By Marsha Makel, Attorney
On May 22, 2012, the Ohio House of Representatives passed Ohio House Bill 479 (HB 479). The main objective of the bill, authored by trust and estate planning attorneys, is to create legacy trusts in Ohio (also known as asset protection trusts). These legacy trusts are similar to those in Delaware and South Dakota. Currently, Ohio law does not allow for legacy trusts and the authors of the bill believe that allowing for the creation of these trusts will attract business owners to Ohio and create additional jobs.
Few Ohio citizens will be protected by these trusts since the trusts are expensive to create. The authors of HB 479 believe they had to also propose a provision that would benefit Ohioans that could otherwise not afford the legacy trust. Accordingly, this Bill proposed to change Ohio’s homestead exemption from $20,200 per person to a 100% homestead exemption. A 100% homestead exemption could greatly hinder any creditor’s ability to enforce judgment liens on real estate and will basically make judgment liens ineffective. Creditors would have one less collection tool to use in Ohio.
Our firm, as a part of the Ohio Creditors’ Attorney Association (OCAA), has been working hard to fight this radical change to the Ohio homestead exemption. We opposed HB 479 through testimony before the Ohio House of Representatives.
In the end, amendments were made to HB 479 before it passed the House on May 22, 2012. One amendment secured a complete exception for the State of Ohio and all of its political subdivisions from the homestead exemption, not only as to taxes but to any governmental debt owed. In addition, the 100% homestead exemption was amended to $500,000 per person. Although there was progress with the amendments, there is still work to be done.
In Ohio, home values average around $150,000. A homestead exemption of $500,000 essentially equates to a 100% homestead exemption for the majority of Ohioans. We plan on opposing this Bill once it is proposed to the Ohio Senate for their vote in the fall. The Ohio Senate was instrumental in changes to Ohio’s exemptions in 2008, which increased the $5,000 homestead exemption to $20,200 and provided for periodic increases based on the Consumer Price Index. In 2008, the Ohio Senate carefully examined the homestead exemption and made the necessary increases and provisions for future increases. Therefore, we are hopeful that once HB 479 is presented in the Ohio Senate, we can work with the Senate to reduce the $500,000 exemption significantly to the $20,200 range that the Senate approved in 2008.
We will be continuing our efforts with HB 479 and will keep you updated on any progress.
If you have any questions on this information, please contact Ms. Marsha D. Makel, Esq. Marsha is an Associate in the Compliance Department of the Columbus office of Weltman, Weinberg & Reis Co., L.P.A. and can be reached at (614) 857-4413 or via e-mail at email@example.com.
1 Comment so far
Leave a comment