With an asset protection plan that uses our proven Estate, Tax, Elder Law, Medicaid and Special Needs Planning strategies, Amoruso & Amoruso, LLP gives you peace of mind by ensuring that your loved ones receive the care that they need.
In an emergency message to its personnel the agency declared that field workers will now need to cite specific reasons for rejecting a special needs trust. Unfortunately, this will still leave some confusion for many people. The applicants only need to be told what section of the Program Operations Manual System was used to determine the rejection of the trust.
This manual is the field guide used by SSA personnel and often contains dense legalese.
A special needs trust attorney can help clear up any confusion and guide you in the right course of action if your application is rejected.
The rules that allow first party special needs trusts to protect assets while receiving assistance from the government are being tightened.
First party special needs trusts are established by a parent, grandparent, guardian or by court order for the sole benefit of a person with special needs. The assets of the person with special needs are placed into the trust and can then be used to supplement government assistance, particularly Social Security. The rules surrounding the trusts are being changed.
Payback Language – When the trusts expire federal law requires that any remaining assets first be used to pay back government agencies for past benefits received. The trust documentation must clearly state that all states must be paid back, not just the state in which the person with special needs resides.
Who Can Establish the Trusts and in What Capacity – A federal court decision recently invalidated a trust created by the parents of a person with special needs on the grounds that since the parents also held power of attorney over their child, they acted as agents in establishing the trust.
What Trustees Can Distribute Assets For – Trustees can only distribute the trust assets for the sole benefit of the person with special needs. The rules surrounding what qualifies as an allowed distribution are tightening. For example, family members cannot be paid for providing care unless they are medically certified to do so.
An estate planning attorney should be consulted if you have questions about the issues surrounding first party special needs trusts.
Here's a Halloween riddle: What really scares Americans 50 and older? Answer: The stock market and their retirement.
According to several recent financial security studies, including the Country Financial Security Index, as a result of the 2008 market meltdown, baby boomers are terrified of investment risk and another market crash. In the latest Country survey, which polled 1,000 adults, 81% of people 50+ have financial fears. Their biggest worry is the cost of health care and the realistic possibility that they might not be able to retire comfortably. Not surprisingly, women who are 50 and older are more likely to worry about being able to retire comfortably than men, 34% men compared to 39% women. We think the men just aren't sharing their fears as easily.
Health care expenses are the main concern among Americans who are 65 and older, according to the last Halloween story of the season, "What Spooks Us Most About Money," from Forbes. In comparison, millennials have their own financial worries, chiefly the ability to pay their rent or make mortgage payments.
But here's the scariest part of the survey: about 21% of the 50+ respondents said their financial fears are holding them back from reaching their goals. That's gotta give you some estate planning chills! Many people 50+ are also undoubtedly scared of what will happen to their financial assets after they die and whether their loved ones will receive proper care.
The whole subject of estate planning gives some people the willies. It is scary to think about dying and planning for what may happen after your death. But not thinking about it could wind up haunting your family for years to come.
If you fail to name guardians for your children in your will, the court might name them for you. And if you don't have a written estate plan, your wealth could go to heirs you hardly know or do not want to have an inheritance.
Sit down with a qualified estate planning attorney and have him or her draw up a will or trust, if you haven't done so already. Ask if it would be wise for you to have one or more trusts, which can be extremely helpful if you have children or grandchildren with special needs.
Trusts are a time-tested pragmatic tool to help individuals and couples achieve specific goals, whether they are related to transferring assets, managing tax liabilities or protecting yourself or your family from other financial threats. Trusts are not just for the wealthy. However, they are not do-it-yourself projects. There are many different kinds of trusts, and it is important to know which one is the right one to achieve your goals.
Here’s the basic concept behind trusts: a trust allows an individual to separate the legal ownership of property from the beneficial enjoyment of the property. In “What Is a Trust, and Why Should I Have One?” Fox Business explains the different kinds of trusts, how trusts can be used to manage and preserve property and the relationship between the trusts, the beneficiaries of the trusts and the responsibilities of the trustees.
Revocable trusts are also known as living trusts. The creators of this trust can ensure the proper management of their assets during their lifetime and after they pass. A revocable trust can be changed at any time by the creator. However, instructions in the trust document tell the trustees how to act after the creator’s death. Revocable trusts are used in estate planning to pass assets to heirs in private and to avoid probate, which can reduce costs and stress.
Testamentary trusts. These are created in a person's will and they don't keep the assets out of probate. A court proceeding is required to fund the testamentary trust. Testamentary trusts provide flexibility.
Irrevocable trusts can be used to make gifts that allow subsequent protection from creditors and estate taxation. These trusts are typically created to hold high-value life insurance policies and keep the insurance proceeds out of the taxable estate of the insured person. The trust languagecan state that any trust money used for the beneficiary won't run into issues with Medicaid and Supplemental Security Income.
Charitable trusts, as the name implies,allows an individual to make a gift to charity but retain an interest in the donated property. Charitable remainder trusts will let you keep an income stream that continues for a specific time or for the rest of your life—the charity will receive any remaining funds at your death. These trusts provide income tax benefits from the value of the donation, even though you still receive income from the trust assets.
Other trusts are used for estate planning purposes, such as credit shelter trusts. These are used to preserve the estate tax exemption of a deceased spouse for future use. A Qualified Terminable Interest Property trust, or QTIP, gives a spouse access to funds while preserving their eventual distribution to children or other heirs. Finally, a Qualified Personal Residence Trust, or QPRT, lets you transfer an interest in your home to family members while you are still alive in a way that reduces gift and estate taxes.
All of these trusts have the same benefit: guaranteeing that your assets will be used to meet your wishes and provide income for you and your loved ones. Talk with an experienced estate planning attorney and see if you can benefit from establishing a trust for yourself or your family.
When their daughter had a breakdown while attending college, there was nothing that Keisha Sacher’s parents could do when she refused to come home. At age 19, she was an adult. They had no legal control over her. When she finally did return to their home, the family endured a nightmare of her drug addiction, homelessness, hospitalizations and worse. The Sacher’s were aging, and they needed to plan for their daughter’s care in the future.
For parents watching helplessly while adult children struggle with mental illness and addition, there is another layer of worry. What will happen when the parents are no longer alive? In“For Parents With Troubled Adult Children, Financial Hurdles Abound,”The New York Times examine the financial challenges of helping loved ones stricken with mental illness. The solution must provide for care without placing assets in the ill person’s control, must not jeopardize their government benefits and must not worsen their condition. One solution is the special purpose trust.
A special-purpose trust is different from a special-needs trust, which is frequently implemented to pay for additional needs of those receiving government benefits where the government has strict restrictions on the recipient’s assets. A special-purpose trust can be used to provide children more of the life they might have enjoyed without mental illness or addiction, and it allows the parents the flexibility to make changes with the distributions.
Special-purpose trusts are more complicated to establish than regular trusts because of the powers they give to the trustees and the restrictions they place on distributions. However, the toughest part of creating a special-purpose trust is getting parents to accept them as necessary: parents must first acknowledge that their children will never fully recover.
Parents are advised to set out some very specific criteria for distributions into trust documents, for example, staying on medication or staying sober for a certain period of time. In addition, those with a family history of mental illness and addiction issues should get a power of attorney and health care proxy for children over 18 who are away at college. In the event that something happens to their child, the parents will have access to medical records and will be able to help.
Work through these issues with an experienced estate planning attorney to make sure that you are doing your best to help your child.
Life is about changes, both good and bad. Children grow up and marry and have children of their own. Families experience the pain of divorce. New families are created when divorced parents remarry. Many of these changes require revisiting and making changes to your estate plan. Even when your family life is stable, laws change and can impact the best of estate plans. An estate plan needs to be reviewed and changed as family situations, laws or other factors change. Here are some common points when estate plans need to be reviewed.
There are certain life events that call for your estate plan to be reviewed, detailed in“9 Life Changes That Require An Estate Plan Review.” from the Huffington Post. Some of the events are happy times, like the birth of a grandchild. But whether they are happy or sad, they all require that you take the time to review your estate plan to ensure that your loved ones are protected and that your wishes are carried out in the event of your death or if you become incapacitated.
Marriage. Did you know that your spouse may not be the sole beneficiary or heir of your estate?Depending on where you live at the time of your death, this may be unknown without a solid estate plan. To ensure your spouse, or anyone else gets certain belongings from your estate, you need to detail this in your plan. When you wed, you should review your estate plan and make any necessary adjustments.
Remarriage. A marriage license typically doesn’t set up your new spouse to receive your entire estate after your pass away. The laws of most states say that your new spouse will share in your estate assets along with your children from your first (or previous) marriage unless you change this in your will, living trust, or other estate planning document. If you get remarried, it's critical that you update your estate plan to add your new spouse and any of his or her stepchildren should you want them to inherit from you.
Divorce. Typically when a divorce decree is entered, the laws automatically disinherit a former spouse. Nonetheless, if you included provisions in your estate plan that give specific property to your former spouse by name, make sure to change this to disinherit him or her.
Birth of a Child. This big change definitely qualifies for an update of your estate plan to protect your child or children. You need to nominate guardians to care for your children in case something happens to you. If not, your children will be cared for by guardians appointed by the court. That could be anyone. Same thing applies if you adopted a child. Designate a guardian to care for your child in your will.
Death of a Beneficiary. Updating your estate plan may be the furthest thing from your mind if this should occur. However, it's important. If your beneficiary dies, you will need to ensure your estate plan still does what you want, such as if the beneficiary had children and you want his or her portion to go to them. You’ll typically need to talk to your estate planning attorney to make sure that happens.
Illness or Disability. One often overlooked aspect of estate planning is illness or disability. There are lots of things to consider regarding your care, and you need to articulate your desires before you become ill, disabled, or incapacitated. This can save your loved ones heartache. In addition, you need to think about the situation if you passed away and one of your beneficiaries became incapacitated. Money from your estate could actually harm them by causing him or her to be ineligible for needs-based government care programs. You need to look at a special needs trust. Plan for both of these scenarios by updating your estate plan before anything happens.
A Substantial Increase in Assets or Income. If you have more money or assets now than when you first created your estate plan, then that is a good thing up to a point. That point is when you and your beneficiaries are subject to federal or state estate taxes. Your estate planning attorney can structure your estate to minimize these taxes and keep more money for your estate.
Moving to Another State. Every state has its own unique set of estate laws, so you should talk to your estate planning attorney.
Changes in the Law. State and federal tax and estate laws are always changing. When this occurs, your estate plan may be at risk.
Review your plan with your attorney to make sure everything is OK.
Trusts are widely used by estate planning attorneys, with good reason. Trusts are a good way to pass wealth from one generation to the next, protecting assets from the effects of estate taxes, divorce, creditors and scam artists. But trusts are not the only way to transfer wealth. There are times when a simple outright inheritance will do the job. The key is knowing when a trust is a good idea, and when it is an unnecessary addition to an estate plan.
According to financialplanning.com’s post “Should Estate Plans Rely on Trusts?,” people structure their estate plan to include trusts for a number of reasons. In some instances, the trust functions as a contingent beneficiary, usually when there are minor children involved, and the trust assigns a guardian for the children until they come of age. Assets held in trust are not subject to probate at death, which is useful if a person owns property in multiple states, thereby avoiding probate in each state.
Implementing a trust provides control for assets in the event of incapacity. A co-trustee or successor trustee will take over the management of the trust assets. Another nice thing about a trust is that it gives you maximum privacy, where a will is public record and open to all.
Trust language can be drafted to reduce or eliminate estate taxes, as well as to protect from divorce settlements and creditors. In addition, a trust can protect dependents with special needs. Ask your estate planning attorney about a special needs trust for your child with special needs—or about the other types of trusts that might benefit your circumstances.
An individual can use trusts in one of two ways. Some people will grant title assets to a trust while alive, and then the living trust terms will stipulate the distribution of trust assets at the grantor’s death. Other folks don’t have a standalone living trust; instead, they use a testamentary trust which is funded through a will.
Contact a qualified estate planning attorney to help you decide which way to go.