Special Needs Trusts: Five Things to Know

A family with a member that has special needs, whether physical or mental, has many challenges and worries. For many parents, worrying about what happens to their child with special needs after the parents pass away is one of them. Often times, parents disinherit their child with special needs, leaving additional money to other children or relatives with the expectation that those third parties will care for person with special needs. This leaves too much unsettled and too much at risk, however, and can create unnecessary issues.

Supplemental Care Special Needs Trusts can help parents and guardians feel secure in the knowledge that their child with special needs will still be qualified to receive government benefits while receiving supplemental support to ensure quality of life.

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Here are five things to know about Special Needs Trusts:

  1. Supplemental Care Special Needs Trusts are created to hold property and distribute funds so that a disabled beneficiary remains eligible for government benefits like Social Security, Medicare, or Medicaid. They are different from General Care or Support Special Needs Trusts, which are designed to be the sole source of income for a person with special needs and will disqualify that person from receiving government benefits.
  2. It is very important that the trust be set up correctly. Incorrectly, parents and guardians face the risk of accidentally disqualifying their child for public benefits, so working with a qualified team is essential.
  3. Once the trust is established, it will need to be funded. Funding for the trust can be granted in a will, as part of a larger estate plan, by life insurance or distributions from other accounts upon death, by third parties, or by the creator of the trust during their lifetime.
  4. The role of trustee should be considered very carefully, as this person or persons will be responsible for managing the trust, making investments with trust assets, keeping records, and making distributions. In order to maintain eligibility for government benefits, the beneficiary of the trust cannot have any control over the trust; they cannot demand distributions, change the terms, or manage the assets.
  5. Telling family and friends about the trust is important. They might make provisions in their own estate planning for the person with special needs, leaving money directly to that person. Doing so could disqualify the person with special needs from receiving public funds. If family and friends know about the trust and the reasons behind, they will know to direct their gifts to the trust.

For more information on trusts of all kinds, contact us.

Can the Executor Sell a Home Inherited to Someone?

Nothing could be more exciting than inheriting someone’s house under their Will.  Often homes are not only the most expensive item in a person’s estate, but often we attach a lot of fond memories attached to a household. However, if you suddenly find a “for sale” sign on the lawn, if the executor of the estate allowed to sell the house when it has been designated to pass to you?  The answer is yes, but only in certain circumstances.

The biggest reason that an executor would sell a house designated for a particular person is that the estate owes debts that cannot be paid without selling the house.  If the debts of an estate exceed the actual assets of an estate, the executor may need to sell the home to settle the debts.  If, however, the home was co-owned by a surviving spouse who also lived in the home, then the executor will not be able to sell the home because it is the surviving spouse’s homestead.  The homestead exemption protects the house from sale, even if there are creditors.  This exemption does not protect second homes or vacation homes, which makes it so the executor may need to sell these secondary properties. After the sale, the inheritor may be entitled to the remainder of the sale not used for the debt.

If no necessity exists to sell the house because of creditors or other reasons, the executor cannot just sell the house for no reason.

If you have been left a house or other asset by a loved one and believe and executor is trampling on your rights, contact us today. We not only help people craft estate plans, but we also represent those that need any help in the process of carrying that estate plan out.

Estate Planning for Minor Grandchildren Beneficiaries

To many grandparents, their grandchildren are precious. You don’t want to miss a single moment of them growing up, but if you can’t be there, you also want to make sure that they have the best shot at life. For this, your estate can help take care of grandchildren if it is your time, but the issue is that there are special considerations that must be made for those that are still considered minors. So if you are estate planning with your grandchildren in mind, here is what to keep in mind.

Grandchildren Dependent on Their Grandparents

In case where grandparents are the ones who are taking care of minor grandchildren because their parents are deceased or otherwise not in the picture, these grandparents want to protect those children as if they were their own. This means that in their estate plan, they will want to name a guardian for their grandchildren in their will. They will also want to add in a HIPAA release that will allow the medical records for their grandchildren to be released to another in case of an emergency or if the grandparent is incapacitated.

Finally, it may be wise to invest in life insurance to make sure those minor grandchildren are taken care of in the event of an unexpected passing.

Inheriting to Minors

Unfortunately, minors cannot directly receive any assets as gifts or inheritance. However, this doesn’t mean you cannot leave them anything. Instead, your estate plan should appoint a guardian to manage those assets until the minor comes of age. These guardians are appointed by the court, but this option can be expensive.

As a more affordable alternative, if a child is inherited assets under $50,000, a Child Uniform Transfer to Minors Act account can be opened and managed by a trusted adult of your choosing. For assets above that, they can be placed in a 529 Plan, which can be used to provide for any educational needs.

If you are a grandparent worried about how your estate will be handled for your grandchildren after you pass on, contact us today to let us help you put plans into place to provide for them.

Life Events That Should Trigger and Estate Change

When you do your estate planning, you do it in such a way that it is ironclad and will last a lifetime, however long that may be. While this should indeed be the way you do your estate planning, estate plans don’t last lifetimes. In fact, they should be reviewed and edited often during your hopefully long life. While you should look over it every now and then, there are actually specific life events that should merit looking and often changing your estate plan. Do you know what they are?

Marriage

If you are swearing to spend your life with someone, obviously you would want them provided for if you pass away. However, while marriage is an event that merits reviewing your estate plan, dying without a Will still results in your new spouse receiving a portion of your estate, but that portion may not be as much or as little as you would have chosen to leave them.

Divorce

Texas law automatically terminates any provision for a spouse upon divorce.  So, if you get divorced and fail to update your Will, your ex-spouse still will not benefit from your Will.  However, it is always best to review and modify your Will after a divorce so that you can confirm who will receive your assets and who will be your executors, trustees, etc.

Death of a Spouse

The death of a spouse is definitely a time to review your estate plan.  Not only are they likely listed as a beneficiary and executor under your Will, but they are probably also listed as agent under your powers of attorney for financial and medical purposes.  As a result of their deaths, you will need to update your estate plan to confirm your new beneficiaries and to designate new people to make medical and financial decisions for you.

Having a Child

The birth of a new child is always a time to review your estate plan.  Have you provided financially for your child?  Have you designated guardians for your child in the event that you and your spouse pass away?  Have you established a trust to manage your child’s assets if you were to die before your child was old enough to manage their own money?  These are all questions that you need to ask yourself when you experience the joy of having a child.

Have you gone through any of these life changes? Then it is time to update your estate plan. However, if you haven’t yet even started for planning for your family after your passing, contact us today.

Where Does Intellectual Property Fit Into The Estate Plan?

You might think you don’t have any intellectual property, such as things like authorship or trade secrets, but in today’s world, assets that you can’t actually touch are more common than ever. A popular example of this is those that retire and take up article writing as a hobby online to share their knowledge. Suddenly, they start to make a little money, then maybe a lot more over time. Alternatively, a more modern example that will become an issue in the upcoming years may be YouTube videos.

When you pass away, who will take over receiving compensation for these pieces of intellectual property? Like any other asset, intellectual assets can be placed in a will or the funds can be given to a trust and that will take care of the issue. However, if you create content as a hobby, you might not realize it needs to be included in an estate plan.

Often, the best idea may be to transfer this intellectual property while you are still alive. However, if a loved one has passed and left behind intellectual property, you may be able to retain the rights as the creator’s legal heir and under copyright law. Copyright law states that the family of the creator will maintain rights for the author’s lifetime plus 70 years, which is often substantial enough to sustain the family. Furthermore, a family member could transfer the copyright to themselves and keep expanding it.

Has a loved one passed away with a substantial amount of intellectual property and your family doesn’t really know what to do? Then you should contact us today. Unfortunately, like estate law, intellectual property law can be highly technical too, even more so when the creator has passed away. Let us help you decide how that intellectual property is divided and inherited to help ease your headache.