Hooper Law Office,LLC Estate Planning Blog

Tuesday, June 16, 2015

Why bother with a trust when I can just give money to someone and tell them to use it for my loved one's care?

Giving money directly to someone else to care for your loved one (even to a trusted child or friend), instead of leaving the inheritance in a Special Needs Trust, has many hidden risks. These risks exist because when you give your assets to someone, they become the legal owner of them. This can have unfortunate consequences such as:

  • If that person becomes disabled, the law requires that the assets be spent on his or her care instead of on your loved one's care;
  • If that person dies, the law requires that the assets be distributed according to that person's estate plan;
  • If that person has financial difficulties, the assets might be lost to that person's creditors;
  • If that person goes through a divorce, the assets might be lost to an ex-spouse; and
  • If that person wants to, he can spend the assets how ever he wants (and not necessarily for your child's care) since legally the assets belong to him.

For all of these reason, and many others, protecting assets in a Special Needs Trust is much wiser than leaving them at risk as described above.

Monday, June 8, 2015

How can I leave my loved one an inheritance that will not result in a disqualification of benefits?

Fortunately, a very special kind of trust can be used to leave an inheritance that will not disqualify a loved one with special needs from receiving government benefits.  These are known as "Special Needs Trusts."  They are designed so that assets in the trust will supplement - but not replace - the government benefits.  Since the assets are held in trust, they do not legally belong to your loved one (even though the trust assets must be used solely to enhance your loved one's life).  The government will not count the inherited trust assets against your loved one and jeopardize his or her eligibility for benefits.

Monday, June 1, 2015

How can an estate planning attorney help prevent the loss of government benefits?

A good financial plan must be designed so your loved one will not be disqualified from receiving government benefits.  An experienced estate planning attorney knows how to avoid the legal pitfalls that can threaten the financial legacy you leave your child or adult with special needs.

Nothing could be worse than having the government declare that the inheritance you left your loved one makes him or her ineligible for benefits.  If this happens, the government will deny or cancel the aid it would have otherwise provided for your loved one.  Even worse, it could force your loved one to undergo the difficult process of reapplying for government benefits once the inheritance is depleted.  This is a planning disaster that must be avoided.

Monday, May 25, 2015

What is the role of the financial planner?

It is up to you to determine what government benefits are available for your loved o ne.  A good financial planner will be able to calculate the cost of providing your loved one the lifestyle that you want him or her to receive beyond that which the government is willing to pay.  Once these amounts are determined, the financial planner will recommend various ways to ensure there are sufficient resources to meet the shortfall between the lifestyle the government will pay for and the flifestyle you desire for your loved one.

An important part of this analysis is to make sure enough assets are available throughout your loved one's life.  Your financial advisor can help you explore your options and ensure enough financial resources exist to meet your planning goals.  Depending on the circumstances, your financial advisor may recommend life insurance, annuities, bonds, mutual funds, or other investments.  Regardless of the specific investments selected, it is critical that your financial plan be coordinated with your estate plan.  Failure to do so can cause the loss of all government benefits.  To avoid this tragedy, make sure that you work with an estate planning attorney who has special needs planning experience.

Monday, May 18, 2015

Why do I need to put a financial plan in place?

It is necessary to put a sound financial plan in place to provide for the care of your loved one because all the great instructions in the world will mean little if your caregivers do not have the money to carry them out.  Our clients want their loved ones to receive more than the bare minimum level of care that the government provides.  They want their loved ones to have the best life possible given their special needs.

Do you want to provide your loved one better than basic housing and living arrangements?:  Do you want your loved one to receive better medical and dental care than the government supplies?  Do you want your loved one to have access to vocational training and other educational opportunities?  Do you want your loved one to have access to transportation, furnishings, clothing, and other things needed to make life as normal as possible?  If so, then you need to financially prepare for these things.  It takes  an experienced estate planning attorney and a qualified financial planner working together to establish and maintain a financial plan to ensure that your loved one will have the needed resources.

Monday, May 11, 2015

What kind of instructions do I need to make?

While naming guardians to care for your loved one is a good start, it is important that you also leave clear and detailed written instructions concerning the type of care you want provided.  Otherwise, you risk leaving the guardians in the dark about the responsibilities being entrusted to them.  You are the most knowledgeable concerning your loved one's needs and are in the best position to provide these instructions.  Needed instructions include the following:

  • A summary of your loved one's medical history, medications, physicians, and daily care needs;
  • A review of your loved one's daily routine, habits, and likes and dislikes;
  • A list of your loved one's friends and their contact information;
  • A list of your loved one's favorite hobbies, recreations, clubs, spiritual care givers, and other organizations that provide assistance;
  • A statement of your desires regarding the living arrangements to be provided for your loved ones;
  • A statement of the benefits and services (both government and nonprofit) that your loved one is receiving or may be eligible to receive in the future; and
  • An explanation of your hopes and dreams for your loved one's future.

By including these detailed instructions in your estate plan, the caregivers you choose will better understand and perform their responsibilities.  This will help ensure your loved one continues to receive the same loving care that you have been providing.  It is like the passing of a  baton - the better the instructions are, the better prepared the new guardians will be when they accept the responsibilities handed over to them.  Even great instructions are not enough.  You also need to put a sound financial plan in place for the management of the money that will provide the financial support for your loved one.

Monday, May 4, 2015

What if I want different individuals to handle the health care and financial affairs of my loved one?

You know that the skills required to supervise the health care needs of your loved one are vastly different from those needed to manage his or her finances.  The individual who is best qualified to tuck your loved one in at night and make medical decisions might be the least qualified to handle financial or legal issues (and vice versa).  The first responsibility (housing and health care) requires someone with a "good heart" who is loving and understanding.  The law calls this individual the "guardian of the person" because this guardian oversees personal care needs.

The second responsibility (financial and legal) requires someone with "a good head on his or her shoulders."  Such a person must possess sound financial and legal judgment.  The law calls this person the "guardian of the estate" because this guardian oversees financial and legal issues.

You are fortunate if you know someone who is equally qualified to serve as both a guardian of the person and of the estate for your loved one.  If not, there is no need to worry because the law allows you to name different individuals for these very different roles.  Any good plan to provide for the future care of your loved one starts with resolving these guardianship issues.  Once the proper guardians are selected, it is necessary to provide them specific written instructions concerning the proper care desired for your loved one.

Monday, April 27, 2015

How can I make my selection legally binding?

Every state has a legal process to appoint individuals (known as guardians) to handle the affairs of children or adults who are incapable of taking care of themselves.  Parents of a child with special needs can designate a guardian in their Will.  In the case of an adult with special needs, the guardian who is currently serving can request a judge to appoint a successor guardian to take over when needed.   The successor guardian will have the legal right to handle the health care and financial affairs of your loved one.

Monday, April 20, 2015

Where do I start planning for a loved one with special needs?

Your first step in protecting your loved one is to select a trusted family member or friend to supervise the personal, financial, and legal affairs of your loved one when you are no longer able to handle them.  We understand that this selection is difficult, but who is better able to make it than you?  Who better understand the unique needs of your loved one?  Who knows better which of the potential caregivers will provide the compassionate care and protection that your loved one needs and deserves?

The worst thing you can do is nothing.  If you fail to make the appointment yourself, you will leave the selection of your loved one's future caregiver to the mercy of judges and social workers.  They are more than ready to select your loved one's caregiver if you fail to chose one yourself.  Do you want to choose the caregiver yourself or leave the choice to the intrusive and costly court system?  When made aware of their options, our clients select the caregiver themselves and take the steps necessary to make their wishes legally binding.

Monday, April 13, 2015

How can I help my spouse insist upon a prenuptial agreement?

Your trust's directions can provide financial incentives for your spouse to request a prenuptial agreement.  For example, your trust instructions can require the trustee to cut off distributions to your spouse if a remarriage occurs without a prenuptial agreement being signed.  If a prenuptial agreement is signed, your spouse can still fully use and enjoy the distributions from the asset protected trust.  Your spouse can blame the need for a prenuptial agreement on the terms of the trust, and thereby avoid the difficult discussion of what happens if the marriage fails.

By putting the proper planning in place, you will have the peace of mind of knowing that your spouse (and the future inheritance of your children) will be protected from potential creditors and predators.  By the way, you just might be the  spouse who survives and is glad to find that these asset protections are in place for your benefit!

Monday, April 6, 2015

Is a prenuptial agreement really a good idea?

Most estate planning attorneys counsel their clients who are about to remarry to consider putting a prenuptial agreement in place.  Essentially, the prenuptial says, "what's mine is mine and what's yours is yours, and should we ever divorce, or if any one of us dies, I keep my stuff and you keep yours."  This is only fair because if a divorce should occur when the marriage is still young, your surviving spouse will leave the new marriage with the same assets he or she brought into it, as well as an equitable share of any assets acquired together during the marriage.

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