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Report of the Estate Planning, Trust and Probate Law Section

To the Council of Delegates:

The OSBA Estate Planning, Trust and Probate Law Section respectfully requests your favorable consideration of the following two legislative proposals, marked as exhibits A and B.

A. A proposal to exclude IRAs from Ohio’s gross estate taxation; and

B. A proposal to waive doctor-patient and attorney-client privilege in probate cases.

Respectfully submitted,
David F. Allen, Marysville
Chair

Exhibit A

PROPOSED AMENDMENT TO ORC §5731.09 TO SPECIFICALLY EXCLUDE ROLLOVER IRAS FROM OHIO GROSS ESTATE

ORC §5731.09(A) by amendment effective March 7, 1997 excludes retirement funds from the Ohio gross estate to the extent contributions were furnished by the decedent’s employer, if the contributions were made by reason of employment. The question immediately arose as to: 1) whether the funds need to be retained in the original plan or trust to which contributed to be excluded, or 2) whether funds that had been rolled over or transferred to an Individual Retirement Account (IRA) would continue to be excluded. The Ohio Department of Taxation took the position that once removed from the original employer plan or trust the funds could no longer be considered contributed by the employer and were instead considered made by the plan participant. The Ohio Supreme Court accepted the department’s position and held in In re Estate of Roberts (2002), 94 Ohio St.3d 311 that rollover IRAs were included in the Ohio gross estate.

Many, if not most practitioners, believe this decision to be an overly restrictive reading of the statute, and in any case, the result to be inequitable. Often when employment terminates the participant is required to take distribution of the fund. Likewise, if the retirement plan is terminated distributions are made and the plan participant has no choice but to take distributions to roll them over into IRAs. Even if not required to take distributions, a participant who has that option may wish to rollover the funds in order to change management of the investments. That adverse estate tax consequences result from any of these transactions do not seem justified.

The Board of Governors of the Estate Planning Trust and Probate Law Section believes there is no justification for treating funds that have been rolled over or transferred from qualified employer plans to IRAs differently for estate tax purposes from funds still maintained in employer plans. It is proposing that the section be amended to clearly provide that such rolled over funds would not be subject to Ohio estate tax.

The recommended changes are as follows:

ORC §5731.09 ANNUITIES; EMPLOYER DEATH BENEFIT PLANS; EXCLUSIONS

(A) Except as provided in division (B) of this section, the value of the gross estate includes the value of an annuity or other payment receivable by a beneficiary by reason of surviving the decedent under any form of contract or agreement under which an annuity or similar payment was payable to the decedent, or the decedent possessed the right to receive such annuity or payment, either alone or in conjunction with another, for the decedent’s life or for any period not ascertainable without reference to the decedent’s death, or for any period which does not in fact end before the decedent’s death.

However, the value of the gross estate includes only such part of the value of the annuity or other payment receivable under the contract or agreement as is proportionate to that part of the purchase price of the contract or agreement attributable to contributed contributions by the decedent. The value of the gross estate does not include the part of the value of the annuity or other payment as is proportionate to the part of the purchase price of the contract or agreement attributable to contributed contributions by the employer or former employer of the decedent, whether to an employee’s trust or fund forming part of a pension, annuity, retirement, bonus, or profit sharing plan or otherwise, if the contributions were made by reason of the decedent’s employment, even if transferred by or at the direction of the decedent to an individual retirement account or other trust or fund.

Exhibit B

Waiver of Attorney/Client, Doctor/Patient Privilege in Probate Litigation Cases.

The OSBA Estate Planning, Trust, and Probate Committee recommends that the legal and medical privileges be waived in probate litigation cases for the reasons set forth below.

Probate litigation cases include cases brought after death, such as will contests, trust contests, will and trust constructions and inter vivos transfer cases, such as gift cases, joint and survivorship disputes and change of beneficiary on life insurance policies, pension plans, etc.

Communications with lawyers and doctors are privileged under ORC 2317.02, and during lifetime, the client/patient may assert or waive the privilege as he wishes. After death, these privileges for a decedent may be waived under said statute by his spouse, executor or administrator.

With the increasing use of trusts, some decedents have no executor or spouse and therefore, there is no one to waive.

Apart from this, waiver has been a troublesome issue in probate litigation for years. Often the person in the executor, administrator or spouse position has an interest in the outcome and uses the privilege to obstruct discovery of medical or legal information and the discovery dispute that follows wastes the time of lawyers and judges and increases delay and costs.

The goal of any litigation should be to get to the truth and to achieve this, you need the facts. Doctors and lawyers often possess crucial facts in probate disputes.

If the decedent was competent, that fact should come out; if the decedent was incompetent, that fact should also come out.

In a will or trust construction, where the attorney understands the Decedent’s intent, should the attorney’s testimony be blocked by the person controlling the privilege merely because that testimony is unfavorable to him?

It is anomalous that an executor named by an incompetent testator may use his fiduciary position to block access to the medical records.

Control of the privilege is often arbitrary; it may be possessed by either the defendant or the plaintiff. The recommendation eliminates this "luck of the draw."

In probate litigation, a truly neutral fiduciary is often pressed by one side to assert and the other side to waive the privilege. The proposal takes this fiduciary "off the hook."

The majority of states waive the attorney/client and doctor/patient privilege in probate controversies after death.

Recent Ohio Legislation:

The Ohio Legislature recently enacted Amended House Bill 533 "to permit the testimonial privileges between a physician and a deceased patient to be waived by any party to a will contest action." But there are some limitations to this Statute:

1. It does not apply to other probate disputes such as trust contests, will or trust constructions, admissions of lost wills, gift cases, joint and survivorship disputes, pension and insurance beneficiary disputes, etc.

2. It does not address the attorney-client privilege.

3. It only allows discovery of the medical records as to incompetency, and not as to undue influence.

The Committee considered suggesting changes to H.B. 533, but concluded that it was simpler and more comprehensive to rewrite it. The proposal incorporates the essence of H.B. 533, but broadens it to other post death controversies and to the legal privilege.

Disclosure of Confidences:

The purpose of the attorney/client and doctor/patient privilege is to encourage open communication. Some may worry that the proposal will have a chilling effect on the dialogue. But we doubt seriously that this is the case, because:

1. This litigation occurs rarely.

2. We doubt the Decedent is thinking about the disclosure of confidences in a will or trust contest when he talks to his doctor (or lawyer).

There was some concern that a lawyer would not be able to advise a client that their conversations would never be revealed, but in fact this is not the case now because invariably in probate controversies, the lawyer is called to testify as to competency (and other issues). When he or she testifies, the privilege is waived.

Also, if the lawyer signs as a witness to the document, this to some extent waives the privilege. So as a practical matter the privilege is usually waived and therefore we wish to eliminate discovery controversies.

The decision of the majority of other states to override the privilege is supported by the policy that accurately settling the decedent’s estate is more important than invading any relevant confidences after decedent’s death. In short, in post death probate controversies, there is greater good than harm in waiving the privilege.

Proposed Amendment:

A majority of states waive the legal privilege in probate controversies. Many states pattern their statutes after Uniform Evidence Rule 502(d)(2) and we adopted this approach.

Also a majority of the states waive the medical privilege in will contests, which is what the recent House Bill 533 does. But many states go beyond will contests to other post death controversies and so does our proposal.

Section 2317.02.

The following persons shall not testify in certain respects:

(A) (1) An attorney, concerning a communication made to the attorney by a client in that relation or the attorney’s advice to a client, except that the attorney may testify by express consent of the client or, IF THE CLIENT IS INCOMPETENT, BY EXPRESS CONSENT OF THE CLIENT’S GUARDIAN, AND if the client is deceased, by the express consent of the surviving spouse or the executor or administrator of the estate of the deceased client and except that, if the client voluntarily testifies or is deemed by section 2151.421 of the Revised Code to have waived any testimonial privilege under this division, the attorney may be compelled to testify on the same subject;

(A) (2) THERE IS NO PRIVILEGE UNDER THIS SECTION AS TO A COMMUNICATION RELEVANT TO AN ISSUE BETWEEN PARTIES WHO CLAIM THROUGH THE SAME DECEASED CLIENT REGARDLESS OF WHETHER THE CLAIMS ARE BY TESTATE OR INTESTATE SUCCESSION OR BY INTER VIVOS TRANSACTION.

(B)(1) A physician or a dentist concerning a communication made to the physician or dentist by a patient in that relation or the physician’s or dentist’s advice to a patient, except as otherwise provided in this division, division (B)(2), and division (B)(3) of this section, and except that, if the patient is deemed by section 2151.421 of the Revised Code to have waived any testimonial privilege under this division, the physician may be compelled to testify on the same subject.

The testimonial privilege established under this division does not apply, and a physician or dentist may testify or may be compelled to testify, in any of the following circumstances:

(a) In any civil action, in accordance with the discovery provisions of the Rules of Civil Procedure in connection with a civil action, or in connection with a claim under Chapter 4123. of the Revised Code, under any of the following circumstances:

(i) If the patient or the guardian or other legal representative of the patient gives express consent;

(ii) If the patient is deceased, the spouse of the patient or the executor or administrator of the patient’s estate gives express consent;

(iii) If a medical claim, dental claim, chiropractic claim, or optometric claim, as defined in section 2305.11 of the Revised Code, an action for wrongful death, any other type of civil action, or a claim under Chapter 4123. of the Revised Code is filed by the patient, the personal representative of the estate of the patient if deceased, or the patient’s guardian or other legal representative.

(b) In any civil action concerning court-ordered treatment or services received by a patient, if the court-ordered treatment or services were ordered as part of a case plan journalized under section 2151.412 of the Revised Code or the court-ordered treatment or services are necessary or relevant to dependency, neglect, or abuse or temporary or permanent custody proceedings under Chapter 2151. of the Revised Code.

(c) In any criminal action concerning any test or the results of any test that determines the presence or concentration of alcohol, a drug of abuse, or alcohol and a drug of abuse in the patient’s blood, breath, urine, or other bodily substance at any time relevant to the criminal offense in question.

(d) In any criminal action against a physician or dentist. In such an action, the testimonial privilege established under this division does not prohibit the admission into evidence, in accordance with the Rules of Evidence, of a patient’s medical or dental records or other communications between a patient and the physician or dentist that are related to the action and obtained by subpoena, search warrant, or other lawful means. A court that permits or compels a physician or dentist to testify in such an action or permits the introduction into evidence of patient records or other communications in such an action shall require that appropriate measures be taken to ensure that the confidentiality of any patient named or otherwise identified in the records is maintained. Measures to ensure confidentiality that may be taken by the court include sealing its records or deleting specific information from its records.

(e) In any will contest action under sections 2107.71 to 2107.77 of the revised code if all of the following apply:

(i) The patient is deceased.

(ii) A party to the will contest action requests the testimony, demonstrates to the court that that party would be an heir of the patient if the patient died without a will, is a beneficiary under the will that is the subject of the will contest action, or is a beneficiary under another testamentary document allegedly executed by the patient, and demonstrate to the court that the testimony is necessary to establish the party’s rights as described in the division.

(e) THERE IS NO PRIVILEGE UNDER THIS SECTION AS TO A COMMUNICATION RELEVANT TO AN ISSUE BETWEEN PARTIES WHO CLAIM THROUGH THE SAME DECEASED PATIENT, REGARDLESS OF WHETHER THE CLAIMS ARE BE TESTATE OR INTESTATE SUCCESSION OR BY INTER VIVOS TRANSACTION.

(2)(a) If any law enforcement officer submits a written statement to a health care provider that states that an official criminal investigation has begun regarding a specified person or that a criminal action or proceeding has been commenced against a specified person, that requests the provider to supply to the officer copies of any records the provider possesses that pertain to any test or the results of any test administered to the specified person to determine the presence or concentration of alcohol, a drug of abuse, or alcohol and a drug of abuse in the person’s blood, breath, or urine at any time relevant to the criminal offense in question, and that conforms to section 2317.022 of the Revised Code, the provider, except to the extent specifically prohibited by any law of this state or of the United States, shall supply to the officer a copy of any of the requested records the provider possesses. If the health care provider does not possess any of the requested records, the provider shall give the officer a written statement that indicates that the provider does not possess any of the requested records.

(b) If a health care provider possesses any records of the type described in division (B)(2)(a) of this section regarding the person in question at any time relevant to the criminal offense in question, in lieu of personally testifying as to the results of the test in question, the custodian of the records may submit a certified copy of the records, and, upon its submission, the certified copy is qualified as authentic evidence and may be admitted as evidence in accordance with the Rules of Evidence. Division (A) of section 2317.422 of the Revised Code does not apply to any certified copy of records submitted in accordance with this division. Nothing in this division shall be construed to limit the right of any party to call as a witness the person who administered the test to which the records pertain, the person under whose supervision the test was administered, the custodian of the records, the person who made the records, or the person under whose supervision the records were made.

(C) if the testimonial privilege described in division (b)(1) of this section does not apply as provided in division (b)(1)(e) of this section, a physician or dentist may be compelled to testify or to submit to discovery in the will contest action under sections 2107.01 to 2107.77 of the revised code only as to the patient in question on issues relevant to the competency of the patient at the time of the execution of the will. Testimony or discovery conducted pursuant to this division shall be conducted in accordance with the rules of civil procedure.

(3)(a) If the testimonial privilege described in division (B)(1) of this section does not apply as provided in division (B)(1)(a)(iii) of this section, a physician or dentist may be compelled to testify or to submit to discovery under the Rules of Civil Procedure only as to a communication made to the physician or dentist by the patient in question in that relation, or the physician’s or dentist’s advice to the patient in question, that related causally or historically to physical or mental injuries that are relevant to issues in the medical claim, dental claim, chiropractic claim, or optometric claim, action for wrongful death, other civil action, or claim under Chapter 4123. of the Revised Code.

(b) If the testimonial privilege described in division (B)(1) of this section does not apply to a physician or dentist as provided in division (B)(1)(c) of this section, the physician or dentist, in lieu of personally testifying as to the results of the test in question, may submit a certified copy of those results, and, upon its submission, the certified copy is qualified as authentic evidence and may be admitted as evidence in accordance with the Rules of Evidence. Division (A) of section 2317.422 of the Revised Code does not apply to any certified copy of results submitted in accordance with this division. Nothing in this division shall be construed to limit the right of any party to call as a witness the person who administered the test in question, the person under whose supervision the test was administered, the custodian of the results of the test, the person who compiled the results, or the person under whose supervision the results were compiled.

(4) The testimonial privilege described in division (B)(1) of this section is not waived when a communication is made by a physician to a pharmacist or when there is communication between a patient and a pharmacist in furtherance of the physician-patient relation.

(5)(a) As used in divisions (B)(1) to (4) of this section, "communication" means acquiring, recording, or transmitting any information, in any manner, concerning any facts, opinions, or statements necessary to enable a physician or dentist to diagnose, treat, prescribe, or act for a patient. A "communication" may include, but is not limited to, any medical or dental, office, or hospital communication such as a record, chart, letter, memorandum, laboratory test and results, x-ray, photograph, financial statement, diagnosis, or prognosis.

(b) As used in division (B)(2) of this section, "health care provider" means a hospital, ambulatory care facility, long-term care facility, pharmacy, emergency facility, or health care practitioner.

(c) As used in division (B)(5)(b) of this section:

(i) "Ambulatory care facility" means a facility that provides medical, diagnostic, or surgical treatment to patients who do not require hospitalization, including a dialysis center, ambulatory surgical facility, cardiac catheterization facility, diagnostic imaging center, extracorporeal shock wave lithotripsy center, home health agency, inpatient hospice, birthing center, radiation therapy center, emergency facility, and an urgent care center. "Ambulatory health care facility" does not include the private office of a physician or dentist, whether the office is for an individual or group practice.

(ii) "Emergency facility" means a hospital emergency department or any other facility that provides emergency medical services.

(iii) "Health care practitioner" has the same meaning as in section 4769.01 of the Revised Code.

(iv) "Hospital" has the same meaning as in section 3727.01 of the Revised Code.

(v) "Long-term care facility" means a nursing home, residential care facility, or home for the aging, as those terms are defined in section 3721.01 of the Revised Code; an adult care facility, as defined in section 3722.01 of the Revised Code; a nursing facility or intermediate care facility for the mentally retarded, as those terms are defined in section 5111.20 of the Revised Code; a facility or portion of a facility certified as a skilled nursing facility under Title XVIII of the "Social Security Act," 49 Stat. 286 (1965), 42 U.S.C.A. 1395, as amended.

(vi) "Pharmacy" has the same meaning as in section 4729.01 of the Revised Code.

(6) Divisions (B)(1), (2), (3), (4), and (5) of this section apply to doctors of medicine, doctors of osteopathic medicine, doctors of podiatry, and dentists.

(7) Nothing in divisions (B)(1) to (6) of this section affects, or shall be construed as affecting, the immunity from civil liability conferred by section 307.628 or 2305.33 of the Revised Code upon physicians who report an employee’s use of a drug of abuse, or a condition of an employee other than one involving the use of a drug of abuse, to the employer of the employee in accordance with division (B) of that section. As used in division (B)(7) of this section, "employee," "employer," and "physician" have the same meanings as in section 2305.33 of the Revised Code.

(THE REMAINDER OF THIS LENGTHY STATUTE REMAINS UNCHANGED.)

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