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By: Robert Moore, Tuesday, August 15th, 2023

Legal Groundwork

A new Ohio law took effect last year that impacts some landowners who want to terminate their farm crop leases. If a farm lease does not include a termination date or a termination method, the law requires a landowner to provide termination notice to the tenant by September 1. The law was adopted to prevent late or otherwise untimely terminations by landowners that could adversely affect tenants.

It is important to note that the law only applies to verbal leases or written leases that do not include a termination date or method of notice of termination.  If a written lease includes a termination date or method of notice, the terms of the lease apply and not the termination notice law.  Also, the law does not apply to leases for pasture, timber, farm buildings, horticultural buildings, or equipment.

The notice can be provided to the tenant by hand, mail, fax, or email.  If termination is provided by September 1, the lease is terminated either upon the date harvest is complete or December 31, whichever is earlier.  While no specific language is required for the termination notice, it is good practice to include the date of notice, an identification of the leased farm and a statement that the lease will terminate on the completion of harvest or December 31.  If termination is provided after September 1, the lease continues for another year unless the tenant voluntarily agrees to terminate the lease early.

A tenant is not subject to the new law and can terminate a lease after September 1 unless the leasing arrangement provides otherwise.  Because it is generally easier for a landowner to find another tenant, even on short notice, the law protects only the tenant from untimely terminations, not landowners.

For more information, see Ohio’s New Statutory Termination Date for Farm Crop Leases law bulletin available at farmoffice.osu.edu.

Posted In: Property
Tags: farm termination
Comments: 0
By: Robert Moore, Friday, August 11th, 2023

Legal Groundwork

On July 26, 2023, Representatives Jimmy Panetta of California and Mike Kelly of Pennsylvania introduced legislation related to farm estate taxes.  The proposed bill seeks to increase the limit on the deduction that can be taken by farmers under Section 2032A of the Internal Revenue Code (IRC).  The 2032A provision in the IRC allows farmers to value their land at agricultural value, rather than fair market value.  However, the current law limits the deduction to $1.16 million.  This relatively small deduction can limit the usefulness of 2032A for some farm estates.

Consider the following example:

Farmer’s estate includes 500 acres with a fair market value of $5,000,000.  The agricultural value, allowed by 2032A, is $4,500/acre or $2,250,000.  The difference between the fair market value and the agricultural value is $2,725,000.  So, by using 2032A valuation, the land value can be reduced by $2,725,000.  However, 2032A limits the deduction to $1,160,000.  Therefore, Farmer’s estate can actually use less than ½ the reduction in land value.

The newly introduced legislation would increase the 2032A deduction limit to the federal estate tax exemption, currently $12,900,000.  Applying the proposed legislation to the above scenario, Farmer’s estate would be able to deduct the entire $2,725,000. 

The farm value of farmland is determined by a formula included in the IRC.  The value is the net cash rent of comparable land less real estate taxes divided by the Farm Credit System Bank interest rate, which is 4.57% for a 2022 Ohio estate.  Let’s assume the fair market cash rent for a farm is $220/acre less $50/acre for taxes.  Dividing by the interest rate, we get a value of $3,720/acre.  The 2032A rate (farm value) is usually 1/3 to ½ of the fair market value.

If we use the $3,720 as the farm value and $10,000/acre for fair market value, 2032A reduces the value of the farmland by $6,280/acre.  Dividing the per acre savings into the 2032A limit of $1,160,000 results in 185 acres.  So, a reasonable estimate is that the 2032A limit only allows farmers to apply the 2032A special valuation to about 185 acres (assuming $220 rent and $10,000 FMV).  Conversely, if the 2032A limit is increased to $12,900,000, the farm value could be used on over 2,000 acres.  Increasing the 2032A exemption limit to $12,900,000 could save as much as $4,696,000 in estate taxes for some farm estate.

It is important to note that 2032A is only needed by farmers whose estate value will exceed the federal estate tax limit.  For example, a farmer that died today with a net worth of $12,900,000 or less would owe no estate tax and thus would not need to take the 2032A deduction.  According to the USDA, of the approximately 31,000 principal farm operators who died in 2020, only 50 (0.16%) owed estate taxes.  With the current high estate tax exemption, less than 1% of farmers owe federal estate taxes and thus the 2032A limit is not an issue for the vast majority of farmers.

Unfortunately, this could change soon. In 2026, the federal estate tax exemption is scheduled to be reduced to around $7,500,000.  We will not know the exact number until 2026 because of adjustment for inflation, but it will be somewhere around ½ of what it is now.  Congress can extend the current, higher exemption or make it permanent, but no one seems to know the likelihood of that happening at this point.  If the federal estate tax exemption does come back down in 2026, and with the increases in land prices the last few years, 2032A may become needed by many more farm estates.

Let’s take a look at how 2032A would play out in 2026. Consider the following scenario:

Farmer dies in 2026 and the federal estate tax exemption is $7,500,000.  His net worth is $10,000,000 with $7,000,000 in farmland.  The estate is $2,500,000 over the estate tax exemption limit which would result in $1,000,000 in estate taxes.  If the 2032A exemption remains at $1,160,000, we can further reduce the estate by that amount, leaving $1,340,000 over and $536,000 of tax liability.  If the newly proposed 2032A legislation is passed, the Farmer’s estate will be able to deduct at least $2,500,000 using 2032A, leaving Farmer’s estate with $0 tax liability.

As the scenarios and discussion shows, increasing the 2032A exemption limit will help farm estates, especially if the estate tax exemption is reduced in 2026.  The proposed legislation has been introduced in the prior two Congresses and both times did not make it out of the House Ways and Means Committee.  We will keep you updated on the status of this legislation and if it begins to make its way through Congress.

Posted In: Estate and Transition Planning
Tags: 2032A, estate taxes
Comments: 0
Aerial view of a field of solar panels in Ohio
By: Peggy Kirk Hall, Thursday, August 03rd, 2023

A long process to update Ohio’s regulations for solar energy facility development has nearly reached its end.  On July 20, the Ohio Power Siting Board (OPSB) adopted new rules that include revisions to rules that apply to solar facilities under its jurisdiction—those that have a nameplate capacity of 50 megawatts or more.  The rules will next go to the Ohio legislature’s Joint Committee on Agency Rule Review (JCARR) for a final review before they can become effective.

The OPSB began the rules review in 2020.  The process included stakeholder meetings, public workshops, a draft proposal of revisions, and a review of comments to the draft rules.  Many parties and interested individuals followed the process, and the agency received formal input from 20 parties and over 400 informal public comments.  The OPSB recognized that the rules review “inspired a robust discussion from numerous interested stakeholders.”

What are the proposed changes?

OPSB summarizes the rule changes it adopted as follows:

  • Public information: Siting project applicants must host two public informational meetings for each standard certificate application. The first meeting will describe the scope of the project. The second meeting, held at least 90 days before an application filing, will focus on the specifics of the application. 
  • Site grading: Applicants must provide a preliminary grading plan that describes maximum graded acreage expectations.
  • Drainage and field tile: Applicants must describe and map field drainage systems and demonstrate how impacts to those systems will be avoided or mitigated, describe how damaged drainage systems including field tile mains and laterals will promptly be repaired to restore original drainage conditions and describe the data sources and methods used to obtain information for field drainage system mapping.
  • Vegetation management: Applicants must prevent the establishment and spread of noxious weeds within the project, including setback areas, during construction, operation, and decommissioning. Applicants must provide annual proof of weed control for the first four years of operation with the goal of weed eradication significantly completed by year three of operation.
  • Noise: Noise limits for renewable energy facilities cannot exceed the greater of 40 decibels (dBA) or the ambient daytime and nighttime average sound level by more than 5 dBA.
  • Surface water protection: Solar energy facility applicants must develop and implement a stormwater pollution prevention plan, a spill prevention control and countermeasure plan, and a horizontal directional drilling contingency plan, to minimize and prevent potential discharges to surface waters.
  • Fencing: Solar energy facility perimeter fencing must be small-wildlife permeable and aesthetically fitting for a rural location.
  • Setbacks: Solar energy facility panel modules must be setback at least 50 feet from non‑participating parcel boundaries, at least 300 feet from non-participating residences, and at least 150 feet from the edge of the pavement of any road within or adjacent to the project area.
  • Regulatory: Compliance monitoring and reporting requirements to ensure applicants meet the commitments and conditions contained in each OPSB certificate.

What happens next?

Parties have 30 days from the July 20 adoption date to file a request for a rehearing on OPSB’s decision to adopt the rules.  A rehearing request to OPSB must be based upon an argument that the rules are unreasonable or unlawful.  Absent a rehearing request, the OPSB will forward the rules package to JCARR, a committee consisting of five representatives and five senators from the Ohio legislature.  JCARR must hold a public hearing to hear comments on the rules between 31 and 45 days after receiving them, then must review the rules to ensure they don’t exceed OPSB’s authority, conflict with existing rules or legislative intent, and include analyses of fiscal and business impacts. The committee will next either approve the rules or recommend invalidation of some or all of the rules by the Ohio legislature, and both the House and Senate would have to pass resolutions to follow JCARR's invalidation recommendations.  If JCARR approves the rules, they’ll go into effect right away.

Follow the JCARR rules review process at https://www.jcarr.state.oh.us/.

Follow this link to read the OPSB Order adopting the rules, which contains the revised rules beginning on page 14.

The entire history of the rules revision is available in Case Record 21-0902-GE-BRO.

By: Robert Moore, Tuesday, August 01st, 2023

Legal Groundwork

A common misperception is that all trusts protect assets from creditors, lawsuits, and nursing homes.  While some trusts do protect assets, many trusts do not.  In fact, most trusts are not designed to protect assets but instead to only transfer assets at death.  Knowing the difference between the different types of trusts is important to ensure that your trust meets your expectations for asset protection.

There are generally two different types of trusts – revocable and irrevocable.  A revocable trust is the typical estate planning trust most people use.  Because the revocable trust can be changed and assets transferred into and out of the trust, it provides no asset protection.  Essentially, if the owner/grantor can access the assets of the trust, then so can creditors.  If you can make changes to your trust and transfer assets in and out of the trust, you probably have a revocable trust.

An irrevocable trust can protect assets.  The concept of an irrevocable trust is to establish a trust that cannot be changed (with a few exceptions), transfer assets to the trust and then relinquish the right to withdraw the assets back out of the trust.  Additionally, someone else serves as the trustee to manage the trust assets.  Since the original owner of the assets no longer has access, control, or ownership of the assets, then creditors cannot access them.

It is important to keep in mind the five-year lookback rule for Medicaid.  This rule causes ineligibility for Medicaid for gifts that were made within five years of Medicaid application.  Due to this rule, establishing an irrevocable trust to protect assets from nursing home costs must be done well before the assets become at risk.

While an irrevocable trust is useful to protect assets, the irrevocable nature of the trust is a significant negative feature.  Once the irrevocable trust is established and the assets transferred, it cannot usually be undone.  Even if circumstances or goals change over time, the irrevocable trust stays in place and the assets stay in the trust.  A revocable trust, on the other hand, is flexible and can be changed as circumstances and goals change.

Sometimes a trust will include “revocable” or “irrevocable” in its name, making it obvious the type of trust.  However, many trusts do not indicate in the name if it is revocable or irrevocable.  In that case, the trust document must be reviewed to determine the type of trust.  Typically, within the first few paragraphs of the trust document, the trust will be clearly identified as either revocable or irrevocable.

Some estate plans include both a revocable and irrevocable trust.  Assets to be protected are transferred to an irrevocable trust and assets the owner wishes to retain control over are transferred to a revocable trust.  Having two trusts increase the costs of both setup and administration but it is an option for many people.

Anyone with a trust should verify the type of trust they have.  It is common that someone believes their assets are protected by their trust only to find out too late that they actually have a revocable trust and their assets are subject to nursing home costs.  A revocable trust can be converted to an irrevocable trust at any time prior to death.  If there is any doubt as the type of trust, review the trust with your attorney to be sure it meets your estate planning and asset protection goals.

Thumbs up emoji
By: Jeffrey K. Lewis, Esq., Friday, July 28th, 2023

It’s getting hot! And we are here to bring you even more heat. This month’s Ag Law Harvest takes you across the country and even across our northern border as we highlight some interesting court cases, a petition to the USDA, and some legislation coming across the desks of Governors from Maine to Oregon.

Ohio Court Determines That Dairy Farm Did Not Intentionally Harm Employee. 
In 2019, a dairy farm employee sustained serious injuries after getting caught in a PTO shaft while operating a sand spreader. After his injury, the employee filed a lawsuit against his employer for failing to repair or replace the missing safety guards on the PTO shaft and sand spreader. In his lawsuit, the employee alleged that the dairy farm’s failure to repair or replace the missing safety guards amounted to a “deliberate removal” of the equipment’s safety features making the dairy farm liable for an intentional tort. In other words, the employee was accusing his employer of intentionally causing him harm. Normally, workplace injuries are adjudicated under Ohio’s workers’ compensation laws, unless an employee can prove that an employer acted intentionally to cause the employee harm. 

For an employer to be held liable for an intentional tort under Ohio law, an employee must prove that the employer acted with the specific intent to injure an employee. An employee can prove an employer’s intent in one of two ways: (1) with direct evidence of the employer’s intent; or (2) by proving that the employer “deliberately removed” equipment safety guards and/or deliberately misrepresented a toxic or hazardous substance. Because there was no direct evidence to prove the dairy farm’s intent, the employee could only try his case under the theory that the dairy farm deliberately removed the safety guards, intentionally causing him harm. 

The case went to trial and the jury found the dairy farm liable and ordered it to pay over $1.9 million in damages. The dairy farm appealed to the Twelfth District Court of Appeals arguing that its failure to repair or replace does not amount to a “deliberate removal” of the safety guards from the PTO shaft and sand spreader. The appellate court agreed

The Twelfth District decided to apply a narrow interpretation of the term “deliberate removal.” The court held that a “deliberate removal” is defined as the “deliberate decision to lift, push aside, take off, or otherwise eliminate.” The evidence presented at trial showed that the shaft guard may have simply broken off because of ordinary wear and tear. Additionally, the evidence could not establish who removed the connector guard or if the connector guard did not also break off due to ordinary wear and tear. Thus, the Twelfth District found that the evidence presented at trial did not support a finding that the dairy farm made “a careful and thorough decision to get rid of or eliminate” the safety guards. Furthermore, the Twelfth District reasoned that an employer’s “failure to repair or replace a safety guard is akin to permitting a hazardous condition to exist” and that the “mere knowledge of a hazardous condition is insufficient to show intent to injure. . .” The Twelfth District vacated and reversed the $1.9 million judgment and entered summary judgment on the dairy farm’s behalf.  

USDA Receives Petition Over “Climate-friendly” Claims. 
The Environmental Working Group (EWG) has petitioned the U.S. Department of Agriculture (“USDA”), asking the USDA to: (1) prohibit “climate-friendly” claims or similar claims on beef products; (2) require third-party verification for “climate-friendly” and similar claims; and (3) require a numerical on-pack carbon disclosure when such claims are made. The core legal issue is whether such “climate-friendly” labels and numerical carbon disclosures are protected and/or prohibited by the legal doctrine of commercial speech, which is protected under the First Amendment of the U.S. Constitution. EWG argues that the USDA has the authority to regulate such speech because commercial speech is only protected if it is not misleading. Additionally, EWG claims that requiring numerical carbon disclosures advances a substantial governmental interest by protecting consumers from fraud and deception. Although EWG has the legal right to petition the USDA, the USDA does not have to grant EWG’s petition, it must only consider the petition and respond within a reasonable time. 

Maine Governor Vetoes Ag Wage Bill.
Earlier this month Maine Governor, Janet Mills, vetoed Legislative Document 398 (“LD 398”) which required agricultural employers to pay their employees a minimum wage of $13.80 and overtime pay. Governor Mills stated that she supports the concept of LD 398 but was concerned about some of the bill’s language. The Maine legislature had the opportunity to override the Governor’s veto but failed to do so. After the legislature sustained her veto, Governor Mills signed an executive order establishing a formal stakeholder group to develop legislation that will establish a minimum wage for agricultural workers while also addressing the impacts the future legislation will have on Maine’s agriculture industry. 

A Big Thumbs Up! 
A Canadian judge recently found that a “thumbs-up” emoji is just as valid as a signature to a contract. In a recent case, a grain buyer, South West Terminal Ltd. (“SWT”), sent through text message, a deferred grain contract to a farming corporation owned and operated by Chris Achter (“Achter”). The contract stated that Achter was to sell 86 metric tonnes of flax to SWT at a price of $17 per bushel. SWT signed the contract, took a picture of the contract, and sent the picture to Achter along with a text message: “Please confirm flax contract”. Achter texted back a “thumbs-up” emoji. When the delivery date came and passed, Achter failed to deliver the flax to SWT which prompted SWT to file a lawsuit for breach of contract. SWT argued that Achter’s “thumbs-up” meant acceptance of the contract. Achter, on the other hand, claimed that the use of the emoji only conveyed his receipt of the contract. 

The Canadian court ultimately ruled in favor of SWT. The court relied on evidence that Achter and SWT had a pattern of entering into binding contracts through text message. In all previous occurrences, SWT would text the terms of the contract to Achter and Achter would usually respond with a “looks good”, “ok”, or “yup”. This time, Achter only responded with a “thumbs-up” emoji and the court concluded that an objective person would take that emoji to mean acceptance of the contract terms. Achter was ordered to pay over C$82,000 ($61,442) for the unfulfilled flax delivery. As the old saying goes: “a picture is worth a thousand words or tens of thousands of dollars.”  

Oregon Governor Signs Agriculture Worker Suicide Prevention Bill into Law. 
Earlier this month, Oregon Governor Tina Kotek signed a bill that creates a new suicide prevention hotline for agricultural producers and workers into law. Senate Bill 955 (“SB 955”) provides $300,000 to establish an endowment to fund an AgriStress Helpline in Oregon. Proponents of the bill believe the AgriStress Helpline will be able to specifically address the needs of agricultural producers and workers which “[s]tatistically . . . have one of the highest suicide rates of any occupation.” Oregon becomes the 7th state to establish an AgriStress Hotline joining Connecticut, Missouri, Pennsylvania, Texas, Virginia, and Wyoming. 

Zucchini and yellow squash in a wooden box
By: Peggy Kirk Hall, Wednesday, July 26th, 2023

It’s the time of year when many Ohio vegetable gardeners are wondering, “why in the world did I plant so many zucchini?”  And it’s also when we start hearing the question, “is there any liability risk in giving away my garden produce?”  The good news is that Ohio has a food donation immunity law.  The law encourages food donations by granting liability protection to those who give perishable foods like garden produce to agencies that serve individuals in need.  A new amendment to the law recently passed in Senate Bill 16 broadens the types of donations that qualify for liability protection.  If you’re up to your ears in garden produce, you may want to know about the food donation immunity law.

Here's how the law works.

  1. The grant of immunity

The food donation immunity law is in Ohio Revised Code 2305.37.  It states in Section B that a person who, “in good faith,” donates “perishable food” to an “agency” is not liable for harm that may arise if the food, when distributed to an “individual in need,” is not “fit for human consumption.” 

  1. The donation must be made “in good faith” that the food is “fit for human consumption” when donated

There is not a definition for the term “in good faith,” but it’s a term commonly used in legal situations.  It means that a person acted with an “honest intent” and not with an intent to deceive or conceal something. The food donation immunity law provides two conditions to help ensure a person is donating in good faith.  First, the immunity only applies if a person determines, prior to making a donation, that the food is “fit for human consumption” at the time it is donated to an agency.  The term “fit for human consumption,” though not defined by this law, means that it is edible and safe.  But note there is no responsibility on the donor to ensure the food will be edible and safe after it is donated, when it is actually consumed or distributed.  Second, when determining whether food is fit for consumption, a donor cannot act with gross negligence or willful or wanton misconduct.  These two conditions mean that if a donor doesn’t inspect the food at all before delivery or knows something happened to the food that could make it unsafe for consumption but donates it anyway, the law will not protect the donor from liability if the food causes harm. 

  1. The law applies to “perishable food”

The law’s definition of “perishable food” is broad.  It refers to any food that may spoil or otherwise become unfit for human consumption due to its nature, age, or physical condition.  The definition includes fresh fruits and vegetables, fresh and processed meats, poultry, fish, seafood, dairy products, bakery products, eggs, refrigerated and frozen foods, and packaged foods.  It also includes food prepared but not served by a food service operation such as a restaurant, caterer, or hotel, and gleaned foods, discussed below.

  1. Donations must be to “agencies” that serve “individuals in need”

Donations to friends and family don’t qualify for the liability protection—the law only applies to a donation to an “agency” that serves “individuals in need.”  Several definitions and conditions are important.

  • An “agency” is an organization that distributes perishable food to “individuals in need,” either directly or indirectly. The term includes any nonhospital, charitable nonprofit corporation organized under Ohio nonprofit laws, or nonprofit charitable association, group, institution, organization, or society.  An “individual in need” is a person an agency determines to be eligible for food distribution due to poverty, illness, disability, infancy, or similar circumstances.
  • A qualifying agency is one that does not charge a fee for the food.  However, Senate Bill 16 recently amended the law to allow donations to an agency that charges an amount no more than the cost of handling the food.  That change means even if individuals pay a food handling cost to receive the donated food, the donor of the food will receive immunity.
  • Another section of the law, 2305.37(D), also grants immunity to an agency that distributes donated food as long as the agency determines the food is fit for human consumption when the food distribution occurs.

Ohio law also provides liability protection for “gleaning”

Growers can also be immune from liability when allowing someone else to pick or salvage the garden produce and donate it to an agency.  This is referred to as "food gleaning" and Ohio law also provides liability protection to those who allow food gleaning.  First, the gleaned food is considered “perishable food” and is covered by the food donation immunity law described above.  Second, the food gleaning immunity law in Ohio Revised Code 2305.35 grants a landowner or operator immunity for physical injuries sustained by a gleaner during the gleaning process. The landowner or operator is not liable for injuries to a gleaner resulting from any risks or conditions of the property or any normal agricultural operations on the property.

Ready to donate?

Gardeners ready to donate excess garden produce first need to locate an agency that serves individuals in need.  Find a local food bank, food pantry, soup kitchen, meals on wheels, or similar agency, and make sure the agency doesn’t charge individuals to receive the food or charges no more than the cost of handling the food.  These resources can help locate an agency: 

Before delivering garden produce to tan agency, be sure to inspect the produce and ensure it is fit for consumption—clean, not spoiled, and edible.  Don’t have time to pick and deliver?  Find a food gleaner who may be willing to glean your garden and donate the food to an agency.  Here’s a resource that lists Ohio food gleaners:  https://nationalgleaningproject.org/gleaning-map/states/ohio/?fwp_state=oh.

By: Robert Moore, Friday, July 21st, 2023

Legal Groundwork

Registration is still open for Cultivating Connections, a conference for farm transition planners.  The conference will take place in Des Moines on August 7th and August 8th.  An online option is also available.  The program is a cooperative effort between OSU’s Agricultural and Resource Law Program and Iowa State’s Center for Agricultural Law and Taxation.  The goal of the conference is to increase the number of skilled professionals assisting farmers with farm transition planning. Additionally, a network of colleagues for connection during the year through online meetings, webinars, newsletters, and other opportunities will be established.

More information and registration details are available at https://www.calt.iastate.edu/seminar/2023-08-07/cultivating-connections-conference-farm-transition-planners . Contact Robert Moore (moore.301@osu.edu) with any questions.

By: Robert Moore, Thursday, July 20th, 2023

Legal Groundwork

Revocable trusts are an important estate planning tool that is utilized in many estate plans.  Most assets can be held in a revocable trust but there are exceptions.  One such exception is retirement accounts like an IRA, 401k or 403b.  These types of accounts should not be owned by a trust and a trust should only be the beneficiary in limited circumstances.

A qualified retirement account can only be owned by an individual.  There are many rules and restrictions related to changing the ownership of a retirement account.  If you transfer a retirement account to your trust, there will likely be penalties assessed and income tax due.  Do not transfer ownership of your retirement account without consulting your tax advisor and financial advisor.  Generally, transferring a retirement account to a trust is not advised.

A trust can be made the beneficiary of a retirement account but, again, caution should be used.  Trusts usually pay higher income tax rates than individuals.  Also, it is often easier for an individual to manage an inherited retirement account than it is for a trustee to manage a retirement account on behalf of a trust.  So, it is usually best to have retirement accounts inherited directly by the beneficiaries rather than be held in trust for beneficiaries.

There are times when naming your trust as the beneficiary of a retirement account is appropriate.  The potential for higher taxes and more cumbersome administration can be offset if the retirement accounts should be managed by the trustee due to concerns with the beneficiaries.  Some situations that might justify using a trust as a retirement account beneficiary include minors as beneficiaries, concerns with marriage of beneficiary, the beneficiary’s inability to manage assets and providing creditor protection.  Particularly when a retirement account may involve large amounts of money and concerns about the beneficiary, naming the trust as the beneficiary may be warranted.

In all situations, the retirement account should have at least one beneficiary named.  If no beneficiaries are named, the account will go through probate and the administration burden on the executor and trustee will be significant.  Be sure to double-check all retirement accounts to be sure a beneficiary is named.

The integration of retirement accounts in estate planning is an important component of most people’s attempt to transfer assets to the next generation.  Be sure to discuss your retirement accounts with your attorney, tax advisor and financial advisor.  Making changes to the beneficiary designations of retirement accounts is a relatively easy process but knowing whom to name as the beneficiary should include careful analysis and consultation with your advisor team.

Ohio Revised Code eminent domain chapter
By: Peggy Kirk Hall, Tuesday, July 18th, 2023

When a landowner legally challenges an agency’s use of eminent domain to appropriate property, Ohio law requires a trial court to hold a hearing to determine the agency’s right to make the appropriation, according to a recent decision by the Ohio Supreme Court.  The Court held that an appeal to a higher court is not permissible until the trial court holds such a hearing and rules on the issues raised in the hearing.  For landowner Diane Less, the ruling means the trial court--the Mahoning County Court of Common Pleas--must hold a hearing to determine whether Mill Creek MetroParks had the right to make the appropriation of her land and whether that appropriation is necessary.

The case is one of several lawsuits and long-running controversies over Mill Creek MetroPark’s use of eminent domain to appropriate land for a bike path.  The Mahoning County disputes are one reason behind a current legislative proposal to revise Ohio’s eminent domain laws, which includes a prohibition against the use of eminent domain for recreational trails. The legislation is at a standstill, however, with many opponents lining up against the recreational trails and other provisions of the bill.

Basis for the decision

The current Mill Creek MetroParks v. Less case made its way to the Ohio Supreme Court after the Seventh District Court of Appeals reversed the Mahoning County court’s summary judgment decision that MetroParks was authorized to use eminent domain to take Less’ land.  MetroParks appealed that decision to the Ohio Supreme Court.  But rather than addressing the issue of authority to take the land, the high court focused on the procedures outlined in Chapter 163 of the Ohio Revised Code.  The statutes “provide a uniform eminent domain procedure for all appropriations sought by public and private agencies,” including procedures for when a property owner contests an appropriation.  The Court reviewed the statutory requirements in ORC 163.09, which require a trial court to hold a hearing when:

  1. A property owner files an answer to a petition for eminent domain that specifically denies the right to make the appropriation or the necessity for the appropriation,
  2. The answer alleges sufficient facts in support of the denial, and
  3. The appropriation is not sought in a time of war or other public exigency or not for the purpose of making or repairing roads.

When MetroParks filed the eminent domain action against Less, she did file an answer that denied the Park District’s right to make the appropriation and the necessity for the appropriation.   Less also filed a motion for summary judgment, asking the court to rule in her favor and dismiss the case because there were no genuine issues of material fact in the case.  The trial court denied her motion, however, and Less filed an appeal of that denial to the Seventh District Court of Appeals.  The Supreme Court points out that the appeal should not have occurred, however, because the statutory procedures required the trial court to hold a hearing after it denied the summary judgment motion by Less.  Nevertheless, the Seventh District ruled on the appeal, reaching a decision that agreed with Less’ argument that the Park District did not have authority to take her land.

The Supreme Court accepted the case for review, but its purpose was not to rule on the issue of whether there was authority for the use of eminent domain.  Instead, the Court held that it had no jurisdiction to hear MetroPark’s appeal of the Seventh District’s decision, and that the Seventh District Appeals Court did not have jurisdiction to review the decision of the trial court.  Because the trial court had failed to follow the statutory procedures for a hearing and decision on the authority and necessity of the appropriation, there was no “final appealable order” that either party could appeal to a higher court. 

What happens next?

The Supreme Court vacated the decision of the Seventh District Court of Appeals and sent the case back down to the Mahoning County Court of Common Pleas.   The county court must now hold a hearing to review the landowner’s arguments on the authority and necessity for the park’s appropriation.  The court’s decision after that hearing will be an order that either party may choose to appeal to the Seventh District.  The best answer to the question of what happens next, most likely, is that case will continue to roll on for quite some time.

Read the Supreme Court’s Decision in Mill Creek MetroParks v. Less.

By: Robert Moore, Thursday, July 13th, 2023

Legal Groundwork

You may have seen the news story this week about Aretha Franklin’s will.  Aretha, the famous singer, died in 2018.  A will executed in 2010 was originally thought to be her last will and the document that controlled the distribution of her assets to her heirs.  The 2010 will appears to have been a formal will, prepared by an attorney, and properly executed by Franklin.  However, a 2014 handwritten will was later found in a notebook in Franklin’s couch.  Some of the heirs of Franklin’s estate disputed the validity of the 2014 will.  The 2010 left Franklin’s home to three sons while the 2014 will left her home to only two sons.  The issue was recently resolved by a Michigan jury.  The primary issue was: can a handwritten will be a valid will?

The answer in most states, including Ohio and Michigan, is yes.  Known as a holographic will, a person can write their own will and the will can be valid provided it is signed and witnessed by two adults.  Generally, the holographic will must be in the person’s handwriting to confirm that they did, in fact, write the will themselves.  So, even a will written by hand on notebook paper found in someone’s couch, like Aretha’s will, can be valid.  Presumably, two witnesses were present when Franklin signed the handwritten deed.  A few lessons can be learned from Aretha Franklin’s situation:

  • Revoke the prior will.  When executing or updating estate planning documents, the new or updated documents should clearly revoke the prior relevant documents.  If Aretha’s 2014 will would have expressly revoked her 2010 will, the matter may not have gone to court because her intent to use her 2014 will would have been much clearer.
  • Every requirement of a will matters.  If Aretha’s will would not have been signed, it would not have been valid.  The law vigorously enforces the technical requirements of estate planning documents.  An unsigned will is typically not enforceable even if it is clear the person intended to use the will but did not sign it in error.  Aretha’s will met all the requirements of a holographic will in Michigan and was deemed valid.
  • Secure your estate planning documents in a safe location and make sure someone knows where they are.  Whether a desk drawer, safe or filing cabinet, your estate planning documents should be held in a protected location and the executor and/or heirs should be aware of the location of the document for easy access.  Also, the law firm drafting the documents usually retains a copy in their files.
  • Put a “No Contest” clause in your will.  A No Contest clause disinherits any heirs who challenge the validity of a will.  If Aretha’s 2014 will had included a No Contest clause, the son disputing the will may have not initiated the lawsuit in fear of losing his inheritance in her valuable song royalty rights.
  • Every change in an estate planning document should be a formal change.  Scratching out a line on a will or adding a provision by hand will likely not be effective.  If a change needs to be made to a document, a formal amendment should be drafted and executed or the document should be changed and re-executed.
  • Casual execution of documents can cause conflict among heirs.  Because Aretha took a more casual approach to her 2014 will, heir heirs ended up in a lawsuit and family relations are likely strained.  Have an attorney assist with your documents so that formalities are followed and conflicts among heirs are minimized.
  • Take the time to visit with an attorney for your documents.  No one likes spending money on legal fees but a modicum of legal fees preparing estate planning documents can save heirs many thousands of dollars in litigation fees.

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