One of the most critical areas of life and estate planning is providing protection for special needs children and beneficiaries. In supporting the needs of children and adults dealing with physical and mental challenges, theU.S.government is pretty good when compared to many other nations. However, the government is also very stringent in making sure that the person receiving support has no other means of support. This often leads to a quandary because parents and other relatives want to provide support in their estate planning documents, but parents know all too well that this well-intended support can quickly lead to a benefits being cut off until all of the inherited money is spent.
Unfortunately, there are a lot of attorneys and other professionals who don’t really know how to plan effectively for parents of special needs children. In many cases, an attorney may be thoroughly knowledgeable of the requirements and rules, and to show off this knowledge they will create a life and estate plan based on the rules at the time. However, there are certain principles that have remained constant, and it really is not that difficult to explain (provided you can speak in plain English.)
To help provide good information on special needs planning, Mr. Marsocci has recently published his ninth book The Simple Guide to Special Needs Estate Planning: Special Needs Estate Planning Explained in Plain English. While not an extensive tome on the rules and regulations of special needs estate planning, it highlights the issues that clients need to understand. The tough part about understanding specific rules, regulations, and statutes is the job of the attorney just as much as it is the job of the attorney to create a flexible plan that accounts for the principles in special needs planning.
To purchase a copy of The Simple Guide to Special Needs Estate Planning, please click here.
But not all attorneys are versed in the principles and sticking to them. For example, I gave a “second” opinion on an estate plan for a parent who passed on and now the uncle (Derek) of the special needs child (Spencer) was questioning some advice from the attorney who created the plan. Apparently, the attorney drafted a Will for the parent that left the house and a vehicle directly to Spencer and then tied up the rest of the special needs child’s inheritance in trust with Derek as trustee. At the time the attorney drafted the Will, a special needs child could own a primary residence and vehicle without limitation, and Spencer had neither. Now, however, Spencer already owned a car and so the attorney recommended Spencer sell his own car. In addition, the rules had changed and now the house going directly to Spencer had too much equity for Spencer to continue to receive his benefits. So the attorney recommended taking out a line of credit and taking the money, losing Spencer’s benefits, and then spending the money on Specner’s care that would have been covered by his benefits. Spencer could then reapply for benefits.
Unfortunately, I told Derek that this was exactly what needed to be done at this point. When Derek asked if it could have been planned differently from the start, I told him it very easily could have. Instead of having the house and car go to Spencer directly, it could have been placed in the same trust that was set up for holding the cash, stock, and other investments Derek would be handling for Spencer. In all, this “small error” by the drafting attorney would cost the family about $130,000.
There are many more examples, but rather than send them in newsletter format, The Law Offices of Jeffrey G. Marsocci, PLLC has set up a specific special needs estate planning online mini-course at www.NCspecialneedsplanning.com. Go to the page and follow the instructions to sign up for the free course.
While there are strict and sometimes complicated rules surrounding benefits for special needs children and adults, the solutions are straightforward if coming from the right law firm and attorney. For more information on this critical area of law, please contact us at 919-844-7993 to set up a time to speak to Mr. Marsocci.