Elder Law Report
Elder Law Report
Securing the Financial Future of Special Needs Heirs: Inheritance Planning Strategies
How can you ensure that your child or grandchild with special needs remains financially secure without disrupting their SSI and Medicaid benefits? Discover the intricacies of inheritance planning for heirs with disabilities in our latest Elder Law Report. We promise you'll walk away with actionable strategies, including the creation of special needs trusts during your lifetime, the setup of supplemental needs trusts within wills, and the incorporation of sub-trusts in existing trusts. These tools are crucial for maintaining the financial stability and care of your loved ones with special needs.
This episode offers a comprehensive guide to protect your special needs family members’ future, highlighted by real-life examples from families we work with. Understand why a special needs trust is a game-changer, how a testamentary trust can effectively manage inheritance, and the practicality of sub-trusts. Our detailed breakdown of each strategy will arm you with the knowledge to make confident, informed decisions about your estate planning. Tune in and gain peace of mind knowing your loved ones will be well cared for, without compromising essential benefits.
Hi, welcome to our Elder Law Report, and today's topic is inheritance planning for heirs with disabilities. This is something that is near and dear to the heart of someone who has a child or grandchild with special needs or maybe some other family member. I represent a number of mothers of autistic children and I've never seen someone more compassionate and whose life is really centered around the care of that child. Now, and if something happened to them, to ensure that there would be a money stream, income flow, caregivers, that everything would be lined up and in place to care for that child if something happened to them. That is extremely important with any child or grandchild, especially with special needs individuals, and I'm going to go over three main ways to protect the money you want to leave for those special needs individuals and not impede or interfere with, kick offline their SSI benefits and the Medicaid health care component that comes with it. So first it would be setting up a special needs trust. First it would be setting up a special needs trust, also called a D4A trust, for a child or grandchild or other family member. You setting that up A special needs trust can be set up by a parent, grandparent, appointed guardian by the court or with an order from the court. So if you're a parent, grandparent, you can easily set one of those up, sign those into being. That would be called a third-party special needs trust, where you are setting up the trust for a third party and a third party you are funding that trust for that special needs individual. You can assign beneficiaries to that trust. So if the heaven forbid the person you're setting up the trust for passes away, then that money is assigned to go to another family member. Money held in a special needs trust is really considered separate from the assets of the special needs person. Therefore it does not impede a means-tested benefit like SSI with a Medicaid health care component. So a special needs trust amazing tool to set up and set aside money for a special needs individual.
Greg McIntyre:Another huge bonus or one real necessity for a special needs trust is if you want to fund the trust with another existing asset and make that trust the beneficiary. Therefore there's life insurance investment accounts and you want the trust to receive all or a portion, maybe a percentage of that life insurance policy or those investment accounts. That trust has to be created during your lifetime, during the person who owns the insurance lifetime. So it exists to be a beneficiary. It can't be created after you pass away. So that is a real reason to go ahead and set up a special needs trust for a special needs family member, because you might not want to place a bunch of assets now in it but set it up to be funded at your passing by insurance or other investment accounts.
Greg McIntyre:Number two would be setting up a supplemental needs trust in a will. A supplemental needs trust is really on par or equivalent to a special needs trust you would set up for someone during your lifetime, but this is a testamentary trust. So your last will and testament has that trust built in as part of the will and is set up at your passing when your will goes through the probate process. That way you can designate assets that are flowing through your will a portion of them or all of them to flow into that supplemental needs trust. Name the trustee who could be another family member and have those assets not flow directly to the special needs individual. Therefore, preventing what would be seen as a gift also be a curse. A blessing would also be a curse because it would, once they receive those assets in hand personally, it would kick offline those SSI and Medicaid health care benefits. Therefore, a testamentary trust can divert that and hold that for the use and benefit of that special needs person to supplement whatever they need during their life.
Greg McIntyre:The third way to do it is similar to that, but within an existing trust. So let's say we designed a trust for you that had beneficiaries. We may want to put a sub-trust, that's, a supplemental needs trust, within that master trust so that if you passed away the trustee of the trust, the successor trustee would be designated and had rules where they had to apportion part of the trust. The successor trustee would be designated and had rules where they had to apportion part of the proceeds from you passing to that supplemental needs sub-trust, or it could be all of them. How you distribute your assets when you pass is up to you, and up to you to direct an estate planning and elder law attorney like myself, who also does a lot of special needs planning for families, as to how you want your assets to pass when you pass away. Now, when you sit down with me within an hour or so, we can really cover a lot of ground, get to know each other and get into your situation and iron out some different variations of plans that might really work for you and your family and then pick the best one that fits you. Every estate plan is individual, with special needs, individuals in your family. We really want to be contemplative and determine how we want to hold those assets so they're healthy, they're cared for and it doesn't affect other important governmental and health care benefits.
Greg McIntyre:I am a big fan of putting the Supplemental Needs Trust in Wills and Trust anyway, because I don't know when a child or grandchild of mine may become disabled and I want to plan for contingencies or what-ifs that may happen in the future. I'm Greg McIntyre. I'm committed to this as a way of life to help people plan to protect their harder money and property and their loved ones, especially their special needs family members. I would offer a free consult. You can exercise that by calling 1-888-999-6600, or you can schedule right on my calendar online at mcelderlawcom slash scheduling. That's mcelderlawcom slash scheduling. Thank you and have a great day.