Monday, February 25, 2013

Special Needs Children Benefit from Special Needs Estate Planning

The following commentary is extracted from an article written by Laura Shumaker - writer and Autism Advocate - and mother of a special needs child.  It appeared in of the San Francisco Chronicle.  Feb. 14, 2013.

1) Most parents of children with special needs worry about what will happen to their child when they are gone, and they worry so much that they put off planning. How do you talk to parents about their fears?

It is difficult sometimes for parents to discuss who is responsible to take care of their children if they are no longer there to do it. This is even more true for parents of children with disabilities who oftentimes must provide a much higher level of care. The benefits of planning are so enormous in these situations that our clients tend to come to us at a much earlier age. A proper estate plan will include planning for the money that is left for the child with a disability, along with a detailed plan that addresses residential, caregiving, advocacy, and other issues that arise for a child with a disability. Once the benefits of planning are provided, parents are relieved to know that something productive can be accomplished to preserve and enhance their child’s life, even when they are not able to do it themselves.

2) What is the first thing parents should do to prepare for the future?

Prepare their own estate plan and write out their instructions for how to best manage their child and their finances. If that is too much, they should at least prepare a Power of Attorney and Advance Health Care Directive to appoint someone to make these important decisions if they are unable to do so.

3) Parents tell me that they are spending so much on treatment now that it is hard to save for later. Your thoughts?

This is a common problem. One solution is to purchase a life insurance policy. It is one additional bill throughout the parents lifetime, but it will provide cash for the care of their loved one with special needs after they are gone. It is important that they select the right kind of policy, because term life insurance usually is not beneficial because they so rarely pay out a death benefit.

4) What is a Special Needs Trust?

A Special Needs Trust (SNT) is a type of trust where people can leave assets to a loved one with special needs that will not interfere with their eligibility for public benefits like SSI or Medi-Cal. In addition, the SNT is a legal way for a person to leave instructions on how best to enhance the quality of life of a loved one with special needs. This often includes plans on where the person shall live, what caregiving will be required, what type of distributions should be made that enhance that person’s quality of life, and any other benefit the person would like to see accomplished.

5) Will trust income affect SSI Eligibility?

No, any assets held inside a special needs trust and any income generated from a special needs trust will not jeopardize eligibility for SSI or Medi-Cal. These trusts are expressly authorized by the federal and state government to hold assets for persons with disabilities and not interfere with public benefits. However, improper administration of an SNT can still cause a loss (or reduction) in benefits, so it is also important to name a trustee (the person responsible for managing the trust assets) who understands SSI rules, Medi-Cal rules, and the typical rules of managing a trust.

6)Why is it important to hire an attorney who specializes in special needs trusts?

Special needs trusts work to preserve eligibility for public benefits, but only if all of the rules are followed. Many estate planners who do not do a lot of planning for persons with disabilities do not understand all the wonderful things a special needs trust can do to enhance the quality of life of a person with a disability. Thus, it is important that the proper special needs planning attorney is used to make sure all of the legal technical rules are followed along with providing advice on all the options that can be used as part of the special needs planning.

Solid legal planning is highly recommended for individuals with developmental disabilities.  I am available to meet to talk about all types of estate planning needs.  The key words are "estate planning".  Let's get you started now.

Tuesday, February 12, 2013

Estate planning can be a jungle, and a guide can be invaluable.

There comes a time for a business owner to plan transition of ownership.  Before selling or giving a business to family members, the owner must devote thought to the outcome that he or she wants to accomplish. Regardless of the intended family recipient(s), all parents have to ponder and answer the following questions to determine their exit objectives:
  • How much wealth do we want to keep?
  • How much wealth do we want the kids to have?
  • How much is too much?
  • And finally what tools should we use to minimize the estate and gift tax consequences?
It's key that business owners define their financial exit objective, then they can become effective in the designs for the optimum transfer mechanisms for passing the wealth to their children with minimal tax impact. It's the first part that is daunting -- Figuring out one’s wealth transfer objectives.  The transfer of wealth tends to be difficult, as family relationships and business objectives become part of the same equation. For example, if an owner wants to transfer the business to a child but still retain control and authority over all business decisions, it is doubtful the child will be ready to run the business once the transition is complete.

These are a few of the subjects that we can discuss when we meet.  I will take the role of "estate planning guide" most seriously.  So please call me, and let's take on the "jungle" one step at a time to insure your success.