Ownership interest is often held in the owner’s name, such as that of John Smith. As a result, when John Smith passes, the ownership interest is a probate asset, meaning that the ownership interest will pass according to the terms of the Will but not until an estate is opened and an executor is appointed. In addition, the value of the ownership interest will need to be reported to the Probate Court as part of the probate process, meaning that the value of your business will be a public record.

Owners have two main options to avoid the probate process at the time of death. First, the owner may title the ownership interest with a Transfer on Death (“TOD”) designee. When held with a TOD, the ownership passes automatically to the designee at the time of death without appointing an executor. While steps should be taken to memorialize the transfer of ownership, the TOD designee is the lawful owner and can exercise ownership rights immediately. Further, the value of the business does not become a public record.

The second option is to hold the ownership interest in a trust. During their life, the owner serves as the trustee of the trust and exercises full control over the ownership interest. Following the owner’s incapacity or death, the successor trustee can immediately exercise the ownership rights. Further, the successor trustee can transfer the ownership to the beneficiaries identified in the trust, which protects the value of the business from becoming a public record.

Your estate plan and other issues affect what method may be right for how you should hold the ownership interest in your business. For questions or assistance with Succession Planning for your business, contact Katie Wahl or John Clough at (937) 223-1130 or www.pselaw.com.

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Much like prenuptial agreements, the postnuptial requires the following minimum standards: (i) agreement in writing and signed by both spouses; (ii) an agreement entered into freely without fraud, duress, coercion, or overreaching; (iii) must be negotiated with full disclosure or full knowledge and understanding of the nature, value, and extent of the property of both spouses; and (iv) the terms may not promote or encourage divorce or profiteering by divorce.

This is a positive development for Ohioans. Provided an agreement meets the statutory requirements, it should allow married couples to better plan for unique or unusual estate planning situations. Whereas in the past, second marriages almost always required trust planning, postnuptial agreements now give estate planners another tool.

If you need a postnuptial agreement or just want to learn more, please contact an attorney at Pickrel, Schaeffer & Ebeling for a consultation at 937.223.1130 or jclough@pselaw.com.

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To qualify for the new portability election procedure, the estate must meet the following requirements:

(1) have a surviving spouse;

(2) passed away after December 31, 2010;

(3) have been a United States citizen or resident on the date of death;

(4) not have been required to file a Form 706;

(5) not have previously filed a Form 706 for their estate.

All that is required to make the election under this new procedure is to:

(1) file a Form 706;

(2) make the portability election on Form 706;

(3) state on Form 706 that the return is “FILED PURSUANT TO REV. PROC. 2022-32 TO ELECT PORTABILITY UNDER § 2010(C)(5)(a).”

With the estate tax exemption set to reduce by half on January 1, 2026, it might be a good time to take another look at the estate planning of anyone who had a spouse die within the last five years.

For more information about this change and other estate planning matters, contact John Clough at jclough@pselaw.com or 937.223.1130.

Regardless of the size or complexity of your estate, our experienced team will work with you throughout every stage of life to assist you and your family to create a customized plan that meets your needs.

¹Revenue Procedure 2022-32; Section 2010(c)(5)(A)

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