OSBA Legislation News
February 13, 2008
Ohio Disclaimer Law Update Awaits the Governor’s Signature
The Ohio House of Representatives and Senate have passed and sent to the Governor House Bill 160, which clarifies and streamlines Ohio’s disclaimer law. An amendment to the bill clarifies that limited liability companies may be formed as nonprofit entities.
House Bill 160 amends the disclaimer statute with regard to the acceptance of economic benefits from bequests, life insurance policies and other arrangements by permitting a person to disclaim at any time prior to the acceptance of the gift, rather than the current nine month time limit. A “disclaimer” is a person’s refusal to accept the economic benefit of a bequest, joint account, life insurance policy, annuity, or other economic arrangement which passes to the disclaimant. The proposed bill has no effect on Ohio tax revenues.
Substantive change - timing of disclaimers
Ohio law now requires a disclaimer to be made within nine months of the death of the decedent who made the bequest. This requirement stems from federal tax law permitting disclaimed property not to be taxed as a gift by the disclaimant if made within nine months of the death which triggered the transfer. Repealing the nine month time limit will allow Ohioans to disclaim after the existing nine month period.
Under House Bill 160, a person would be able to disclaim any time prior to the acceptance of benefits.
Under federal gift tax law, a disclaimer made more than nine months after the dearth of the decedent who created the interest is treated as a taxable gift. A disclaimer within nine months is not a taxable gift. The federal credit for tax-free gifts is now $1,000,000. Under the bill, disclaimers more than nine months after the disclaimed interest is created will be possible in many cases without adverse tax results since relatively few inherited interests are over the $1 million amount. Thus, the proposal disconnects Ohio disclaimer law and federal gift tax law so as to give Ohioans a much more flexible system for disclaiming inheritances.
A disclaimer of a property interest not capable of valuation, such as a discretionary right to principal, or a testamentary limited power of appointment, would be disclaimable without being a taxable transfer even though more than nine months has passed.
Clarification of existing law
Disclaimers by fiduciaries. There has been some confusion with the IRS over whether the executor of the estate of a deceased beneficiary could disclaim that beneficiary’s interest. The bill would clarify the law allowing such a disclaimer; the probate court’s control over such disclaimers is preserved.
Disposition of disclaimed interest. Present law allows only for the disclaimant to be treated as predeceasing. When the will or trust of the deceased person provides a different disposition, the practicing bar has always believed the will or trust controls. The bill clarifies that result.
Different interests created by one instrument. Present law is not clear where one instrument creates two trusts and a beneficiary wants to disclaim rights in one but not the other. The proposed amendment expressly permits such a disclaimer.
House Bill 160 also clarifies the limited liability company (LLC) act by making it clear that nonprofit LLCs can be formed. The clarification to the LLC statute was made after the Secretary of State indicated that the LLC law was unclear as to whether an LLC could be formed as a nonprofit entity, and includes some related changes to the tax law.
OSBA Legislation Inventory
(Bills the OSBA is Following)
HB3 / ESTATE TAXES (LATTA, R)To eliminate the state portion of the estate tax. The new bill would gradually raise the practical threshold of liability to apply to estates of more than $600,000 by 2010.
Current Status: / 4/25/2007 - House Ways and Means, (Sixth Hearing)
HB4 / LOCAL GOVERNMENTS (WOLPERT, L)Gives the state's portion of the estate tax to local municipalities, and allows local governments to opt out of the estate tax.
Current Status: / 4/25/2007 - House Ways and Means, (Sixth Hearing)
HB5 / EMINENT DOMAIN (GIBBS, B)Implements recommendations made by the Eminent Domain Task Force,
Current Status: / 6/19/2007 - Referred to State and Local Government and Veterans Affairs Committee
HB7 / ADOPTION (BRINKMAN, T)To reduce the barriers to adoption in Ohio including complications and red tape in the legal system and exorbitant costs.
Current Status: / 1/16/2008 - House Health, (Second Hearing)
HB10 / JUROR COMPENSATION (WOLPERT, L)Provide that a board of county commissioners may fix the compensation of jurors in the court in an amount that differs from the compensation of jurors in the court of common pleas.
Current Status: / 4/19/2007 - House Judiciary, (Second Hearing)
HB46 / CONSUMER'S CREDIT REPORT (STEWART, J)To require a consumer reporting agency to place a security freeze on a consumer's credit report in response to a consumer's request.
Current Status: / 5/23/2007 - Referred to Judiciary - Civil Justice Committee
HB89 / CHARITABLE DONATIONS (COLEY, W)To provide persons who donate consumer goods to a charitable agency with qualified immunity from civil liability for harm that allegedly arises because the consumer goods are not fit for use and to establish a qualified immunity from civil liability for certain charitable agencies that distribute perishable food or consumer goods free of charge to individuals in need.
Current Status: / 7/19/2007 - SIGNED BY GOVERNOR; Eff. 10/18/07
HB119 / BIENNIAL BUDGET (DOLAN, M)To make operating appropriations for the biennium beginning July 1, 2007 and ending June 30, 2009, and to provide authorization and conditions for the operation of state programs.
Current Status: / 6/30/2007 - 6/30/2007 - SIGNED BY GOVERNOR, appropriations eff. 6/30/2007-some sections different dates
HB134 / CORPORATION LAW (SEITZ, B)To modify corporation law relating to the election of directors and to conform conversion provisions of Chapter 1701. of the Revised Code with parallel provisions in Chapters 1705., 1775., and 1782. of the Revised Code.
Current Status: / 7/19/2007 - SIGNED BY GOVERNOR; Some sections eff. 1/1/08; others 10/18/07
A product of the OSBA Corporation Law Committee
HB138 / JUDICIAL SALE-PROPERTY (FOLEY, M)To require purchasers of real property at a judicial sale to provide certain identifying information and to make other changes in judicial sales of real property.
Current Status: / 2/5/2008 - Senate Judiciary - Civil Justice, (Third Hearing)
HB154 / MAYOR'S COURTS (WOLPERT, L)To abolish mayor's courts and to create community courts and to modify the compensation of municipal court judges in territories having a population of more than 50,000.
Current Status: / 1/10/2008 - SUBSTITUTE BILL ACCEPTED
HB160 / OHIO TRUST CODE (BUBP, D)To clarify and modify the law relating to disclaimers under the Ohio Trust Code.
Current Status: / 1/30/2008 - PASSED BY SENATE
A product of the OSBA Estate Planning, Trust & Probate Law Section
HB173 / JUDGES (SEITZ, B)To increase the compensation of justices and judges of the courts, to change the qualifications of all judges, to require the Supreme Court to establish a qualification program for candidates for judicial office, to create the Judicial Allotment Review Commission to study and review the allotment of judgeships in the courts for the purpose of recommending legislation to ensure the efficient and prompt administration of justice in Ohio, to create the Judicial Appointment Review Commission to make recommendations of persons to fill judicial vacancies, to specify that a portion of certain court costs currently deposited to the credit of the Reparations Fund be deposited in the fund for court security, and to make appropriations for court-related purposes.
Current Status: / 10/3/2007 - 10/3/2007 - House Judiciary, (Sixth Hearing)
HB178 / HEALTH INSURANCE/CHILD SUPPORT (BLESSING, L)To define the reasonable cost of health insurance coverage in child support orders.
Current Status: / 5/9/2007 - House Juvenile and Family Law, (First Hearing)
A product of the OSBA Family Law Committee
HB219 / TESTIMONIAL PRIVILEGE (PATTON, T)To create a testimonial privilege for communications between a representative of an employee organization and a bargaining unit member.
Current Status: / 1/29/2008 - House Commerce and Labor, (Second Hearing)
HB222 / LAND SALE PUBLIC NOTICES (ZEHRINGER, J)To permit instead of require that public notices and advertisements of the sale of lands and tenements taken in execution contain a description of the lands and tenements and to permit those advertisements to be made on the sheriff's web site.
Current Status: / 5/31/2007 - 5/31/2007 - House Local and Municipal Government and Urban Revitalization, (First Hearing)
HB232 / COOPERATIVE BUSINESS ENTITY (REINHARD, S)To authorize the establishment of a new form of cooperative business entity in this state.
Current Status: / 9/19/2007 - 9/19/2007 - House Civil and Commercial Law, (Second Hearing)
HB248 / CIVIL LITIGATION (BLESSING, L)To set forth requirements governing non-recourse civil litigation advance contracts.
Current Status: / 2/6/2008 - SUBSTITUTE BILL ACCEPTED
HB255 / PROBATE/GUARDIANSHIP REQUIREMENTS (LATTA, R)To allow appointment of a nonprofit corporation or public agency as guardian of a person, allow an executor or administrator to accept the county auditor's valuation of real estate, provide that the testimonial privilege between a physician or dentist and a patient does not apply in certain guardianship, adult protective services, commitment, or institutionalization proceedings, eliminate the requirement that a probate court act as a board of education, or governing board of an educational service center that fails to perform its duties, and require a probate court to promptly fill a school board vacancy not filled within 30 days.
Current Status: / 6/25/2007 - 6/25/2007 - House Judiciary, (Third Hearing)
HB258 / FINANCIAL RESPONSIBILITY PROOF (STEBELTON, G)To increase the minimum amounts required for valid proof of financial responsibility.
Current Status: / 1/23/2008 - House Insurance, (Fourth Hearing)
A product of the OSBA Negligence and Insurance Law Committees
HB278 / MOTORCYCLE SEIZURE (LETSON, T)To modify the guidelines governing seizure of a motorcycle by a law enforcement officer when the identity of the motorcycle cannot be determined and to establish limited civil liability if the law enforcement officer or agency fails to comply with specified guidelines.
Current Status: / 1/23/2008 - House Civil and Commercial Law, (First Hearing)
HB279 / OVI OFFENDERS (SEITZ, B)To require certain OVI offenders who are granted limited driving privileges to operate only vehicles that are equipped with interlock devices and to make other changes relative to such devices.
Current Status: / 9/10/2007 - Referred to Criminal Justice Committee
HB296 / REPEAT OFFENDERS (HUGHES, J)To establish a presumption that a court should impose on a repeat offender the longest prison term authorized for an offense and to specify longer prison terms that a court may impose on
felony offenders with two or more previous felony violations.
Current Status: / 2/7/2008 - House Criminal Justice, (First Hearing)
HB307 / COURT COSTS-TRAFFIC LAWS (WILLIAMS, S)To require the Bureau of Motor Vehicles to establish a procedure allowing courts to apply for money
from the Financial Responsibility Compliance Fund to cover costs incurred by the courts in connection with the enforcement of the traffic laws.
Current Status: / 10/3/2007 - 10/3/2007 - House Infrastructure, Homeland Security and Veterans Affairs, (First Hearing)
HB332 / REVISED UNIFORM PARTNERSHIP ACT (WAGONER, M)To adopt the Uniform Partnership Act to be known as the "Ohio Uniform Partnership Act (1997)," to establish that on and after January 1, 2009, the act governs new partnerships and partnerships that elect to be governed by the act, to establish that effective January 1, 2010, the act governs all partnerships in Ohio, and to establish that effective January 1, 2010, the existing Ohio Partnership Law no longer governs partnerships.
Current Status: / 2/5/2008 - Senate Judiciary - Civil Justice, (Second Hearing)
A product of the OSBA Corporation Law Committee
HB361 / RESIDENTIAL LEASE CONTRACTS (YUKO, K)To require that specified residential units conveyed pursuant to a land installment contract receive an appraisal and an inspection prior to the execution of the contract, to define residential lease option contract, to regulate residential lease option contracts under the Ohio Landlord and Tenant Law, and to provide penalties.
Current Status: / 10/30/2007 - Referred to Civil and Commercial Law Committee
HB374 / CORPORATE DIRECTORS (COLEY, W)To allow the original articles of incorporation to eliminate cumulative voting in the election of directors, to remove restrictions for certain corporations regarding the elimination of cumulative voting and to exclude from the existing procedures for the sale of all or substantially all of the assets of a corporation the sale of those assets to the corporation's wholly owned subsidiaries.
Current Status: / 1/30/2008 - REPORTED OUT AS AMENDED
A product of the OSBA Corporation Law Committee
HB386 / MORTGAGE FORECLOSURES - VETERANS (HARWOOD, S)To prohibit a creditor within eighteen months of the person's release from active duty from initiating a mortgage foreclosure against a person who is a veteran who has made a claim for disability benefits and to forgive Ohio court costs for veterans seeking civil damages in an Ohio court for denial of rights.
Current Status: / 12/4/2007 - Referred to Ways and Means Committee
HB395 / DIVORCE COURT JURISDICTION (HUGHES, J)To provide for a procedure for the return of personal property held by a law enforcement agency upon the expiration or termination of a protection order and to generally exclude a spouse's social security benefits from a divorce court's jurisdiction.
Current Status: / 12/4/2007 - Referred to Judiciary Committee
HB404 / VIATICAL SETTLEMENTS (HOTTINGER, J)To make changes to the law governing viatical settlements.
Current Status: / 2/6/2008 - Senate Insurance, Commerce and Labor, (First Hearing)
HB414 / FAMILY/HOUSEHOLD VIOLENCE (LATTA, R)To modify when a defendant who is accused of committing an offense of violence against a family or household member must personally appear for the setting of bail.
Current Status: / 1/8/2008 - Referred to Criminal Justice Committee
SB6 / CONSUMER'S CREDIT REPORT (NIEHAUS, T)To allow a consumer to place a security freeze on the consumer's credit report, to specify that Social Security numbers are confidential, to specify that certain personal information is not a public record, to require a public office to redact from a document that is otherwise a public record certain personal information.
Current Status: / 10/30/2007 - Referred to Financial Institutions, Real Estate and Securities Committee