This year opened with a flurry of bills crossing Governor DeWine’s desk. One of these, Senate Bill 202, contains a smorgasbord of updates to Ohio law about disabilities, cemeteries, estate & trust administration, and some unusual Fulton County courts. Two of the most important changes for our estate planning practice come in a slight tweak to the presentment of claims in decedents’ estates and a clearer mechanism for terminating trusts at the end of their lives.
Presentment of Claims
When it comes to a decedent’s debts, their creditors typically had six months to present a claim to the executor, or else the claim would be extinguished. A few years ago, the Ohio Supreme Court strictly interpreted this requirement to mean putting a bill in the hands of the estate fiduciary themselves; delivery on the fiduciary’s attorney was specifically not enough. For just about any other purpose, serving a party’s attorney is the same as serving them, so this result was at odds with our normal procedural instincts.
SB 202 changes this. Creditors still must still present their claims to the fiduciary (or open an estate) within six months of a decedent’s passing. However, now presentment can be achieved by service on the fiduciary’s attorney. Further, the legislature added that presentment is independent of how the claim is addressed. This gives creditors more certainty, which is all the more valuable when Ohio already has a hasty claims presentment period compared with other states.
Mechanisms for Terminating Trusts
Occasionally, we practitioners run into a standoff between a trustee and a beneficiary, particularly when dealing with corporate parties. After the trustee has gathered the resources and paid the debts at the end of administration, it’s time to distribute them to the beneficiaries. Typically, a trustee will ask the beneficiary to approve the trust accounting and release the trustee of liability before making that distribution.
This is usually fine, but sometimes we run into a beneficiary who refuses the release the trustee until the distribution has been made. The trustee wants to distribute once liability has been waived, while the beneficiary seeks to ensure they have their money before they sign away their rights. If everyone stays stubborn, we may be stuck for a while.
Fortunately, SB 202 provides a mechanism that allows the trustee to force the issue. Under the new provision, a trustee can give a notice of intent to distribute with their accounting, which starts a clock running for the beneficiaries to submit a dispute. If the trustee and beneficiary can’t work it out, we now have a formal way to go to court and resolve that dispute. But if there is no dispute, the trustee is legally blessed to make that distribution without worrying about future liability.
This arrangement provides a welcome amount of formality and certainty at the end of a trust’s administration. The existing judicial trust termination procedures are more time- and resource-consuming than this mechanism looks to be, which will also aid the beneficiaries. We still hope that everyone will get along when it comes time to distribute, but we now have a tool to help make the parties come to the table and resolve any differences.