Navigating the complexities of trust administration can be challenging, especially during the emotional turmoil of grief. At the Family Estate Planning Law Group, our primary focus is on you—our client—and ensuring that you take care of yourself during this difficult time. While it may be difficult, understanding how to approach trust administration with your well-being in mind can provide clarity and comfort.
When you have a beneficiary who is receiving government benefits, including benefits that pay for medical care such as Medicaid, reimbursement for expenses through SSI, or benefits for housing such as section 8, whether they are eligible for these benefits will depend both on their disability and on the assets they own. Therefore, any assets they receive from others either by gift or by inheritance can make them ineligible to receive these critical benefits. We have seen children who are receiving medical care paid for through governmental benefits become ineligible for these benefits and stop receiving the medical care they need. Proper planning is essential so that a family member can gift assets during life and/or after death to a child who is receiving governmental benefits without jeopardizing these vital benefits. One of the main tools used by families is to create a “special needs trust” which is designed to supplement but not replace any benefits that a child would be receiving from the government. In this blog we will explain two types of special needs trusts that are commonly used in estate planning. [Read more…]
For many people, some of our biggest inspirations are celebrities. It is common for the rich and famous to have estate plans, but celebrities make mistakes and sometimes they can be costly. In this blog, we will dive into three different famous musicians’ estate plans and look at where they went wrong. [Read more…]
Choosing a responsible, trustworthy trustee and executor to respect your requests when you are not around can be a daunting task. They will have the responsibility of carrying out your estate plan after death, distributing the inheritance to your beneficiaries, closing accounts, and selling property. Many people choose to have their children or spouse to oversee their plan. Although less common, others may choose to appoint an attorney or professional trust company to be their trustee or executor instead of a family member or friend.
As many of you may know, administrations come and go, and when they do, it is prime time for law changes. Some of these changes do not or only minimally affect estate planning, but others, like the recently proposed federal estate and gift tax changes, have the potential to dramatically affect estate tax planning. This is one of the many reasons we have a client care program designed to take care of our families—so that when the law changes, your plan can change with it.
If you’ve done some reading on our blog already or have done your homework before reading this, you may already have a solid grasp on the benefits of comprehensive and quality estate planning. And at Family Estate Planning Law Group, we work to make sure each estate plan is customized to fit any given family’s needs. Sometimes, that involves specific types of trusts that fulfill certain functions.
For example, what if you or someone in your family has a dependent who needs persistent attention because of a physical, intellectual, or mental disability and they receive government assistance for income, health care, or housing? In that case, there needs to be a different legal mechanism to protect that assistance while also allowing them to receive estate assets. This takes the form of a special needs trust (SNT).
Parents of a child with special physical or developmental needs know that many of the simple, everyday functions we take for granted are more complicated for their children and come with associated costs to help them with their standard of living. This can be compounded by the child being unable to manage their own funds because of their condition.
Special needs trusts (SNTs) are a specific tool to be used in estate planning when parents have a child with physical, mental or developmental conditions that require persistent care and make it difficult for the child to support themselves. An SNT provides parents with a means to take care of their child after they are gone with the help of a trustee to manage the assets on their son or daughter’s behalf without jeopardizing any governmental benefits they are receiving now or may receive in the future.
If there is one overarching piece of advice across all estate planning, it’s ‘better sooner than later’ and this, too, applies to special needs trusts when they are applicable. But there are some timing considerations to keep in mind specifically with SNTs.
In my last blog, I explained why your will won’t get you where you want to go. If I have managed to convince you (or maybe even if you’re still up in the air), then let me explain to you how a trust can help get you there. A trust is like a bucket with instructions written on it about what to do with the stuff inside. When an attorney sets up a trust for you, they help you legally write the instructions for how to handle the stuff inside. During the process of asset alignment, (formerly known as funding) they should help you to make sure that all of your stuff gets in the bucket.
Now that everything is in the bucket, and you’ve hired an attorney to monitor the changes in your assets, the law and your circumstances, you can relax about your loved ones being taken care of when something happens to you. Here is how it works. The Trustees of the trust are holding the bucket, following the instructions, and making sure that everything happens as it should from day-to-day. In the case of a revocable trust, you will likely be the Trustee of your own trust (and still in control of your assets). When you die, instead of your stuff falling on the floor as would happen in probate, there are instructions on the bucket (in the trust) for another person’s hands to come on the bucket and take control (a successor Trustee). Because the trust does not die, none of the assets aligned with the trust have to go through probate, meaning your successor Trustee has immediate access to those assets and can use them as needed to care for your loved ones and handle your final expenses.
If your estate planning attorney and accountant have two very strongly diverging opinions about your trusts, it’s possible that your family trusts are no longer solving a problem, advises an article from Forbes, “Why You Might Need To Fix Your Family Trusts.” This happens for a few different reasons:
The last thing you want to do is leave a bureaucratic mess for your loved ones when you die. This will cause the family stress during a difficult time. That should be more than enough reason to get this done in advance!
US News & World Report’s recent article, “12 Documents to Prepare Now for Your Heirs,” says that when people don’t have their paperwork ready, it can be a huge headache for the family. A family can be left with all kinds of paperwork to sort out while dealing with grief. Even worse, heirs may forfeit life insurance proceeds and tax deductions or overlook accounts they don’t know exist. That’s why it’s critical to have important documents ready for loved ones, additionally, we at the Family Estate Planning firm have added an additional document (a revocable living trust), as many times this is the foundation of a sound estate plan to avoid probate and allow an orderly administration.
