We Answer Some Frequently Asked Questions About Estate Planning
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Will my child have to ‘pay back’ the government for benefits if I leave them money in a special needs trust?
Currently, there is no ‘payback provision’ for a third party special needs trust, meaning you can leave your child money through a special needs trust, and direct where any remaining money will go should your child pass away before their trust is exhausted. Most times, parents direct the remaining money to another child, or to a favorite charity. There is a payback provision for first party special needs trusts.
My child has a disability but is high functioning. Will they need a special needs trust?
For most of us, it’s hard to anticipate whether our child will ultimately need assistance in their adult life, making them eligible for government benefits. In these cases, you will want to have a candid conversation with your attorney and seek guidance on the best options for your child.
My friend said it’s better to just disinherit my child with special needs, so my child would not get disqualified from benefits. Is that best?
No. You can leave your child money without disqualifying them from benefits, if you leave it to them through a special needs trust.
What is the difference between a first party special needs trust and a third party special needs trust?
A first party special needs trust is established by the person with the disability, and funded using money already in the child’s own name (usually from a settlement or inheritance). A third party special needs trust uses funds from a third party, such as a parent, who leave the child money through the special needs trust, rather than to the child in their individual name. The major difference between these two trusts, other than the source of funds, is that the first party special needs trust has a ‘payback provision’, meaning any money left in that trust at the end of your child’s lifetime will need to payback the government for benefits received, whereas there is no payback provision for third party special needs trusts, and the creators of the trust can choose where remaining money should go at the end of their child’s lifetime.
My child received a settlement or inheritance already and now has money in his own name. What are my options?
Depending on the amount of assets your child has already received, you may need to spend down those assets to later qualify for government benefits, or your child may need to establish a first party special needs trusts. We can assist you with this process.
What is a Special Needs Trust?
A Special Needs Trust is a legal document that allows you (and anyone) to pass money to your child with special needs, in a way that would not disqualify your child from receiving government benefits, now, or in the future. Special needs planning is highly technical and involves a lot of moving parts. We can help you understand how you need to structure your family trust together with your child’s special needs trust, so your complete plan is connected andworks together seamlessly.
Can I transfer my international assets into the name of my U.S. revocable living trust?
Typically, no. But there are other options for addressing what happens to foreign assets when you pass away, depending on what country the assets are located in.
Can I transfer my rental properties into my revocable living trust?
Yes, you can, but for liability reasons, often the use of LLC’s may be a more attractive option, depending on whether you have a mortgage on your rental properties. You should talk with us about the best way to own your rental properties, so we can provide you your best options.
Can I transfer out-of-state properties into my revocable living trust?
Yes, you can. You will need to take title or change title on out of state properties in the name of your trust to eliminate the need of opening a probate wherever your real properties are located.
Can I prevent my spouse from giving my money away to a new spouse if I pass away?
Yes, if you set up a revocable living trust and structure if with certain protections and restrictions. For married couples owning joint assets, you can decide how to direct your half of the money when you pass away. Sometimes, spouses choose to leave their share of the money to the surviving spouse, outright and without any restrictions. This means that while the surviving spouse retains complete control and flexibility over the late spouse’s assets, the surviving spouse is also free to give the money away to a new spouse, or lose it to a creditor, predator, lawsuit, or divorce. Spouses do have the option to safeguard their share of the money upon their death, so it can support the surviving spouse, but also prevent his or her from giving it away to anyone other than the secondary beneficiaries they had agreed on (usually the children), or losing it to an ill-intentioned third party.