Estate Planning + Disabled Child [Archive]

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Radicchio

9-9-13, 1:01pm

I know we should contact an attorney who specializes in estate planning for families with dependent disabled children, but DH uncharacteristically has dug in his heels and doesn't want to do so. I'm not sure how to find someone who is well qualified, either.

So here I am on an open forum seeking advice! Our adult child receives a small SSI stipend and has been disabled since birth, requiring supervision 24/7. Our child lives with us. I am concerned about planning both for our retirement and for our child after we have died. I do realize our child cannot inherit money directly, as that would lead to the loss of the SSI. It's my understanding that we need to provide money for our child through a special needs trust. I have tried to get DH to consider setting up a small special needs trust for our child, which would inherit the bulk of our estate after we have both died. He doesn't want to do that now, thinking we have plenty of time. My concern, of course, is the unexpected occurrence that would result in both of us dying before setting up arrangements for our child. Currently, our will provides that our disabled child's inheritance would go to a trusted relative, with the understanding that that person would set up a special needs trust for our child after our death. I think this will result in taxation of the funds when they are transferred to the trust. I'm assuming if the inheritance went directly into the trust there would be no tax on the funds. Of course, I don't know that for a fact because DH refuses to consult an attorney at this time.

Here's my basic question: Is it possible to stipulate in the will that designated funds should be used to set up and fund a special needs trust for our child, rather than leaving the money to one person and having that person set up the special needs trust with the funds he/she received?

I'm not concerned about the trustworthiness of the person we've designated, but there are so many things that could go wrong---i.e., extra tax burden, the person we've left the money to dying before getting the special needs trust set up and his/her heirs ending up with money that should be left for our child, etc.

If anyone here is knowledgeable in this area, I'd certainly appreciate some suggestions.

try2bfrugal

9-9-13, 1:19pm

I think it is hard for many people to deal with issues regarding their own mortality.

With a disabled child, my advice would be to see an estate attorney. If you husband won't go, go alone. This is about your kid's future, which trumps your husband's maturity level and ability to deal with unpleasant but important issues. You could both get killed in a car accident tomorrow.

In California, the state bar has a list of attorneys certified in various specialization areas, including estate planning. If you live somewhere else maybe your state has something similar. Many attorneys will give an initial consultation for free. I would suggest interviewing a few and picking the best one.

Radicchio

9-9-13, 1:26pm

try2bfrugal,

Thanks for your reply. I know it will eventually come to that, although I'm still hoping we can do this together. I do want to emphasize that this is uncharacteristic of him. We have had wills drawn up since before the birth of our first child, been responsible in financial matters, etc., and he has always been on board and active in doing these things. I'm really baffled about why he is balking now. We suffered the loss of a child a few years ago, though, and I think both of us are probably more distraught than ever at the thought of our disabled child being left behind after our deaths and what it will mean for that child's quality of life. Maybe that's what he doesn't want to have to contemplate.

I will check with the bar association to see if I can find a qualified attorney. In the meantime, any information others can offer would be appreciated. I always like to do my homework anyway before meeting with a professional to discuss options. I am, of course, looking for general advice not specific, since each situation and each state is different.

Tradd

9-9-13, 1:28pm

You might also check any online forums for parents of special needs kids, if they have any attorney recommendations.

try2bfrugal

9-9-13, 3:09pm

I have saved a lot in attorney fees for my business by reading the Nolo Press books first so I knew what questions to ask. I was also able to rule out a few attorneys who could not answer basic questions on the material covered in the books. Nolo Press does have many books on estate planning and I see one just on special needs trusts -

http://www.nolo.com/products/wills-trusts/estate-planning-books

Radicchio

9-9-13, 3:24pm

Tradd, Good idea. I've looked at some in the past, just for general information/ideas, but not recently and not for specific attorney information.

trytobefrugal, Thank you so much for the book recommendation Guess what? I checked my library online, and they have the book on special needs trusts (2013), as well as the one on estate planning (2013), so I've placed a hold on both of them and should be able to pick them up in a few days.

Miss Cellane

9-9-13, 5:48pm

My nephew is physically disabled. He is younger than your son, as he is still a teenager. My brother and SIL set up a special needs medical trust for him when he was two. I think there was some tax benefit or something like that for setting it up. They also have an extra life insurance policy on both of them, with the special needs trust as the beneficiary, in addition to their regular life insurance policies with all three kids as beneficiaries.

My nephew will be able to go to college, but whether or not an employer will be willing to hire him is another question. And whether he can afford to forgo the Medicaid benefits he would lose if he got a job is also a problem.

It is likely that he will be able to live more or less independently when he is an adult, with a personal care attendant for a couple of hours every morning and evening to help with those activities of daily living he can't quite manage on his own--getting dressed, for one. So my brother purchased a few acres of land adjacent to their house when they went up for sale a few years ago, with the plan that when Nephew is old enough, they will build a small accessible house for him on that land, to give him some degree of independence.

DB and SIL have appointed guardians, who would move into their house and take care of all three kids until they are adults. There are also about 13 aunts and uncles who would be hovering around making sure everything and everybody was okay. I'm the back-up plan if the appointed guardians cannot, for some reason, assume guardianship.

Some of what you need to do is governed by Federal regulations, and some by state regulations. I would encourage you to find an experienced lawyer/CPA and start the fact-finding on your own.

Radicchio

9-9-13, 5:59pm

Miss Cellane, It sounds like your nephew's family has given this a lot of thought and managed to come up with the optimal arrangements to allow their son as much independence as he wants and can handle. Our child requires a great deal of supervision and support, and we have had to make some major adjustments in our lives to accommodate having a child that has never grown up. We don't have anyone to step in and take up where we left off and, honestly, I can't imagine asking anyone other than a parent to make the sacrifices we have to keep our child at home with us. That's why I want to take care of as many details ahead of time as I can. We have friends and family who would certainly keep in touch with and check on our child after we're gone, but we want to have finances on hand to make sure our child is well taken care of and still has some "extras" along the way to add to the quality of life. I think I'll do some more fact-finding first, then find a professional experienced in estate planning for special needs children to help implement the best possible plan.

Miss Cellane

9-9-13, 6:43pm

Radicchio, I think one of the hardest parts of this type of planning is that every child is so different.

So there's no one plan that will work for all disabled people. I would encourage you to talk to as many experts in the various fields involved, so that you can get as many possible options and creative ideas as you can. Then work on the best plan for your son.

I know this must be hard for you. But knowing that your son will be well taken care of--it will be such a huge relief when you finally have a plan in place.

Radicchio

9-9-13, 7:10pm

Thank you. You are absolutely right that knowing we have done all we could to provide for our child is/will be a huge weight off me. I thank everyone who has kindly taken the time to respond to this thread. I appreciate it more than I can say.

razz

9-9-13, 9:07pm

May I suggest that your DH's balking may be triggered by something else going on in his life entirely that is not under his control? If he has been proactive in so many other ways, it may require some counselling to find out where you two are in agreement and where the ways part.

The right lawyer may help here or a good paralegal may be better initially to help sort through the emotional aspects.
Wishing you a good solution as this type of planning is difficult

Simplemind

9-9-13, 10:01pm

I am glad that you recognize that you don't have time even if your husband stated otherwise. I think it would be good to find out what is really bothering him because it seems like even though he says you have time it is more that he doesn't want to contemplate it. When you write wills and trusts etc, you have to make choices. Sometimes those choices (such as who would be a guardian and handle the money) are not easy to make. Sometimes the person you choose doesn't want all that responsibility. Many things to consider.
I to would suggest that even if your husband doesn't want to go that you get the ball rolling. Let him know of your plans and tell him that it is irrational to think that you could ever predict the future. You strongly believe these are decisions that both of you should be present for and discuss.
Don't leave any of this planning up to chance or that a family member will handle your money and carry out your wishes without legal documentation.
I have worked with so many families that didn't/couldn't have these difficult conversations. You will get over your discomfort and a huge weight will be lifted off your shoulders when you know for certain that your child has been provided for. Don't wait!

AnneM

9-9-13, 11:03pm

Radicchio, I don't know where you are located. We are in the Seattle area, and used The Dussault Group. Dussaultlaw.com for our daughter's 3rd party special needs trust. Social Security cannot consider it as a source of assets, due to the Crummey power we have given to her brother. That may change after he hits 18, depending on his maturity level. Crummey power may need to be transferred to someone else. We'll see. Depending on what state you are in, you may qualify for legal services from the state for help in setting one up. It is means based. In Washington, we did not qualify. It may be worth it though, for you to contact your state's department of social and health services to see if you do.

Radicchio

9-10-13, 1:02pm

Razz, Simplemind, and Anne, I just wrote a lengthy reply to each of you and then clicked on the wrong button and lost it all. Essentially, I just wanted to say thanks for replying. I do know that our delay in doing this is undoubtedly connected with the pain of losing our older child. Contemplating our disabled child's life with none of the immediate family left is very difficult. We do have arrangements in place now that a trusted relative would inherit the bulk of our estate, to be used on behalf of our disabled child---including instructions to set up a special needs trust, as well as written instructions about our child's daily schedule, likes/dislikes, what an ideal home setting would look like, etc.---but there are some drawbacks to leaving it this way. If we both died tomorrow, I have no doubt that things would be done the way we asked; but I think it could be done much better, with less of a burden on the person carrying out our wishes and less cost to the estate. (I say "estate," since that it is the legal term, but we are not independently wealthy---just fiscally responsible middle class.)

Anyway, thank you all for your reassuring responses.

befree

9-10-13, 10:47pm

Radicchio, you have already gotten such great advice, and I can't add much, except urging you to read the books and see the qualified estate attorney, because I really have the impression that the trust will preserve a large amount of money that otherwise would be lost to taxes, and also will make the bureaucratic transition of the estate/trust much more streamlined. After you've got it largely figured out, I think your husband will accept the plan. And it simply must be done....nobody else will see to the interests of your child better than you and your husband, and it will be such a help to the relative you rely on to have these issues settled beforehand. My best wishes to you on this journey.

Radicchio

9-11-13, 3:01am

befree, Thanks.

Radicchio

9-13-13, 10:58pm

Just wanted to say that the books came into the library and I picked them up this afternoon. I got three NOLO books on special needs trusts, estate planning basics, and avoiding probate, plus another author's book called Getting it Together, about what records to have to make it easier to settle your estate after you're gone. I've just read a little in the book about special needs trusts, and it's great! It's already answered a couple questions I had, but I really need to read it through from start to finish to get full benefit. I'm so glad you recommended the NOLO books to me, trytobefrugal---I think they will be a big help. While the book on special needs trusts says it outlines the basics for someone to set up a special needs trust himself/herself, I still think it would be better to have an attorney complete it---just to be sure (also recommended in the book). Now, though, I can go in knowing just what we want/need and what questions to ask.

try2bfrugal

9-14-13, 1:12am