On March 27, 2013, the Ohio Asset Management & Modernization Act (“AMMA”) took effect. The introduction of the AMMA added additional protections and clarity to Ohio debtors. Some highlights:
- The Ohio Legacy Trust, which is an asset protection trust, allows a grantor to protect their assets from future creditors, but still receive the benefits of those assets.
- Increase of the Ohio homestead exemption and medical exemption up to $125,000, from $20,000 increasing the amount protected from creditors.
- Protection of 529 Plan and Roth IRA assets from creditors.
Since its debut last year, the Ohio Legacy Trust debuted at #3 on the Steve Oshins’ Domestic Asset Protection Trust State Rankings Chart, following Nevada and South Dakota. One of the reasons that it was rated lower was because an affidavit is required of solvency when transfers are made into the trust. The drafters of the Ohio Legacy Trust included that language to better protect the grantor demonstrating the grantor fully understood the assets and liabilities at the time of transfer.
Since the March 27, 2013 effective date, the rate of inflation has increased the Homestead Exemption from $125,000 to $132,900. This means a married couple whose home is titled in both names can protect $265,800 of equity in their home from creditors. This amount also applies to the exemption for medical equipment and supplies. Meaning that people with medical conditions can also protect $132,900 of medical equipment and supplies from creditors.
Overall, the last year has been very positive for individuals to protect themselves from both current and future creditors. The creation of the Ohio Legacy Trust allows an individual to create a rainy day fund. It should be a part of an overall asset protection strategy and estate plan, rather than the only component. When done correctly, it provides further comfort that a grantor is protected. Grantors in high risk professions find this very beneficial.
Of course, there are other ways to protect assets without an Ohio Legacy Trust, such as an umbrella insurance policy, the proper use of business entities, and for clients who will inherit substantial assets, drafting the parents’ estate plans to keep assets in trust for the children’s lifetimes.
On its first anniversary, the AMMA seems to be a success.