A special needs trust is an essential estate planning document for some families. It can accurately help protect a disabled individual from losing government benefits if they suddenly acquire additional future income.
To ensure benefits aren't someday taken away or grow to be invalid, like when an inheritance occurs, the wording and planning of a trust like this need to be carefully thought out.
When you use the correct language and take the proper legal steps with a special needs trust, some benefits that will stay in place, despite what the future may hold. Depending on the beneficiary's lifestyle, creating a solid trust that plans for possible income changes is key.
A special needs trust may help:
- ensure government assistance continues
- protect Supplemental Security Income (SSI)
- keep Medicaid as a health plan
- maintain the utilization of vocational rehabilitation programs
- preserve subsidized housing qualifications and monthly adjusted rent amounts
- defend certain inheritance funds if they come into question
- keep any proceeds from a settlement that may have occurred on behalf of the disabled person
- protect resources if the disabled person was sued
Many health, government, lifestyle or monetary benefits can continue despite unforeseen circumstances when the right plan is in place. Since each situation is unique to the person involved, it's important to know the different benefits being used and which ones may need protecting in the future.
If a special needs trust is right for your family, you don't have to face figuring this out on your own. Trusted attorneys can always help unravel the pieces to protect the quality of life and future to the fullest
What you may not know is that you can lose all power to make financial or medical decisions for your child in an emergency or if they are unconscious. Doctors can use their best judgment on how much they reveal to parents, so being named your child's representative is one of the only ways to ensure you can make medical choices for your child and have access to him or her.
Get these three documents signed
Three important documents to discuss with your child when they turn 18 are:
- HIPAA to authorize doctors or nurses telling you about medical situations, possible treatments and relevant medical history
- Medical power of attorney to permit you to make complex medical decisions if your child is unconscious or to refuse treatments for them
- Durable power of attorney to give you financial authority if your child is incapacitated for any reason, or if he or she studies abroad and needs tax forms signed
Drafting terms in these documents can be as broad or specific as your situation or state requires. It is also a great idea to have them all scanned with copies kept at home as well as on everyone's phone should an emergency arise.
While this can be a difficult subject to discuss with your child, it can prove to be quite valuable in the event of a tragic situation. Understand that you don't have to figure this all out on your own, either. You can consult an attorney who can help you and your child understand the legal measures that can protect his or her medical and financial best interests.
Estate planning can be tricky and often sneaks up during stressful times of family illness, discussions about money, or a loved one getting older. Mistakes are easily avoidable with some careful planning and knowledge of what's in store for you.
One common mistake is a lack of liquidity, or not being able to convert assets into cash quickly to cover future unforeseen costs. Lacking liquidity is especially important when it comes to estate planning, since people do not know how significant the cost may be to settle affairs and cover taxes or related estate expenses quickly.
Nine months later--and in cash
Luckily, Florida doesn't impose any estate or inheritance taxes. However the federal taxes on an estate are generally due before nine months have passed after death. What makes this amount of money hard to handle is the fact you pay taxes and fees in cash. The cost can force you to liquidate assets you weren't prepared to spend or to scramble to raise the necessary funds quickly.
Liquid assets are essential
Be aware of all the assets or accounts you have on hand to utilize if cash is needed fast. Some useful assets include checking and savings accounts, investments, market money funds, mutual funds, stocks, bonds and more.
Avoid these problems
Being financially aware and knowing your easily liquidated assets could be the difference between a smooth estate transition and a stressful one. Don't be caught off guard by common mistakes--prepare far in advance with your family and trusted counsel.
Some people in Florida might view writing a will as a task for seniors who have accumulated assets. These documents that express a person's final wishes, however, ease burdens on survivors when a person of any age passes away. Wills leave instructions that aid the people left behind who must handle probate court issues.
When a young person attains the age of majority, an estate plan that assigns a parent or someone else the power to make medical decisions reduces legal delays if the person becomes incapacitated or dies. Even the death of a young person with few assets, such as a checking account and a car, requires a probate court to assign someone to oversee the small estate. With a will in place, the probate court will know the person's wishes and not need to make arbitrary decisions.
Upon marriage, a person could use a will to designate who is to receive what assets. These clearly written instructions could prevent fights among a spouse and blood relatives. In marriages that include stepchildren, a will acts as a barrier to conflicting claims among family members. A will can also name a guardian for children. As people age, they should review their wills and update beneficiaries if necessary. They could also consider using trusts to hold or transfer assets.
Estate protection often motivates people to write a will. A person who wants to establish how to distribute assets could consult an attorney. Legal research could also inform the person about tax issues that heirs might face. An attorney might suggest strategies for limiting taxes. Once the client makes decisions, an attorney could write the documents for the plan.