to look for in that agreement.

The first unique part of a solar land lease is that it has two periods or terms in it. The first is the option period and the second is often called the extended or power period. Knowing how many years the property will be under contract and how much will be paid per acre during the two different periods in the contract is essential.

An “option period” is a period, usually five to ten years, when the property owner agrees to give the solar company time to investigate whether they want to proceed with putting a solar project on their property. There are many reasons why it takes the solar company this long to make the decision but during that time, they are willing to pay $40-$125 per acre to have the right to start the project if they wish. During this time, they may take some soil samples but generally do not disturb the property and the owner can still grow or lease crops, hunt and enjoy the property. If the solar company chooses not to build during this period, they will cancel the contract and the property owner will keep the money paid out during the option period.

Once the solar company decides to proceed and notifies the homeowner in writing of their intention to build a solar array, the contract’s “extended period” or “power period” starts. This period is usually between thirty and forty years. The solar company will build out its hardware on the property. Crops in the field may be tilled over, and a settlement paid to the farmer. No more hunting may occur on or near the solar company’s hardware. During this period, the solar company will pay the higher lease per acre amount of closer to $750 to $1,000 per acre per year.

The next concern is what happens if the solar company goes out of business. Make sure this issue is addressed in the contract, that the company purchasing the original contract must abide by the terms of the contract, unchanged. This goes for you as well. Make sure you can sell the property if you wish, with the understanding that the buyer would get future payments that would have to be made to the new owner.

You will want to make sure the contract has a clause that if any action by the solar company or their equipment damages your property, they have sufficient insurance coverage to satisfy the value of their investment and yours. They should provide you annually with a copy of their insurance coverage showing it to be in force.

One of the most important concerns is what happens to the framing structures, fencing and panels the solar companies build when the contract ends, or the solar company abandons the project. The contract should clearly state that the solar company must remove and legally dispose of all solar panels, framework and footing up to a few feet under the soil’s surface. There are hazardous waste materials in the panels and other issues with being stuck with these things left on the property. The homeowner should not under any circumstances take responsibility for keeping or removing the solar materials.

One of the key points the solar salesman makes is that there is no money out of pocket for the property owner. Yet I strongly suggest anyone considering signing a solar lease contract or any contract have the document reviewed and explained by an attorney. This advice should not surprise you coming from an attorney. If you hear me out, I am amazed when people come to my office after a contract goes bad (or they didn’t even have a contract) and did not have an attorney review and explain it to them. In the case of a solar lease, these contracts will affect the family land for roughly fifty years, a generation. They can potentially bring in more than a million dollars of revenue over their term, sometimes many millions, based on the project size. With an investment like this, it is in the property owner’s best interest to know what they are agreeing to and have legal counsel. Several solar companies have caught on to the fact that an educated partner is a good partner and even agreed to pay up to $1,000 toward legal fees to have their contract reviewed. If this clause is not in the contract, ask. You deserve the peace of mind of knowing you understand what you are getting your family into.

Along with the solar company reimbursing for attorney fees, some contracts include a signing bonus. I recommend asking for a bonus payment, made at the time you sign the agreement. Be aware that these dollars are taxable, but you should do a little something to celebrate the occasion. This truly is a once-in-a-lifetime moment.

Another key provision the owner should look for is that if there is a dispute arising out of this contract that it must be settled in the Courts of the State of Ohio. Solar companies come from across the country and Canada and sell these contracts or merge with other companies frequently. If the company does something to violate the terms of their contract, you do not want to be traveling to California or Delaware to sue; you want the right to go to our County Courthouse in Georgetown and be heard on the matter there.

Solar Lease Agreements are long and detailed documents prepared by the solar company’s attorneys to give them the best shot at making money off of your land. If this is something you are considering I strongly urge you to contact a local attorney to review the document, make recommendations and explain the details and terminology to you before you commit your family’s land to a lifetime of marriage with a solar company.

If you are looking at the possibility of signing a solar lease, do yourself a favor and schedule a strategy session to discuss how this will affect you and your land. Call (937)402-2348 or use our online scheduling link.

Author: James Schroeder

One of my favorite clients (yes attorneys have favorites) is a cranberry and blueberry operation in southern New Jersey. A few years ago while testifying at the state capital on their behalf regarding leasing government land for farming operations I had an interesting conversation with a legislator who could not understand why my client wanted a long term lease and may not be willing to pay as much as an out of state operation at auction for some state land that abutted their farm.

The State Senator had a point, it was his job to get the most amount of money for the state’s land. That was his job. My job was to explain that getting the highest price upfront was not in the best interest of the state and it is not in the best interest of the property owner in a lot of situations either.

More than once I have heard of a low bidder who has no other attachment to the land than to make money off of it using questionable practices such as ignoring soil conservation practices, failing to replace mineral content, over-applying herbicides on fields negatively affecting waterways and buffer areas and other tales of woe.

Low bidders often have one thing on their minds, get in, get planted, get harvested and get as much money out of the contract before moving on. Landowners need to think more strategically and often enter into more complete contracts covering more than just acreage and price.

The 2017 Survey of Iowa Leasing Practices prepared by Iowa State University Extension and Outreach office shows some interesting facts about leasing. Just over half (53%) of farmland acres in Iowa are leased. Forty-four (44%) of all acres were leased for cash rent, Nine (9%) were leased on a crop share basis. The trend of the past thirty-five years went from fifty-five (55%) of farms being owner-operated to forty-one (41%) owner-operated.

With more and more farmers allowing those with no ties or legacy to the land to operate across their fields, it is important to consider a few more issues than price to protect the integrity of the land the owner has been given to manage. Three factors should be considered and memorialized in the lease: price, farming practices, and length/legacy.

Beyond price, the farm owner and tenant should discuss and memorialize in the lease how the soil and topography will be treated during the term of the lease. Perhaps soil fertility will be tested at the beginning and end of the lease term and the tenant shall be responsible to maintain minimum levels of basic markers. The parties should agree on tilling practices and how these might affect soil erosion. Generally, the owner and tenant should discuss what kinds of herbicides will be used and if there are times of the year or areas of the property where the owner does not want any applications.

Concerns regarding legacy and length of lease should also be agreed upon. In order to protect the land, an owner might factor in the length of a lease. The Iowa survey shows that the average tenure of current tenants is 11 years for cash rent and 14 for crop share arrangements. Sometimes leasing to a relative or trusted neighbor might justify taking less per acre in order to help ensure the land will be managed respectfully.

Regardless of who you rent to it is wise to ask the tenant for financial information about their operation, obtaining character references from personal and vendors of the prospective tenant and inspecting some of the fields they currently farm.

As the term of the lease proceeds communication between the parties can help the relationship run smoothly. Perhaps the parties might plan an annual spring and fall walk or ride of the property to discuss any issues pre-planting or post-harvest. Long term tenants renting off of family farms should ask to meet the farmer’s spouse or child to have them involved in the conversation if they can.

Cashing a few fat rent checks can do long-term damage to both the land and the farmer’s bottom line. Consider more than price when leasing your land, your legacy, and the bottom line.

Author: James Schroeder

SECURE THE PAPERS. Have a plan as to where these documents will be safely kept. Let your beneficiary know where to find the originals.

You may hand out copies of your Power of Attorney documents. Copies of POAs are as effective as the original. Never give the original away to a third party!

MOVE ASSETS AWAY FROM PROBATE.

Complete a Payable on Death Affidavit for Bank Accounts. Go to your bank and ask for the necessary forms to make your accounts payable upon death to a person you choose.

Transfer on Death for Real Estate. If you have not done so already, you can have our office draft and file a Transfer on Death Affidavit for an Ohio Real Estate parcel you own. If you own property out of state, we can discuss whether there is a similar statute in the other states where you hold title to a property.

Change Titles to Vehicles. Any motor vehicle or RV with a title may be passed directly upon death to a person you designate by obtaining and filing a “Transfer on Death Beneficiary Designation/Removal Affidavit” (BMV3811) form with the County Clerk’s Title Office.

Designate Beneficiaries. For any asset with a beneficiary, including insurance policies, retirement accounts, investments, business interests, notes, or mortgages payable to you, you can designate the Trust as the beneficiary of these assets.

Please speak with your financial advisor regarding whether it is your best strategy to designate the Trust as the beneficiary of an IRA; you may be better off naming a spouse or a child as the beneficiary and allowing these assets to grow tax-free, longer. We can help you with transferring these interests if you wish, but clients generally can handle these transactions themselves or with the assistance of their financial advisor/broker.

Give Specific Gifts. If you wish to give something of financial value or even sentimental value and you can part with it now, I encourage you to write a little note to the person you want to give it to as to what you want to give to them and why and give the gift now rather than waiting. It will likely be meaningful for the person and save potential conflict later. You may give specific gifts as part of your will but these “pass-through” probate.

REVIEW THE PLAN. You should have us review the plan every five years or if a major life event occurs, such as:

• Marriage or Divorce

• Birth or adoption of a child

• Death of a spouse, child, beneficiary, or executor

• Disability of a person named in the Will due to addiction or other issue

• Acquisition of a new property that you want to add to the Will.

• Change of residence to another state where the inheritance laws are different.

If you have a Will or need a Will, call Schroeder Law Group to set up a strategy session to review your estate plan including your will, trust and powers of attorney documents. We provide estate planning services from our Hillsboro Ohio office. Call 937-402-2348 or schedule online.

Author: James Schroeder

SECURE THE PLAN. Have a plan as to where these documents will be safely kept. Let your beneficiary know where to find the originals. If your plan includes a Memorandum of Trust, you can share copies with agents, brokers, bankers, etc. FUND THE TRUST. If you have a Trust but do not change titles and designate the trust as a beneficiary, you have an empty shell that protects nothing. Change Titles. Bring any deeds you wish to have transferred to be controlled by the trust. We will prepare and record these for you. Designate Beneficiaries. You can designate the Trust as the beneficiary of these assets for investments, insurance policies, business interests, notes, or mortgages payable to you. Please speak with your financial advisor regarding whether it is your best strategy to designate the Trust as the beneficiary of an IRA; you may be better off naming a spouse or a child as the beneficiary and allowing these assets to grow tax-free, longer. We can help you with transferring these interests if you wish, but clients generally can handle these transactions themselves or with the assistance of their financial advisor/broker. Transferring Other Assets. Many other assets can be transferred into the Trust. Here are a few:

• Aircraft, Automobile or Boat • Annuity or Brokerage Account • Stock or Business Interests • Livestock or Mineral Rights • Patent, Copyright or Trademark • Checking or Savings Account • IRA and Retirement Plans • Royalties • Timeshares • Baseball Cards or Collectibles • Life Insurance Policies • RV or Mobile Home

INFORM OTHERS. Provide your CPA with a copy of the Trust. Inform property insurance carriers of the change of ownership. Make sure tax bills are coming to the address you prefer.

REVIEW THE PLAN. You should have us review the plan every five years or if a major life event occurs, such as:

• Marriage or Divorce

• Birth or adoption of a child

• Death of a beneficiary

• Death of your trustee or successor trustee

• Change of which property is part of the Trust

• Change of your name

• Acquisition of a new property that you want to add to the Trust

• For Revocable Trusts, change the beneficiary, remove assets, change trustees

• Change of residence to another state where the inheritance laws are different

If you have a Trust or think you need a Trust, call Schroeder Law Group to set up a strategy session to review your estate plan including your will and powers of attorney documents. We provide estate planning services from our Hillsboro Ohio office. Call 937-402-2348 or schedule online.

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