Ohio’s “Probate Omnibus Bill” to Take Effect This Month and Expands Special Needs Trust law, Creates A Process for Pre-Death Validation of A Trust and Solidifies Attorney-Client Privilege for Trustees

By The Family Wealth & Estate Planning Group

Ohio House Bill 595, also known as the “Probate Omnibus” bill, contains a series of provisions designed to revise and improve certain aspects of Ohio’s estate planning, trust administration, and probate laws. On December 21, 2018, then-Governor John Kasich signed House Bill 595 into law, and its changes are set to take effect on March 22, 2019. This article highlights important reform to special needs trusts, a new process to establish the validity of a trust pre-death and solidification of attorney-client privilege for trustees under Ohio law.

Special needs trusts allow for families to set aside funds for their loved ones who have disabilities, or are on Medicaid or SSI, without jeopardizing their eligibility for government assistance. House Bill 595 makes an important update to the Ohio law on establishing a special needs trust. Previously, the language of the statute stated that the special needs trust could only be established for someone by their parent, grandparent or guardian. The Bill extended the ability to create a special needs trust beyond that group. After the reform, it is now possible for nonelderly disabled applicants or recipients of Medicaid benefits, or their spouses, to establish their own special needs trusts. The new law is valid for special needs trusts created on or after December 13, 2016 and aligns Ohio law with federal law on special needs trusts.

Since 1979, Ohio testators have been able to file a declaratory judgment action with the probate court to declare that their wills are valid. In essence, these actions allow testators to have the court “pre-approve” the will before death. These actions, often called “antemortem probate” proceedings, are useful for testators who wish to ensure that there will be no disputes or challenges to the will after their death. Although long available for wills, antemortem probate proceedings were not previously available for trusts in Ohio. House Bill 595 changes that, making it possible for a trust’s settlor to file for a declaratory judgment declaring that the trust is valid before his or her death. This availability of this procedure is a relief for Ohio settlors who want to avoid postmortem disputes and make sure that their interests are carried out as planned.

If you are serving as a trustee, executor, or administrator, it is vital to understand the nature of the relationship between you and your attorney. Your conversations with your attorney are typically protected by attorney-client privilege. However, recent Ohio case law created some ambiguity as to how the privilege applied when an attorney represents a fiduciary such as a trustee. In some jurisdictions, there is a “fiduciary exception” to the attorney-client privilege—meaning that communications between a trustee and his or her lawyer cannot be shielded from the beneficiaries of the trust. Ohio’s passage of House Bill 595 makes the clarification that such an exception does not exist in Ohio. The update solidifies the attorney-client privilege for trustees, shielding communications between the fiduciary and his or her attorney from the third-party beneficiaries of the trust.

If you have any questions about the Omnibus Probate bill and how its changes impact your estate plan, please contact your attorney at Carlile Patchen & Murphy LLP or any member of the Family Wealth & Estate Planning Group.