Youngstown Daily Legal News

Attorneys endorse bill that would help Ohioans protect their assets, stay in Ohio

TIFFANY L. PARKS
Special to the Legal News
Published: August 10, 2012

More members of the state’s legal community have come out in support of a bill designed to help protect the assets of Ohioans.

“My clients come from all walks of life and include medical doctors, surgeons, psychiatrists, orthodontists, chiropractors, assistant U.S. attorneys general, lawyers, teachers, first responders, business owners, contractors, Realtors (and) bankers,” said Charles McClenaghan, who heads a boutique law firm with offices in Dublin and Newark.

“Collectively, my clients own hundreds of millions of dollars in assets. Virtually all of them are hard-working people who built wealth through their own efforts, vision and tenacity. Most continue to work well past the typical age for retirement because they want to be sure their life’s work will be available for legacy and/or charitable purposes.”

McClenaghan, a member of Wealth Counsel, a national organization of estate planning attorneys, said a common theme he sees among clients is a “staunch determination to protect what they have earned during their lives.”

“In counseling clients to help them achieve their goals, I have an obligation to discuss the realities of the world today,” he said. “I hear questions like: What can be done to protect my assets? I am frequently required to advise my clients that Ohio is not the most friendly environment to form a business or to die.”

After weighing the state’s current asset protection statutes against other jurisdictions, McClenaghan said some clients choose to establish their residency or business entity elsewhere.

And that’s why he, and other attorneys, are backing House Bill 479.

The proposed legislation, sponsored by Reps. Christina Hagan, R-Alliance, and Lou Blessing, R-Cincinnati, would establish the Ohio Asset Management Act.

The bill, also known as the Ohio Legacy Trust Act, was crafted to allow Ohio citizens, business owners and entrepreneurs to better protect their assets. The proposal is modeled after plans that have been implemented in other states.

The act has been pitched as a way to create and retain thousands of jobs and funnel in revenue for the state.

If the bill is enacted, Blessing said, it would modernize Ohio’s legal infrastructure in the areas of trust, asset protection and business to “the degree that Ohio will be a national leader in fiduciary services.”

“With HB 479, the hope is that Ohioans who are able to keep more of what they have worked hard to earn will be more likely to keep and invest it here in Ohio and in our financial institutions,” he said. “The passage of this legislation is going to help put Ohio at the forefront of trust and asset protection.”

McClenaghan said under current state law, a decision to leave Ohio can save a client hundreds of thousands, or even millions, of dollars.

“I believe Ohio is a wonderful place to live and raise a family,” he said. “However, even with all of the positive reasons to live in Ohio, we are all painfully aware that winters in Ohio can be a challenge. As a result, many successful people plan to retire somewhere warm; somewhere the business climate is more inviting.”

The bill would allow investors to establish domestic asset protection trusts in Ohio.

“This proposal will eliminate the requirement that Ohio citizens send their assets and business to other states to implement a domestic asset protection trust,” McClenaghan said. “As more and more baby boomers plan to retire, dreams of a home in warm weather are becoming reality for many. As I consult with homeowners, I must share with them the very real advantage of the homestead exemption for their personal residence in states like Florida, Texas and others.”

In Ohio, McClenaghan said, the homestead exemption from creditors for the equity in their home or farm is limited to $20,200.

“By contrast, Florida offers an unlimited homestead exemption,” he said. “HB 479 would put Ohio on par with our friends in the sunny South.”

William McGraw III of Dungan & LeFevre in Troy also is supporting the enactment of HB 479.

“When clients ask me how they can best protect their businesses and assets, I must advise them that one of the best options would be to establish and fund an asset protection trust,” he said. “Unfortunately they must do so in one of 14 states which permit, recognize and honor an APT. These states include Delaware, North Dakota, Alaska and 11 others.”

McGraw, a certified specialist by the Ohio State Bar Association in estate planning, trust and probate law, said there is “no rational reason why Ohio should not avail its citizens of the opportunity to do APT planning in Ohio pursuant to Ohio law.”

“If clients wish to take advantage of this planning opportunity, we Ohio advisors must help them engage attorneys and banks or trust companies based in one of the APT states ... this drives up the cost of establishing such a trust and the inconvenience factor is also significant,” he said.

“The trustee and asset management business related to this client leave Ohio permanently. Trustee and asset management fees are paid to banks and trust companies located elsewhere.”

McClenaghan applauded state lawmakers for passing a bill that would eliminate Ohio’s death tax beginning next year and called HB 479 a “logical extension to these legal improvements.”

“HB 479 allows Ohio to be much more competitive and gives my clients reasons to maintain Ohio residency and to create their business here in Ohio,” he said. “As I see it, the result will be jobs, jobs, jobs for Ohio.”

The proposed legislation has passed the Ohio House and is now awaiting a committee referral in the Senate.

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