Deborah Jacobs is an estate planning attorney and journalist for Forbes.com. She examines the inevitable problems with DIY will and trust kits.
As Timothy E. Kalamaros, a lawyer with his own practice in South Bend, Ind., says, using a DIY will is like “pulling your own tooth with a pair of pliers instead of going to the dentist.”
If you care for a child or other loved one with a disability, you’ve no doubt thought about what will happen when you’re no longer able to give that care. There is a solution. You can leave property and funds to your disabled loved one in a special needs trust without jeopardizing their government benefits.
Problems can arise when disabled individuals inherit an estate. Their assets usually rise above the “limits” and benefits will cease until the inheritance is sold, spent and used up. The special needs trust allows you to protect your loved one’s benefits while supplementing their needs. The trust is merely a container used to hold property and money that will supplement your loved one’s government benefits-whether they are Supplemental Security Income, Medicaid or another program.
These programs have limits to what a disabled person’s income and total assets must be. A person must have less than $600-$800 of monthly income and less than $2,000 worth of total liquid assets. If a disabled person’s income or assets rises above those limits then their income and health care they receive from those government programs will cease. Fortunately, special needs trusts are a widely accepted and legal estate planning tool that will allow a disabled person to use their inheritance as a supplement for their special needs. The disabled person cannot be the trustee of the trust. I usually recommend a corporate trustee as following special needs trusts can be complicated. There are many rules to follow to ensure the trust operates properly and benefits are not lost.
Special needs trusts are very complicated to draft. It is a good idea to use your entire team of estate planning professionals (life insurance agents, financial planners, accountants, corporate trustees and attorneys) to ensure you are making the right decision. As always, please do not ever hesitate to contact me to discuss this and any other estate planning need or goal.
Kris Boyd; (501) 372-1616; kris@krismboyd.com
