October is a Good Time to Review Your Will

The National Academy of Elder Law Attorneys has designated this October as “Special Needs Month.” They’ve also directed members to educate the public about special needs issues in Estate Planning.

The best way to explain these issues is by example. Presume I have a grandchild who is blind, mentally challenged, or has some other disability entitling him to disability or public benefits. I want to leave a bequest to that child in my will. But by doing so, I may place his public benefits at risk because the extra cash may place him over income or asset eligibility guidelines required for the public benefits.  Furthermore, his benefits may be cut off until the inheritance is spent, and he might have to re-apply for the benefits.

In the end, the grandchild receives nothing if I leave a bequest in my will, and it may even do more harm than good.

On the other hand, there are many expenses and needs not covered by disability or public benefits, and it would be nice if the grandchild could receive those perks. A partial list of benefits not provided by disability or public benefit payments might include: school tuition, books and supplies; vacation travel; transportation such as purchase of a handicap van, car or train tickets; entertainment, such as books and magazines, movies, plays, electronic equipment, games, etc.

We can provide those benefits to my grandchild without jeopardizing the disability or public benefits by establishing a Special Needs Trust. The trust will make distributions which supplement the public benefits rather than replace them.

The trusts are legal and encouraged; in some cases a court will set up a trust for a disabled individual who receives a court award. The cost of drafting such a trust is usually a few hundred dollars; more important though, the trustee must become familiar with what expenses may and may not be paid while administering the trust. There are books available on Amazon and at the library to help guide the trustee in administering a special needs trust. If the parents of the child receiving public benefits have already set up a Special Needs Trust, other relatives can make a bequest directly to that trust rather than be required to draft their own.

There are other kinds of Special Needs Trusts but what I've explained above is the most basic. If you intent to make provisions in your will for someone who is receiving disability or other public benefits, you should do so through a Special Needs Trust.

Stay well until the next post.

Bob

Robert Gasparro is an Elder Practitioner (an accountant and attorney). He can be reached at robert.gasparro@lifespanlegal.com. He welcomes questions, or ideas for future blogs.