Topics: Estate Planning
There's been a long debate among practitioners of special needs planning about how specific to make trust language governing the distributions to or on behalf of the beneficiary. The trend is to be less specific, giving the trustee wide discretionary on whether and how to make trust distributions.
There have been at least three points of view with regard to special needs trust (SNT) drafting:
Restrictive. This approach is to limit distributions to only those items and purposes approved by the Social Security Administration (SSA) as not affecting eligibility for Supplemental Security Income (SSI). The fear is that if more general language is used, such as for the beneficiary's health and maintenance, the SSA may require that the funds be used for such purposes and consider them available to the beneficiary, rendering him ineligible for SSI, which in many states would mean the loss of Medicaid as well.
While day-to-day obligations can certainly get in the way, at some point as a parent of a child with special needs you will need to create a special needs trust to shelter and manage whatever you may leave the child. This is the only safe way to make sure that the funds you leave are protected and well managed and that the child, who by then is probably an adult, can continue to qualify for vital public benefits.
Here are some of the questions you will need to consider in guiding their attorney to create the trust:
It’s a bit of ancient history, but Jim Morrison’s will highlights a misunderstanding in estate planning that is still common today -- what happens to the balance of a bequest when the beneficiary dies. The Doors lead singer’s will provided that his entire estate would pass to his girlfriend Pamela Courson, provided she survived him by three months. If she didn’t, then his property would instead pass to his brother and sister. Well, his girlfriend did survive Morrison by three months, but by less then three years. And when she died in 1974, Morrison’s property all passed to the girlfriend’s parents –- not his parents or brother and sister.
Topics: Estate Planning
What is a life estate?
The term “life estate” refers to property that is owned by an individual only through the duration of his or her lifetime. Therefore, it’s always for an indefinite period of time. We usually encounter life estates when dealing with real estate. When you have a life estate, you are called the “life tenant.” For example, you can sell or give your home to your children, but retain a “life estate,” thereby reserving the right to live in, use, enjoy, and control the home until you die. Your children would be called the “remaindermen.”