Special Needs and Disabled – Benefits Or Medical Care Can Be Denied Without an Estate Plan and Trust

Realizing a major injury from a vehicular accident or personal injury is always a tragedy and sobering. Unfortunately, many individuals have not been lucky enough to walk away from these types of accidents. For these victims, the harsh reality of life can often be cruel. With the new turn of events and now having to deal with a disability in some form or another, it is imperative for experienced legal special planning.

Parents of newborns with special needs and those special needs individuals, often have insurmountable challenges to adapt to or overcome. Many parents and families do adapt out of necessity, but what of a person who has, for all intense and purposes, led an average everyday life only to have the future forever changed by an unforeseen car accident?

While the individual may or may not be completely cognizant of the drastic change in their life, the family members and friends fully realize the difference between what was and what is. Now is not the time to be floundering about trying to do what is best. Many doctors and hospitals can provide basic information on what medical care is available to best manage the care of the special needs or disabled individual.

Medical care is just the half of the concerns. Of course the present is the immediate priority. After the dust has settled, the family along with the special needs individual needs to contact a qualified and experienced lawyer specializing in special needs estate planning, trusts, and wills. Unfortunately the average individual or family fails to plan sufficiently for the future and after the parents or spouse has passed away.

Without a proper estate plan and living will, one can only expect a mediocre level of care for the special needs or disabled individual left behind. The courts will begin the probate procedures. While proper care would be provided in a perfect world, government programs and subsidies are designed to just meet the minimum basic medical needs. Other programs exist to provide shelter and other necessities, however, there is a catch.

Should the special needs individual stand to gain more than $2000 from an inheritance or lawsuit, the individual will lose their supplemental security income (SSI) and Medicaid. By setting up a trust, the individual will be allowed to receive continued government assistance and have use of the inheritance or lawsuit winnings.

Laws governing the rights and benefits of special needs and disabled persons are constantly being amended every year. While the majority of these laws are passed by the federal government and therefore apply to all states, individual states may have additional mandates and laws. It is strongly recommended not to solely rely on medical professionals and government employees for information and guidance, but the experience of a well experienced attorney or law firm.

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Estate Plans and Powers-Of-Attorney For Special Needs Clients

Estate planning, trusts, wills and living wills are confusing and convoluted. Estate plans cover several of these items, but trusts can be a different matter. With state and federal laws regarding inheritance and property changing every year and contributing to the confusion, an individual or family should not rely on a do-it-yourself approach. What poses a more challenging and problematic situation is if there is an individual with physical disabilities or developmental special needs. Because the laws change constantly, the services of an experienced attorney need to be used.

When an individual dies without a will, also known as intestate, the assets are left for the courts to decide the best method to distribute them. The process of probate is usually never swift and even the simplest estate can often be diminished to the extent where the remaining assets are almost nonexistent. Conversely, should the entire estate be left solely to the spouse, the taxable estate of the spouse may very well increase. In the event that the spouse also passes away, the children will be left with higher taxes as well. Estate tax exemptions are available, but may not be taken advantage of without taking the proper steps.

Assigning a power of attorney is also an important component of estate planning. Not to be confused with a living will, should an individual be ill or unable to be present to make decisions about personal property and finances, a power of attorney authorizes a second party to legally make decisions in their stead. A living will does not pertain to the individual’s property, but the medical care provided.

In the event that a person becomes too ill, incapacitated or otherwise incapable of making their own decisions regarding their personal medical care, a living will prepared ahead of time will spell out the medical care desired or forbidden. An example of this would be to forbid using artificial life support when permanent brain damage has caused the brain to cease any activity.

A complete estate plan will include much of the above, but when there is a special needs or physically disabled individual, additional detailed and complex provisions need to be arranged. Without additional planning, it is almost a certainty that the disabled or special needs family member will end up in a state institution receiving only the mediocre care that lack of money can provide. Trusts are not always part of an estate plan, but are an integral part of ensuring that the special needs individual will receive the appropriate medical care after the parents have passed. Without planning for the inevitable would just be criminal for which there is no punishment.

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The Basics of Estate Planning – Trusts

What is a Trust?

A Trust, generally, is a legal entity that can hold title to property. There are three parties to a Trust agreement: the Trustmaker who creates the Trust, the Beneficiary who receives the benefit of the property held in the Trust, and the Trustee who manages the Trust. The property that is transferred to and held by the Trust becomes the Trust principal. If you create a Trust within your Will, it is called a Testamentary Trust. If you create a Trust while you are alive, it is called an inter vivos or Living Trust.

While you are alive, you usually will receive all the income of the Trust and as much of the principal as you request. Upon your death, the Trust assets are distributed to your Beneficiaries in accordance with your directions contained in the Trust agreement, or it can continue for specified purposes for a period of time.

The Advantages and Disadvantages of a Trust

The Main Advantages of a Living Trust:

If you want or need to have someone else manage your property and pay your bills in case of illness or disability, the Living Trust is an ideal estate planning tool for you.
Avoiding probate which can save time and money, especially if you own real estate in different states.
Because a Living Trust is not filed in Court, its provisions are private. This differs from a Will, which must be filed with the Probate Court and becomes public.
Reduction of delays in distribution of your property after you pass away.
Continuity of management of your property after your death or incapacity/disability.

The Main Disadvantages of a Living Trust:

There are usually more initial costs in setting up a Living Trust as compared to a Will because a Living Trusts generally requires more extensive, technical and complex drafting.
“Funding”, which is the process of re-titling your assets in the name of your Living Trust, takes time.
Administering the Trust can be expense depending on who is acting as Trustee.

Trust vs Will: Which is Right for You?

How do you know if you need a Trust instead of a simple Will? Many people assume that Revocable Living Trusts are only for the wealthy, but Revocable Living Trusts have benefits even for the average person. If your life or financial situation fits into one or more of these categories, then you should consider a Revocable Living Trust.

Planning for Disability

Regardless of your net worth, and particularly if any of your assets are titled solely in your name, then you should consider a Revocable Living Trust for disability planning to avoid court-supervised guardianship or conservatorship.

Estate Planning for Minor Beneficiaries

Parents with minor children and who have life insurance policies or retirement plans with high values should consider a Revocable Living Trust. In the event both parents die while the children are still minors, the insurance or retirement funds will be placed in the Trust for the benefit of the children instead of in a court-supervised guardianship or conservatorship.

Estate Planning for Singles

Anyone who is single and has assets titled solely in their name should consider a Revocable Living Trust to avoid court-supervised guardianship and the costs and hassles of probate.

Tax Planning for Married Couples

If you are married and the combined estates of you and your spouse exceed the Federal exemption of $3,500,000 or your state’s exemption ($1,000,000 for Maryland the Washington, DC), then you should consider establishing a Revocable Living Trusts to eliminate or avoid estate taxes.

If You Own Real Estate in More Than One State

If you own real estate in more than one state or outside of your home state, then you should consider a Revocable Living Trust to avoid multi-state probate.

I hope this information helped you better understand Trusts and how they fit into the estate planning process. As always, if you have any questions about any aspect of estate planning, I invite you to contact me by phone (888-495-7289) or visit our website or blog.

Nicole K. White, Esq. established Kinsey Law Group, P.C. to help and educate individuals and families in the areas of ASSISTED REPRODUCTION/SURROGACY and ESTATE & HEALTH PLANNING.

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