Our clients came in initially wanting to create a simple estate plan that met their goals. They have three children, two sons and a daughter with special needs. They wanted their assets to go to their children equally, but did not know if their daughter should receive her inheritance directly. Doing so would disqualify her from receiving public benefits from the state and they knew that she would not be able to manage the funds well.
One alternative the parents considered was to give everything to their other two children and ask them to take good care of their sister. But they realized that this approach would present a number of difficulties. Their other children might not be able to agree on how much of what they inherited should be spent for their sister, potentially creating animosity between them. Either of them might pass away before their sister, leaving their estate to their spouse and children. And, finally, it would be an unfair burden on our clients' sons to not to be able to spend their inheritance as they see fit. This is sometimes referred to as a "morally obligated" gift.
Fortunately, there are good alternatives. We were able to provide them with the legal advice they needed, help them plan accordingly, and also create a trust to protect and manage their daughter's inheritance going forward. As part of this planning, the parents realized that their estate might not be large enough to fully protect their daughter and provide equal shares to their sons. So, taking into account their daughter's additional needs, they decided to purchase an additional life insurance payable to their daughter's trust, which would protect their daughter and still allow them to provide an equal inheritance to their sons.