by Dan McCarthy | Apr 1, 2025 | Estate Planning
Introduction to The “Death Tax” and Gift Tax-(and why you likely do not need to fear the death tax)
At McCarthy Law Office, we proudly serve the Cincinnati and Westside communities, providing trusted legal counsel for all your estate planning needs. One topic that frequently comes up in conversations surrounding estate planning is the so-called “death tax”—more formally known as estate taxes. Estate taxes can be complex, but understanding the basics can help you make informed decisions about your financial legacy.
What Are Estate Taxes?
An estate tax is a tax on the transfer of property after someone passes away. It’s assessed on the value of a person’s estate, which includes assets such as real estate, investments, savings, and other property. When a person dies, their estate may be subject to estate taxes if its value exceeds certain thresholds set by federal and state governments.
In the past, many states, including Ohio, had their own estate tax systems. However, Ohio no longer imposes a state estate tax, which has simplified the estate planning process for residents. While Ohio has eliminated its state-level estate tax, the federal estate tax still applies to estates that exceed certain thresholds.
The Federal Estate Tax Exemption
The federal government has significantly raised the estate tax exemption in recent years. As of now, the federal estate tax exemption is just under $14 million per individual. This means that if the total value of your estate is less than this amount, you won’t be required to pay any federal estate tax. However, estates that exceed this amount may be subject to estate taxes on the value above the exemption limit.
For married couples, this exemption can be even more significant. Federal estate tax portability allows a surviving spouse to inherit any unused portion of their deceased spouse’s exemption. This could potentially double the exemption for the surviving spouse, provided they file an estate tax return (even if no tax is owed) to claim portability. The ability to transfer unused exemptions is a powerful tool in tax planning, particularly for high-net-worth individuals.
Federal Gift and Estate Tax Exemption
In addition to the estate tax exemption, there are also federal gift tax exemptions to consider. As of recent updates, the federal gift and estate tax exemption has increased to $13.99 million per person. This amount includes both lifetime gifts and assets transferred at death. The annual exclusion for gifts has also increased to $19,000 per donee, per donor, meaning you can give up to $19,000 to any individual without it counting toward your lifetime exemption.
These increases provide more opportunities for individuals to transfer wealth without incurring estate taxes. However, it’s important to remember that these exemption amounts are set to “sunset” at the end of 2025, meaning they may decrease unless new legislation is passed to extend or modify them. For this reason, it may be wise to take advantage of the increased exemptions before the potential reduction.
Portability and Planning for the Future
One important consideration for married couples is the concept of portability. This allows a surviving spouse to utilize their deceased spouse’s unused federal estate tax exemption. To take advantage of portability, the surviving spouse must file a federal estate tax return (even if no estate tax is owed) within a specific period following the decedent’s death. This period remains five years after the date of death, so it’s crucial to act promptly if you want to maximize this benefit.
Portability can be particularly helpful for couples whose combined estate may exceed the federal exemption amount. By properly utilizing portability, the surviving spouse can avoid unnecessary estate tax liability and keep more wealth within the family.
Required Minimum Distributions and Retirement Accounts
For those with qualified retirement plan accounts, it’s important to be aware of changes to the rules regarding required minimum distributions (RMDs). Starting in 2023, individuals who reach the age of 72 after December 31, 2022, must begin taking RMDs at age 73. This change affects individuals who have retirement accounts like IRAs, 401(k)s, and similar plans, and it can impact your overall estate planning strategy.
Planning Ahead
Estate planning can be complex, but with the right guidance, you can ensure that your assets are distributed according to your wishes and in the most tax-efficient way possible. With federal estate tax exemption amounts set to decrease at the end of 2025, it’s a great time to review your estate plan and take action to maximize the benefits of the current exemption limits.
At McCarthy Law Office, we are here to help you navigate the intricacies of estate planning. If you’re ready to start planning for the future, contact us today to schedule a consultation. We proudly serve the Cincinnati and Westside communities and are dedicated to helping you protect your legacy for generations to come.
by Dan McCarthy | Mar 1, 2025 | Estate Planning, Trusts and Wills
Caution: Potential Unintended Consequences of Beneficiary Designations
Avoiding probate is often a goal of estate planning clients. A Revocable Living Trust is one way to avoid probate. Another strategy is the use of beneficiary designations. When planning for the future, many individuals use beneficiary designations to ensure that their assets are passed on to loved ones upon their death. Whether it’s life insurance, retirement accounts, bank accounts, or other assets, naming a beneficiary directly can seem like a simple, efficient way to manage one’s estate. In Ohio, it is even possible to place a beneficiary designation on your home with a Transfer on Death Designation Affidavit.
However, this approach can sometimes lead to unintended consequences, particularly when it conflicts with a will or trust, causing issues such as disinheritance or disputes among family members.
Conflicts with the Will or Trust
One of the primary risks of using beneficiary designations is that they can conflict with your will or trust, leading to confusion and potential legal battles. A will is often the primary document for distributing assets after death, specifying how property should be divided among heirs. A trust is also a common estate planning tool, designed to manage assets during and after your lifetime, especially for individuals with more complex estates.
If a beneficiary designation contradicts the provisions of a will or trust, the beneficiary designation typically takes precedence. For example, if your will directs that a particular asset, like a bank account or life insurance policy, be passed to a specific person, but you have listed a different beneficiary directly on the account, the beneficiary designation will override the instructions in the will.
This can lead to family conflict, especially if the named beneficiary is not who you intended, or if they were accidentally added in error. Furthermore, assets designated to a beneficiary outside of the will may bypass the probate process, which could leave certain family members feeling unfairly excluded or disinherited.
Unintended Disinheritance
Another significant risk associated with beneficiary designations is the possibility of unintended disinheritance. This often occurs when someone assumes that the beneficiary designations align with their wishes but fails to regularly update them. For instance, a married couple may designate each other as beneficiaries on life insurance policies, but if
one spouse dies, the surviving spouse might forget to update the designation or might unintentionally leave an asset to a child from a prior relationship instead of the surviving spouse.
Similarly, if you get remarried and forget to change the beneficiary on a retirement account or other asset, your former spouse could inherit your assets, leaving your current spouse and children without their expected share. The issue can be even more complicated if you have multiple children from different marriages and haven’t coordinated your beneficiary designations with the overall estate plan.
Beneficiary designations are typically not governed by the terms of a will or trust, which means assets that are designated outside of your will could pass to someone you did not intend, causing serious disputes among heirs. These errors can be costly and time-consuming to resolve, often requiring legal action to clarify your intentions.
Estate Planning Should Be Comprehensive
While beneficiary designations are a valuable tool in many situations, they should not be used in isolation when planning for the distribution of your estate. It’s essential to have a comprehensive estate plan that includes a will or trust, and to ensure that all beneficiary designations are consistent with the terms of your estate planning documents.
Updating beneficiary designations is crucial whenever there is a major life event, such as marriage, divorce, or the birth of children. Reviewing these designations regularly is a simple way to ensure that your estate plan remains up-to-date and reflects your current wishes.
Connect with McCarthy Law to Support Your Case or Situation
If you are concerned about potential unintended consequences due to beneficiary designations or conflicts with your will or trust, McCarthy Law is here to help. We focus on helping clients navigate complex estate issues and ensuring that their wishes are carried out according to their desires. We can review your current estate plan, help you make necessary updates, and ensure that your beneficiary designations are aligned with your broader plan.
Whether you are trying to resolve a conflict or create a comprehensive estate plan from the beginning, McCarthy Law is dedicated to providing the legal guidance you need. Contact us today to discuss how we can support your case or situation and help secure your legacy.
by Dan McCarthy | Feb 11, 2025 | Business - null, Estate Planning
McCarthy Law Office Celebrates 10 Years of Service
In 2015, Dan McCarthy took a leap of faith and founded McCarthy Law Office with a vision of providing personalized, one-on-one legal services to individuals and families in the Cincinnati community. Over the past decade, the firm has evolved, focusing on helping clients plan for the future and navigate the legal complexities of estate planning and probate.
A Decade of Growth and Focus
While McCarthy Law Office initially handled a variety of legal matters, the firm has refined its focus over the years, dedicating its practice to estate planning and probate. Today, the firm is committed to helping families gain peace of mind by crafting comprehensive estate plans, guiding clients through the probate process, and offering strategies to help families avoid probate whenever possible.
To better serve the community, McCarthy Law Office has also expanded its presence. The firm’s main office is now located on the Westside of Cincinnati, while a downtown office on Court Street remains available for client meetings.
Recognition and Achievements
McCarthy Law Office’s dedication to excellence has earned Daniel McCarthy numerous professional accolades. He has been recognized as a Super Lawyer every year from 2019 to 2025 by the prestigious Ohio Super Lawyers list, an honor reserved for only a small percentage of attorneys in the state. Prior to this, he was named a Rising Star from 2014 to 2017, a recognition highlighting outstanding attorneys early in their careers.
Helping Families Plan for the Future
As McCarthy Law Office celebrates this milestone, Dan McCarthy reflects on the impact the firm has had on the lives of its clients. Estate planning and probate matters are deeply personal, and his goal has always been to provide guidance, clarity, and peace of mind to those facing important legal decisions. Whether creating a will, establishing a trust, or navigating probate after the loss of a loved one, McCarthy Law Office is committed to helping clients make informed, thoughtful choices for their future.
Looking Ahead
As the firm enters its second decade, McCarthy Law Office remains dedicated to serving the Cincinnati community with integrity, compassion, and expertise. Families can feel confident knowing they have a trusted legal partner to help them protect their assets, honor their wishes, and secure their loved ones’ futures.
Take the First Step Toward Peace of Mind
Planning for the future isn’t just about legal documents—it’s about protecting your family and ensuring your wishes are honored. Don’t wait until it’s too late to make these important decisions. Whether you need to create an estate plan, update an existing one, or navigate probate, McCarthy Law Office is here to guide you every step of the way.
Schedule a consultation today and take control of your family’s future. Call or text us at 513-815-7006, visit danmccarthylaw.com, or email mccarthy@danmccarthylaw.com to get started.
by Dan McCarthy | Feb 23, 2022 | Estate Planning, Trusts and Wills
A letter of instruction (LOI) is an important part of any comprehensive estate plan, whether you’re just starting out or have a plan already in place. A letter of instruction can help your loved ones manage important information about you. A LOI conveys your desires, includes practical information about where to find various items referenced in your plan, and it can provide advice to help those you designate in managing your affairs.
Even with a new or updated estate plan, there exists a lot of information that your heirs need to know that doesn’t necessarily fit into the format of a will, trust, or other estate plan components. In the absence of this information, it is easy for those in charge to miss important items and alternatively become overwhelmed, sifting through all of the documents you left behind. All LOI’s are as different as the persons who wrote them; however, there are some standard data that every LOI should include:
- A current list of people and their contact information to inform of your death
- A list of beneficiaries of your estate plan
- The locations of important documents like your will, trust, financial statements, insurance policies, deeds, and birth certificate
- A comprehensive list of assets such as bank accounts, investment accounts, real estate holdings, insurance policies, and military benefits if applicable
- PINs, usernames, and passwords for debit cards and online accounts
- Usernames and passwords for social media accounts, music or information accounts
- Keys and combinations to digital safes, strong boxes, and safety deposit boxes and their locations
- A list of credit card accounts and any other debts
- A list of organizations in which you belong or are a paying member such as professional organizations, boards, country or golf clubs, social or political clubs, and more
- A current list of contact information for lawyers, brokers, tax preparers, financial planners, and insurance agents
- Instructions for the distribution of personal items with sentimental value
- Instructions for a memorial or funeral service
- A personal message to family members
A note about your digital footprint: your digital world often includes music libraries, storefronts, YouTube channels, influencer social media accounts, etc. When most of us create these accounts, we blithely accepted the End User License Agreement (EULA) without much thought about when we are no longer around to manage its content and activity. A EULA designates the rights and restrictions that apply when using the software known as terms of service (TOS). Naming someone capable of managing your digital assets and their activity is important. Most of your online accounts are not subject to typical estate planning devices like trusts and wills because they are not technically your property. Since most TOS are non-transferable, you will be unable to transfer your online accounts’ ownership legally. However, you can still make a plan for how they are handled when you die.
Once you write your letter, put it somewhere easily accessible and tell your family about it. If you do not want anyone to read the LOI until your death, seal it in an envelope. You should review your letter once a year to be sure it reflects your most current wishes and information. Because your heirs read your letter of intent upon your death, it can be difficult for you to write and have any degree of satisfaction. The final words and conveyances are sobering.
We can help you compose such a letter (as well as other estate planning documents), making sure that it complements and does not contradict your estate plan. Remember that your LOI can bring real peace and be a source of comfort to your grieving family members. It allows them time to contemplate and connect with others to celebrate you rather than sort through documents searching for important papers. Your LOI can also alleviate potential family conflicts and stress because you specifically address personal items’ distribution. Your goal should be to ease the burden for those in charge and gain a sense of peace that you have done all you can to allow your loved ones to focus on reflecting on your life.
When you are ready to take the next step, we will be here to help. If you need assistance or would like to talk about your specific situation, contact our Cincinnati office at (513) 815-7006.
by Dan McCarthy | Feb 16, 2022 | Estate Planning, Health
The COVID-19 pandemic underscores the importance of advance care planning and directives. Responses to vaccinations and understanding their efficacy, reinfection potential, and long-haul symptoms resulting from COVID-19 continue to baffle our scientific understanding. It appears the coronavirus will continue to challenge Americans, indeed the world, as according to an article in Nature, long haul symptoms may include: respiratory conditions, diseases of the nervous system, mental health burden, metabolic disorders, poor general wellbeing, cardiovascular conditions, gastrointestinal system burdens, skin disorders, arthralgia and arthritis, and infections. Our world is forever changed, and so too is our need for planning.
An advance directive pertains to treatment and preferences and the designation of a surrogate decision-maker should you become unable to make medical decisions on your behalf. These advance directives fall into three categories: health care proxy, power of attorney, and living will.
A health care proxy designates an individual to make health care decisions if the other person is medically incapacitated and cannot make their wishes known. This proxy affords the same rights to request or refuse medical treatment as if the individual at risk were capable of making and communicating decisions.
A living will specify the types of medical treatment desired in the case of incapacitation addressing information regarding the following situations: pain relief (analgesia), antibiotics, intravenous hydration, artificial feeding such as a feeding tube, cardiopulmonary resuscitation, ventilators, and do not resuscitate orders (DNR).
Medical advance directives now include specific passages addressing COVID-19 and your desired course of medical treatment. Some advance directives provide express authorization for surrogates or agents to communicate with providers remotely. The directive includes all forms of digital communication such as web conference, telephone, FaceTime, email, etc., and expressly permits medical providers to accept written instruction.
Your advance medical directive can express end-of-life wishes that address the use or withdrawal of specific treatments, particularly intubation, as COVID-19 patients needing a ventilator have poor survival rates. In dire health situations that require intubation, caregivers want and need legal, medical access to advocate for their loved ones, even if they cannot be present due to visitor restrictions or live remotely.
A previously well-drafted advance directive needs small adjustments to accommodate issues of COVID-19; however, it is prudent to revisit an existing document. Be certain to address remote communication authorizations in your directive. If you do not have an advance medical directive, be aware that there are many future unknown health consequences due to COVID-19, its long-haul symptoms, and future vaccination issues that should prompt you to create a directive.
An AARP article describes how these documents are created, whether it is the first time or updating an existing directive. Of course, there is no way to address every possible health condition scenario, but where you can, be explicit about your instructions, best course of actions and empower your health care agent to understand your decision-making process.
We can help by reviewing an existing advance directive, or by drafting new ones for you. We will listen to your wishes and help guide you in making important decisions about your care, where it will be provided, and who will assist you if needed. If you would like to talk about your specific situation, contact our Cincinnati office at (513) 815-7006.
by Dan McCarthy | Feb 2, 2022 | Estate Planning, Trusts and Wills
- I don’t own much and neither does my family. Can’t we delay estate planning until we can afford it?
You shouldn’t. It is crucial to give legal authority to a person of your choice, to care for your children if anything should happen to you. You don’t want your children to become wards of the court, or to be delivered to a family member you don’t like. Second, the cost to you at the front end (now) is much less than it could be later when you might face steep legal fees to get the job done. We’re all in favor of lawyers earning a living. We just never want any of our clients to have to pay for costs that are unnecessary or avoidable.
- My son just graduated from high school. He owns nothing but an autographed baseball and a 1997 Chevy pickup. Surely I don’t have to worry about an estate plan for him?
You should. Estate planning isn’t just about owning property. Life needs protecting, too. If your child should lose consciousness in an accident, and he or she is over the age of 18, you as a parent will no longer have the legal authority to decide what medical treatment he should receive. Insurance companies might refuse to deal with you.
Just imagine the stress of it. You’d be there to help, but nobody would be legally required to listen to you. You would have to go to court and get a guardianship – over your own child.
Instead, just think how much easier (and less expensive) it would be to get your adult child to come in to see us, while all is OK now, to make out powers of attorney. Those are documents that convey legal authority onto you, or on people of your adult child’s choice, to act on your child’s behalf if he or she becomes unable.
- Our kids are grown and married. Can’t my spouse and I postpone planning?
You shouldn’t. First, you can never tell when disaster might strike. Second, your kids may seem happily married now, but there’s no telling how long for – and you don’t want to see their, and possibly your, money and property lost in bitter divorce proceedings or lawsuits or bankruptcies.
- Our kids are able-bodied, thank goodness. Why should we worry about protecting disability benefits for them if they don’t need them?
They might not need those benefits now. But if they become disabled in the future, and if they inherit money from you, inherited money could cost them thousands of dollars a year in benefits.
- My doctors know best. I’m not going to tell them how to do their jobs, and I don’t want anyone else doing that either. What’s wrong with that?
Do you want to be kept alive on machines, possibly for years, when you no longer can care for yourself, recognize loved ones, converse, or even swallow? These days, medical machines can breathe for you through a tube in your throat, keep your heart beating, and deliver food and fluids through a tube in your stomach. Many who are on these machines die in the hospital, their arms tied down to prevent dislodging the tubes. Health-care providers are ethically obligated to keep you alive to the bitter end. Few of us want that. You can decline those extreme measures with our carefully crafted legal documents.
- Can’t I just grab a will of the internet, do a transfer-on-death deed for my land, put my kids on my bank account, and call it done?
Just look at some of the complications, in the above answers. An estate plan should protect disabled children’s inheritances from the loss of valuable government benefits. It should avoid probate court. It should protect money from creditors or divorce or remarriage. It should avoid disputes between children as joint owners.
Even a relatively simple situation contains many moving parts. It takes expertise to coordinate the various strategies. Don’t risk a result you wouldn’t want. Call us to create a plan that harmonizes the moving parts, so the gears will work together and you will leave the legacy you intended.
- Can’t I just forget the whole thing and let my kids deal with it after I’m gone?
Sure you can. But your kids will not thank you for leaving a disorganized mess behind, and that may be how they remember you.
Here’s one good idea:
Come see us now. The documents we create for you might be “just pieces of paper,” but they are worth a great deal more than that. At a stressful time when additional hurdles are the last thing you need, powers of attorney and other estate-planning options could save you and your family delay, expense, and heartache. If you need assistance or would like to talk about your specific situation, contact our Cincinnati office at (513) 815-7006.
