(858) 432-3923 tara@cheeverlaw.com
Create a Special Needs Trust to Protect the Financial Future of Your Child with Special Needs

Create a Special Needs Trust to Protect the Financial Future of Your Child with Special Needs

It always surprises me to hear parents who have a child with special needs tell me that they were not aware of what they needed to do to ensure the future well-being and care of their child is properly handled. Or sometimes, they tell me they didn’t know they needed to do anything at all.

If that’s you, and you have a child with special needs at home, this article is for you. And if you have friends or family who have a child with special needs, please share this article with them.

Every parent who has a child with special needs must understand what’s needed to provide for the emotional, physical, and financial needs of their child, if and when something happens to them.

Naming guardians
Of course, the first and most critical step in ensuring the well-being and care of your child with special needs’ future is to name both short and long-term legal guardians to take custody of and care of your child, in the event of your death or incapacity. And as you well know, this responsibility doesn’t end at age 18, if your child will not grow into an adult who can independently care for him or herself.

While I understand this lifetime responsibility probably feels overwhelming, I’ve been told repeatedly by parents that naming legal guardians in writing and knowing their child will be cared for in the way they want, by the people they want, creates immense relief.

I frequently build in plans where the named guardians are properly instructed—and even incentivized—to give your child the same care you provide. For example, I’ve created plans whereby the named guardian is compensated for taking the child to dinner and the movies weekly, or doing something similar if this is something the child used to enjoy doing with his or her parents.

But without written instructions (and perhaps compensation) built into the plan, fun activities like this can often go by the wayside when you’re no longer available. For guidance on selecting legal guardians and properly instructing them to provide your child with special needs the same level of care and attention you do, consult with me as your Personal Family Lawyer®.

Beyond naming a guardian, you’ll also need to provide financial resources to allow your child to live out his or her life in the manner you desire. This is where things can get tricky for children with special needs. In fact, it may seem like a “Catch-22” situation. You want to leave your child enough money to afford the support they need to live a comfortable life. Yet, if you leave money directly to a person with special needs, you risk disqualifying him or her for government benefits.

Special Needs Trusts
Fortunately, the government allows assets to be held in what’s known as a “special needs trust” to provide supplemental financial resources for a physically, mentally, or developmentally disabled child without affecting his or her eligibility for public healthcare and income assistance benefits.

However, the rules for such trusts are complicated and can vary greatly between different states, so you should work with me as your Personal Family Lawyer® in order to create a comprehensive special needs trust that’s properly structured and appropriate for your child’s specific situation.

Setting up the trust
Funds from a special needs trust cannot be distributed directly to a beneficiary and must be disbursed to a third-party who’s responsible for administering the trust. Given this, when you initially set up the trust, you’ll likely be both the “grantor” (trust creator) and “trustee” (the person responsible for managing the trust), and your child with special needs is the trust’s “beneficiary.”

You’ll then name the person you want responsible for administering the trust’s funds once you’re no longer able to as “successor trustee.” To avoid conflicts of interest, overburdening the named guardian with too much responsibility, and provide checks and balances, it can sometimes be best to name someone other than your child’s guardian as trustee.

As the parent, you serve as the trustee until you die or become incapacitated, at which time the successor trustee takes over. Each person who serves as trustee is legally required to follow the trust’s terms and use its funds and property for the benefit of the individual with special needs.

And in all cases, you should name a series of successor trustees, which can even be a trust company or other professional fiduciary, as backups to your primary named trustee.

Placing money and property into a special needs trust
There are two ways to set up a special needs trust. In one situation, I build it into your revocable living trust, and it will arise, or spring up, upon your death. From there, assets that are held in your revocable living trust will be used to fund your child’s special needs trust.

In other cases, I can set up a special needs trust that acts as a vehicle for receiving and holding assets for your child now. This makes sense if you have parents or other relatives who want to give your child with special needs gifts sooner rather than later.

I’ll be dedicating a future article on the available estate planning options you can use to pass money to a special needs trust. Until then, consult with me as your Personal Family Lawyer® if you need guidance on the planning vehicles that are best suited for this purpose.

The trustee’s responsibilities
Once the trust is funded, it’s the trustee’s job to use its funds to support the beneficiary without jeopardizing eligibility for government benefits. To handle this properly, the trustee must have a thorough understanding of how eligibility for such benefits works and stay current with the law. The trustee is also required to pay the beneficiary’s taxes, keep detailed records, invest trust property, and stay current with the beneficiary’s needs.

Given this huge responsibility, it’s often best that you name a legal or financial professional who’s familiar with the complexities of the law as trustee or co-trustee, so they can properly handle the duties and not jeopardize eligibility.

If you need help creating a special needs trust for your child, contact me as your Personal Family Lawyer ®. I can develop a sustainable living plan for your child with special needs that will provide her or him with the financial means they need to live a full life, while preserving their access to government benefits. Contact me today to get started.

This article is a service of Tara Cheever, Personal Family Lawyer®. I don’t just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why I offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling my office today at (858) 432-3923 to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

Sign up for the Cheever Law Newsletter

I Don’t Have Kids, So Why Do I Need Estate Planning? Part 2

I Don’t Have Kids, So Why Do I Need Estate Planning? Part 2

Last week, I shared the first part of my series on the importance of estate planning for those without children. If you haven’t read it yet, you can do so here. Here in part two, I discuss the other risks involved for those who forego estate planning.

Someone will have power over your health care

Estate planning isn’t just about passing on your assets when you die. In fact, some of the most critical parts of planning have nothing to do with your money at all, but are aimed at protecting you while you’re still very much alive.

Advance planning allows you to name the person you want to make healthcare decisions for you if you’re incapacitated and unable to make decisions yourself.

For example, if you’re temporarily unconscious following a car accident and unable to give doctors permission to perform a potentially risky medical treatment, it’s not always clear who’ll be asked to make that decision for you.

If you have a romantic partner but aren’t married and haven’t granted them medical power of attorney, the court will likely have a family member, not your partner, make that decision. Depending on your family, that person may make decisions contrary to what you or your partner would want.

Indeed, if you don’t want your estranged brother to inherit your property, you probably don’t want him to have the power to make life-and-death decisions about your medical care, either. But that’s exactly what could happen if you don’t proactively plan.

Even worse, your family members who have priority to make decisions for you could keep your dearest friends away from your bedside in the event of your hospitalization or incapacity. Or family members who don’t share your values about the types of food you eat, or the types of medical care you receive, could be the one’s making decisions about how you’ll be cared for.

Even if, or maybe especially if, you don’t have kids, you need to do estate planning in order to name health care decisions-makers for yourself and provide instructions on how you want decisions made.

Someone will get power over your finances

As with health-care decisions, if you become incapacitated and haven’t legally named someone to handle your finances while you’re unable to do so, the court will pick someone for you. The way to avoid this is by naming someone you trust to hold power of attorney for you in the event of your incapacity.

A Durable Power of Attorney is an estate planning tool that gives the person you choose authority to manage your financial matters if you’re incapacitated. This agent will have a broad range of powers to handle things like paying your bills and taxes, running your business, collecting your Social Security benefits, selling your home, as well as managing your banking and investment accounts.

Because these powers are so broad, it’s critical that you only give this power to someone you absolutely trust, and ideally, with the guidance of a lawyer who can watch out for your best interests.

The fact that a Durable Power of Attorney is granted as soon as you’re incapacitated means your Agent can begin handling your finances immediately, without waiting for a judge’s decision, simply by presenting a legal document and appropriate proof of your incapacity to a financial account holder. Since courts are notoriously slow, this quick access can be immensely beneficial to ensure your bills get paid on time and you have the funds available when you need them.

Without signed powers of attroney, your family and friends will have to go to court to get access to your finances, which not only takes time, but it could lead to mismanagement and even the loss of your assets should the court grant this authority to the wrong person.

Furthermore, the person you name doesn’t have to be a lawyer or financial professional—it can be anybody you choose, including both family and friends. The most important aspect of your choice is selecting someone who’s imminently trustworthy, since they will have nearly complete control over your estate. Besides, with me as your Personal Family Lawyer®, your agent will have access to us as your trusted counsel should they need guidance or help.

Given all of these potential risks, it would be foolhardy for those without children to ignore or put off these basic estate-planning strategies. Identifying the right planning tools is easy to do, and begins with a Family Wealth Planning Session, where I can consider everything you own and everyone you love, and guide you to make informed, educated, empowered choices for yourself and your loved ones.

It will likely take just a few hours of your time to be certain that both your assets, healthcare, and relationships will be managed in the most effective and affordable manner possible in the event of your death or incapacity.

This article is a service of Tara Cheever, Personal Family Lawyer®. I don’t just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why I offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling my office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

Sign up for the Cheever Law Newsletter

I Don’t Have Kids, So Why Do I Need Estate Planning? Part 1

I Don’t Have Kids, So Why Do I Need Estate Planning? Part 1

It’s a common misconception to think that if you don’t have children, you don’t need to worry about estate planning. But the fact is, it can be even MORE important to do estate planning if you have no children.

Some of the common thoughts behind this mistaken belief may take one of these forms:

“If I die, everything will pass to my spouse anyway, so why bother?”

“I’m single with little wealth, so who cares who gets my few meager assets?”

“Estate planning is an expensive hassle and it doesn’t even benefit me because I’ll be dead, so I’m better off letting a judge handle things.”

This kind of thinking ignores several basic facts about both estate planning and life in general. Regardless of your marital status, if you don’t have children, you face potential estate-planning complications which those with children do not. And this is true whether you’re wealthy or have very limited assets.

Without proper estate planning, you’re not only jeopardizing your personal property, but you’re putting your life at risk, too. And that’s not even mentioning the potential conflict and expense you’re leaving for your surviving family and friends to deal with.

So if you’re childless, consider these three inconvenient truths before you decide to forego estate planning.

Someone will get your stuff
Whether you’re rich, poor, or somewhere in between, in the event of your death everything you own will be passed on to someone. Without a will or trust, your assets will go through probate, where a judge and state law will decide who gets everything you own. In the event no family steps forward, your assets will become property of your state government.

Why give the state everything you worked your life to build? And even if you have little financial wealth, you undoubtedly own a few sentimental items, including pets, that you’d like to pass to a close friend or favorite charity.

However, it’s rare for someone to die without any family members stepping forward. It’s far more likely that some relative you haven’t spoken with in years will come out of the woodwork to stake a claim. Without a will or trust, state laws establish which family member has the priority inheritance. If you’re unmarried with no children, this hierarchy typically puts parents first, then siblings, then more distant relatives like nieces, nephews, uncles, aunts, and cousins.

Depending on your family, this could have a potentially dangerous outcome. For instance, what if your closest living relative is your estranged brother with serious addiction issues? Or what if your assets are passed on to a niece who’s still a child and likely to squander the inheritance?

And if your estate does contain significant wealth and assets, this could lead to a costly and contentious court battle, with all of your relatives hiring expensive lawyers to fight over your estate—which is exactly what’s happening with Prince’s family right now.

Finally, even if you have a spouse and your assets are passed to him or her, there’s no guarantee they’ll live much longer than you. In the event of their death without a will or a trust, everything goes to his or her family, regardless of the fact that you can’t stand your in-laws.

You really don’t want your spouse’s sister, brother, parents (or the new spouse he or she marries after you die) inheriting what you’ve worked so hard for, do you?

Next week, we’ll continue with part two in this series on the value of estate planning for those without children: how you could be leaving YOURself at risk.

This article is a service of Tara Cheever, Personal Family Lawyer®. I don’t just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why I offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling my office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

Sign up for the Cheever Law Newsletter

Joint Tenancy Pitfalls: The ‘Simple’ Fix that Can Leave Your Family Broke

Joint Tenancy Pitfalls: The ‘Simple’ Fix that Can Leave Your Family Broke

There are many ways to own your assets. When you die, it is only natural that you want your family to share in the bounty of your hard work. As a way to simplify the transfer process and avoid probate, you may be tempted to add a child or other relative to the deed or bank account utilizing the ownership type of joint tenancy with right of survivorship (JTwROS). However, while this type of ownership delivers a lot of potential benefits, it may also be masking some dangerous pitfalls.

Under JTwROS, when one owner dies, the other owner(s) inherit the deceased owner’s share of the property proportionately.Take note that the words “with right of survivorship” do not need to be explicitly spelled out because the survivorship right is automatic with joint tenancy, unlike other forms of ownership types, such as tenants in common.  With JTwROS, its benefits are specific: ownership is transferred automatically without entering probate.  Because the property is transferred outside of probate, it is possible to keep this inheritance out of the clutches of creditors of your estate.   On the surface, this seems like a smart way to streamline the inheritance process, sidestep creditor baggage, and bureaucratic charges. But the risks may outweigh the benefits.

You May Pay the Price

One of the main problems with JTwROS is that when you enter into this kind of agreement, you open yourself up to additional liability. When you agree to a JTwROS, you put your assets on the hook for the other owners’ creditors, ex-spouses and flights of fancy.

Another problem with JTwROS, as it relates to real estate, is that there are now multiple owners of the property. You must now get the approval of the other owners if you would like to mortgage, refinance, transfer, or sell the property. It does not matter if you are the only one who is occupying the property or paying the expenses, by adding additional people as owners, you are giving away control.

With respect to any bank accounts, once you add an additional owner, that individual, as an owner, has the right to go to the bank and withdraw whatever money is in the account. The bank is merely going to make sure that the individual is listed on the account and will freely turn over your money to him or her. If a joint owner’s creditor serves the bank with a garnishment order, they can also seize the money in the account, even if the joint owner was only added to help avoid probate.

In my years of practice, I have seen in countless situations where an adult child is added to a parent’s bank account as a joint tenant in order to “make things easier” at death.  In too many of those situations, it is discovered later that the adult child was secretly withdrawing money and frequently making purchases for his/her own benefit, even though that person was only added to the account to assist parent and avoid probate.  When the parent finally realizes the value of proper estate planning and then discovers the financial abuse, it almost always creates family conflict and difficulty because the adult child does not want to lose control of those assets and becomes a roadblock for the parent to complete their estate planning properly.

Disinheriting Loved Ones

While JTwROS can have some impacts on you, it can also disrupt your estate plans because instead of property getting handed down, it’s handed over. For example, if someone with children remarries and a new spouse is added to the deed as a joint tenant, that new spouse will inherit the property, not the kids or grandkids. Because there’s a new spouse involved, the new spouse’s family will then be the ones to inherit upon his or her death, leaving the whole ‘branch’ of the original family may be disinherited—and not always intentionally!

Questions? Give Me a Call

Although there are some advantages to a JTwROS, don’t let simplicity or speed be your only measures. Give me a call so we can discussing all of your options and tailor a solution that will best fit your needs.

As a Personal Family Lawyer®, I offer expert advice on Wills, Trusts, and numerous other estate planning vehicles. Using proprietary systems, such as my Family Wealth Inventory and Assessment™ and Family Wealth Planning Session™, I’ll carefully analyze your assets—both tangible and intangible—to help you come up with an estate planning solution that offers maximum protection for your family’s particular situation and budget. Contact me today to get started.

This article is a service of Tara Cheever, Personal Family Lawyer®. I don’t just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why I offer a Family Wealth Planning Session™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling my office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

Sign up for the Cheever Law Newsletter