Kansas & Missouri Estate Planning

Selecting the Right Trustee

So, you’ve created a trust to protect your loved ones. Did you name the right person as trustee?

Likewise, perhaps you've just been asked to serve as trustee without a firm appreciation for what that means, or perhaps you’ve just figured it out. Question: Should the trust have a professional trustee?

Whether you're parent who's set up a trust or you're a named trustee, Special Needs Answers recently offered a couple of tests to determine if the trust has the right trustee and if a professional may be in order. Their advice, as you would imagine, is especially poignant in the case of a special needs trust, but also has broader application.

Does the trustee have enough time? Being a trustee is not like being a god-parent; it's almost like another job and even a full-time job for some kinds of trusts. Is the trustee able to keep up with it?

Does the trustee keep track of the rules? Every trust has various rules in place to maintain it, and even more to make sure it accomplishes its goals. In the case of a special needs trust this means keeping track of government benefit rules (even as they change, or threaten to change as in the current political climate). The trustee has to be able to do this.

Does the beneficiary make things complicated for the trustee? If the trustee knows the beneficiary directly, whether by familial relation or long acquaintance, then they also may exert more influence on the trustee than the trustee ought to allow. If the beneficiary feels entitled or wants to ask for something, they may have leverage and the trustee may cave.

Of course, these questions illustrate the common difficulties a trust and a trustee will have to face. Everyone involved ought to understand these difficulties in advance and make the right choices for all concerned.

Bottom line: If you're setting up a trust, seek the advice of qualified estate planning legal counsel.

One of the best articles I have come across on this subject (and not just because I was interviewed for it) appeared in the March 2007 issue of Kiplinger's magazine, entitled "In You They Trust," by Steven Goldberg. Check it out for further background on this important issue.

Reference: Special Needs Answers (November 2, 2011) "Is It Time For A Professional Trustee?"

Adult Children With Special Needs? Plan Wisely!

Deciding how to leave your assets to your kids is tricky enough. But when your adult child has special needs, the task is much more complicated and the stakes are even higher.

Estate planning is never easy. For one thing, it necessitates thinking about protecting your loved ones when you're no longer around. It's tough enough making plans to protect self-sufficient heirs who take care of themselves and an inheritance. However, it can be a real challenge when planning for heirs with special needs, for a variety of personal and legal reasons. Unfortunately, as The Wall Street Journal Online recently pointed out, with the economy and politics as they are, there are new concerns to bear in mind as you plan.

Both state and federal budgets are strapped for cash. No surprise there. To make up some of the deficiencies in government coffers, more of the burden is falling on Medicare and Medicaid. It's up to the Congressional Special Committee to consider the future of Medicare now, but many Medicaid programs already are feeling the squeeze with tighter income restrictions for benefits and services.

Of course, much of the disabled population (12% of the overall population) relies on state and federal services for those services that they couldn't afford in the private market. To plan for an heir with special needs, then, means planning to provide for them without risking their main sources of care. Now, more than ever, that means a "special needs trust," tailored to provide the inheritance as a "safety net" without endangering the continuation of benefits. [Sidebar: Sometimes an older parent can make this move and kill two birds with one stone. How? They create the trust now for themselves and a loved one with special needs so that both qualify for government benefits, once the "look back" period has past for eligibility disqualification. Caveat: As budgets get tighter, expect greater governmental scrutiny regarding such moves.]

The other major issue, and a related one, is housing. Many Americans with special needs live in group housing programs. These programs are, in turn, subsidized by government agencies, but are increasingly unable to meet demand and are cash-strapped. The same political/economic pressure is keeping those agencies from expanding.

At the same time, there simply are more prospective residents due to lengthening life expectancies. In fact, the US would have had to expand its residential-services capacity by 28% to meet the demand as of two years ago. Clearly, housing has been an issue and it will only get worse.

Amidst all of this uncertainty, you still need to plan where your loved one will live. This might mean another form of trust. For example, a "Qualified Personal Residence Trust" (QPRT) could provide that you live in your home until your death, but that your family member with special needs would continute to live there (without disqualifying ownership). Great care is required in the preparation and execution of such an arrangement. Also, it may be possible to provide a home to shelter several persons with special needs. For example, several families could pool resources and maybe donate a home to a non-profit that, in turn, can convert the home into a new group home. The options are limited by your creativity, but careful to avoid elibility diqualifying mistakes.

Ultimately, the best plan will depend on your own unique family circumstances, as well as the current state and federal laws governing benefits and services. Unfortunately, according to a recent study by Arc, an advocacy group, only one-third of affected families actually have plans to control what happens when the caregiver grows old and evem after they are gone.

Bottom line: Remember to engage qualified legal counsel to help you navigate the regulatory minefields.

Reference: The Wall Street Journal Online (September 3, 2011) "Taking Care of Disabled Heirs"

Get on PACE to Avoid Long-Term Nursing Home Care

PACE’s goal is to cocoon the frail elderly, and disabled people over 55, in a web of services, thereby allowing most of them to live at home and make their own choices.

If you (or loved ones over age 55) are struggling with health issues, and yet trying to avoid long-term nursing home care, you may want to investigate a little-known program called PACE – Program for All-Inclusive Care of the Elderly. PACE is an optional benefit under both Medicare and Medicaid that focuses entirely on older people who are frail enough to meet their State’s standards for nursing home care. It features comprehensive medical and social services that can be provided at an adult day health center, home, and/or inpatient facilities. This comprehensive service package permits most patients to continue living at home while receiving services.

PACE may, however, be one of the best-kept secrets in the field of elder care. According to a recent article in the Providence (Rhode Island) Journal, PACE programs currently serve only about 22,000 people nationwide. Note: PACE is available only in states that have chosen to offer it under Medicaid.

PACE’s financing arrangement allows for a great deal of flexibility. Medicare and Medicaid both pay a set amount of money for each patient, instead of reimbursing for each service and specifying which services are covered. PACE, then, has the freedom to use the money in whatever way best serves the patients’ needs. This could include things that are not normally paid for by Medicare, such as an air conditioner for an asthma patient.

PACE teams include primary care physicians and nurses; physical, occupational and recreational therapists; social workers; personal care attendants; dietitians; and drivers.

You can read more about PACE in the Providence Journal article, and on the Medicare website. Also, access the PACE website for a listing of PACE organizations nationwide.

Also, be sure to visit our website for more information about elder law and long-term care.   

Special Needs Planning for Special Family Members

Do you have a family member with special needs? If yes, have you made special estate planning arrangements for their care after you are gone?

Planning your estate is an important step toward ensuring the financial security of your family when you are gone. This is especially true if you have a loved one who has special needs (mental and/or physical), since additional, specific planning may be necessary. If you are responsible for the welfare of someone with special needs, you may want to look more closely at establishing some type of Special Needs Trust.

According to the New York Times, “Interest in the (Special Needs) Trusts has been growing over the last decade, but despite the many advantages the trusts offer, some people still shy away from them.”

These special types of trusts allow you to supplement any government benefits to which your loved one may be entitled, without disqualifying them from receiving those benefits. This way, you can make the most of those benefits while still providing financial support for your loved one’s wellbeing.

You can learn more about Special Needs Estate Planning on our website. We also offer a free report, Special People…Special Plans. Be sure to register for that free download, you’ll find an abundance of information and resources for you and your loved one.

Planning for a Child with Special Needs

Planning for a loved one with special needs to be cared for after you're gone may involve some of the most important and emotional decisions you make.

A recent article on Forbes.com focused on planning for a child with special needs, especially when we are no longer there to organize and advocate on their behalf. Parents of children with special needs must make careful estate planning choices to coordinate all of the legal, financial, and special care needs of their children – both now and in the future. Comprehensive planning involves maximizing opportunities and minimizing risks.

As the Forbes writer pointed out, making arrangements for lifetime special needs care is different than ordinary estate planning. Special needs planning is a balancing act to provide for the loved one with special needs, as well as for other members of the family, while at the same time protecting eligibility for government benefits designed to help those with special needs:

“There are many intricacies in planning for the secure future of your family member with special needs. The process can certainly appear daunting at first, but the key is recognizing that you do need to plan, and the time to start is now.”

We work frequently with families facing these issues and offer a wealth of information about Special Needs Planning on our website, including our Free Report: Special People, Special Plans.  In this FREE REPORT you'll learn about the four essential steps in Special Needs Estate Planning, why Special Needs Trusts are important and how proper planning can maximize your resources for your loved one(s) with special needs, while preserving their eligibility for public benefits.

Planning for Special Needs

Parents need immediate estate planning to make sure their assets are properly disbursed when they die - and event that can happen at any time -  for the specialized care of their minor or adult children with special needs.

Coping with the physical, emotional or developmental disabilities of a child with special needs is part of the daily life of many parents.  Then, there is the added financial burden of providing care and security for all family members, both today and in the future. Parents are encouraged to call upon the trained expertise of financial and legal advisors today, rather than tomorrow.

Last week, The Times Herald ran an excellent brief article highlighting some of the important aspects of Special Needs Planning, to include:

• Retirement and Estate Planning for the parents.
• Reviewing all beneficiary designations for life insurance, qualified retirement plans or annuities to ensure any inherited assets will not disqualify your child with special needs from receiving vital federal benefits.
• Consideration of establishing a "Special Needs Trust" to accumulate, mange and disburse monies for any child with special needs.
• Protecting the financial security of other family members – including college funds for other children in the family.

If you are the parent of a child with special needs, or know someone who is, I encourage you to visit the Special Needs Practice Center on our website. There you will find an abundance of information and resources, including our Free Report: Special People…Special Plans.

Estate Blunders Abound

I recently came across article on morningstar.com, entitled "Avoid These Estate-Planning Pitfalls." Author Christine Benz interviewed a top Chicago estate-planning attorney named Susan Jones and they discussed the following estate-planning pitfalls: misunderstanding beneficiary designations on retirement plans; improper inheritance arrangements for family members with special needs or disabilities, adult children with substance abuse issues, spendthrift/financial mismanagement issues, and/or minor children; failure to leverage lifetime giving (wealth transfers); and failure to use retirement funds for charitable giving in place of after-tax assets. It is an excellent article that makes many important points. I certainly commend it to your reading. However, to round out their discussion, allow me to add a few points of my own.

Incapacity Planning: Everyone age 18 and older needs to appoint agents through proper "Durable Powers of Attorney" to make their own personal, health care and financial decisions in the event of their incapacity. What happens if you fail to do so? Can you say "Terri Schaivo"? You likely would not know her name had she executed Advance Medical Directives (i.e., a Health Care Treatment Directive/Living Will and a Durable Power of Attorney for Health care Decisions) prior to February 25, 1990.

Guardians/Back-Up Parents: In Kansas and Missouri, the only way parents can appoint the Guardians (Back-Up Parents) for their minor children is through a "Last Will and Testament". Period. Otherwise, a Probate Judge (who may not know you and your family) will decide for you. By the way, those signed, written instructions you left on a cocktail napkin in the airport watering hole before your last flight will not stand up in court, even if witnessed by two semi-sober fellow travellers and a notary public.

Death & Taxes: Death is a 100% certainty (according to every actuarial table I have consulted and ample anecdotal evidence). However, each of us has a choice when it comes to how our assets will pass to our favorite charities and to our loved ones upon death. Whether your estate passes through the local Probate Court (e.g., via a Last Will and Testament) or outside of Probate (e.g., via a fully-funded Revocable Living Trust), one fundamental key to a smooth transition is the organization of your legal, financial and personal documents. For access to practical, complimentary organizational tools you may download and share, visit our website. As far as Taxes, it is settled law that no taxpayer should pay more that his or her fair share. As I write this there is no Federal Estate Tax, but remember: No taxpayer's wallet is safe as long as there is a Congress and a President in Washington, D.C. (and don't forget their counterparts at the state and local levels, too!).

Inheritance Risks: One matter over which I do part company with attorney Susan Jones is how to protect an inheritance "from" and "for" loved ones. In the above referenced interview, she suggests using a "trust to parcel out the assets over a period of time" with "half the assets at 25, but leave the other half in trust until they're 35. If they make some mistakes at 25, then at least it's not their entire inheritance, it's only a part of their inheritance." While I agree, that certainly is better than an "outright" distribution in one fell swoop, once the toothpaste is out of the tube... it's tough to get it back inside. Accordingly, I prefer to keep the inheritance in a Long-Term Discretionary Trust with Supplemental Needs, Substance Abuse and Spendthrift Protection provisions for as long as permitted under the applicable state Rule Against Perpetuities. As Oliver Wendell Holmes put it: "Put not your trust in money, but put your money in trust." In my opinion, why not "keep" it there as long as permitted.

Procrastination Perils: Many adult American fully intend to get their estate plan completed "someday". However, as Zig Ziglar notes, "Someday Isle is not a dream vacation spot." Despite such good intentions, a recent survey conducted by lawyers.com found that "Only 35% of Americans now report having a will and only 21% have a trust arranged." Without a doubt, the #1 Estate Planning Pitfall is good, old-fashioned Procrastination. Why? Here are a couple observations for you to ponder: (1) Estate Planning confronts us with our own morbidity and mortality. Given the option to confront such cheery matters or to do "anything else", most of us would elect anything else; and (2) Estate Planning is not something we do for ourselves, but for the folks we love most, because it is a lot easier (and cheaper) for us to make proper plans today than it will be for them to clean up a big old mess later on.

Bottom line: The act of making proper estate plans is, when you get right down to it, an act of unselfish courage (much like purchasing enough life insurance to provide financial security for your loved ones in a world without you). As estate planning professionals, it is our pleasure and privilege to work with such uncommon, everyday heroes.

[Well, I really did not intend for this posting to run this many paragraphs, but there you have it. However, feel free to read the online version of our February 2010 estate-planning newsletter for more, to include an article about avoiding "Family Feuds" and family business succession problems.]

Special People... Special Plans

Have you heard the news? The federal government is out of money and so are most state governments. Certainly, that is not good news for anyone, especially those who are most vulnerable among us - Americans with special needs. Why, you ask?

If you have a family member with special needs, or know someone who does, then you know that many Americans with special needs rely, at least to some extent, on public assistance to help them with support for essentials like food, clothing, shelter and basic health care. "Public assistance" means "government money" and there is not much government money these days when government spending far exceeds tax revenue. Not a pretty picture.

So, what should parents (and grandparents) of a family member with special needs do to help ensure their future financial security, ESPECIALLY when the parents (and grandparents) are no longer available to provide assistance for them? The answer is "Special Needs Estate Planning". This unique form of estate planning focuses on providing for the special needs of mentally and/or physically challenged family members, even if public assistance is not available or is severely limited in the future.

The first step, however, is to get educated regarding your options. We have created a resource center on our website to help educate families facing these issues, as well as their professional advisors. To learn more about "Special Needs Estate Planning" click here. If you would like to register to download our free SPECIAL REPORT: "Special People... Special Plans", then click here.

In this SPECIAL REPORT you will learn about the four essential steps in Special Needs Estate Planning, why Special Needs Trusts are important and how proper planning can maximize your resources for your loved one(s) with special needs, while preserving their eligibility for public assistance. Do you have a basic plan in place to cover the essentials? Find out in this SPECIAL REPORT.

In addition to the resource center on our website, I also present workshops on this topic to interested groups and have a brochure available upon request. If you would be interested in knowing more, then contact us by phone or by email. We are here to help.