Your Estate Plan Will Work Only if You Tie Up the Loose Ends

November 11, 2008

Filed under: Estate Planning — Tags: , — Alexis @ 2:45 PM

Have you set up your estate plan?  You signed your will, trust, special needs trust, durable power of attorney, health care proxy, stand-by guardianship for your minor children – it’s a lot of work, congratulations!

One last task before you are done – you MUST remember to change beneficiary listings on your various assets if you want your estate plan to work.  If, for example, your plan depends on directing your CD’s into a special needs trust for your disabled child, then you must contact your bank to complete the paperwork that will change the beneficiary listing.  Other assets with beneficiary listings include 401(k)’s, IRA’s, and life insurance policies.  

Your lawyer should have provided you with a letter of instructions detailing what assets you will need to tend to.  Follow those instructions carefully.  If you can’t find it, call her and she will remind you of the steps you need to take. 

You paid a lot of money for your estate plan, now just finish the job and make sure it works. 

Set Up a Self-Settled Special Needs Trust for Your Child Now

November 9, 2008

If you have already established a “third-party special needs trust” for your child – that’s the one that will receive her share of your estate when you pass away – congratulations.  Now it’s time to set up a “self-settled” special needs trust.  This trust will be a depository for any of your child’s own assets.  “But my child doesn’t have anything,” you say.  But she could in the future.  Perhaps a relative will leave her something, or perhaps she will receive a personal injury settlement.  

For reasons that no one can explain, Congress mandated that a trust holding a disabled person’s own assets (self-settled) can only be established by a parent, grandparent, guardian, or a court, and not by the disabled individual herself.  If your child comes into funds in the future and you and her grandparents are not able to meet with an attorney to draft a trust, she will be forced to use the court or a guardian, both of which add unnecessary costs to the process. 

Also, as you may know, SSI has strict rules about how long an SSI recipient can hold onto funds before they are considered assets and threaten her monthly benefits.  If your child receives some money and does not have a self-settled special needs trust already set up, then you will need to hustle to draft it, sign it, obtain a TIN from the IRS, open an account at the bank, and deposit the proceeds – perhaps all within a matter of days.  

Instead, it is easier to set up the trust now and it will be ready and waiting when it comes time to fund it.  If you are reading this article, then you are in the mode of putting your child’s legal documents in order.  Have your disability law attorney draft a self-settled special needs trust now while you are thinking about it.  You don’t need to fund it now, all you need is to have the signed document in your file.  That way it will be immediately available for your child’s use should she ever come into some money of her own. 

Afraid That You Don’t Have Much of an Estate to Leave to Your Disabled Child?

November 7, 2008

Filed under: Adult Disabled Child,Uncategorized — Tags: , — Alexis @ 2:36 PM

Many parents worry that when they die their estates will be too small to provide much care for their disabled child.  One solution is to purchase “second-to-die life insurance.”  These policies are relatively inexpensive, and the company pays the death benefit only after both of the people insured have died.  

Usually purchased by spouses, these policies can in fact be purchased by any two people.  This could be beneficial if, for example, a single mother and single daughter both live with and care for a disabled child / grandchild.  

You should work with your financial advisor to select the best insurance for you.  Remember that when selling insurance, advisors are paid on commission.  When the advisor is presenting you with quotes from various companies, make sure he also shows you how much commission he would make under each quote. 

A Family Only Needs One Special Needs Trust

November 6, 2008

Have you set up a Special Needs Trust (SNT) to receive your disabled child’s share of your estate when you die?  Are there other family members who might also want to leave something to your disabled child, for example grandparents or a doting uncle?  Or even non-family members, such as god-parents or very close friends?

If so, be sure to tell them about your trust – there is no need for them to spend time and money asking a lawyer to draft another special needs trust as part of their own estate planning package.  That person’s attorney will simply need to see a copy of your special needs trust and she will reference it in your family member’s will. 

While it may feel awkward, you will save your family time and money by mentioning to them that you have already established a trust for your child and that they can direct inheritances into it rather than drafting separate trusts with their own attorneys.