Articles Posted in Planning for Disability

At Ettinger Law Firm, we are fond of saying “trusts create order out of chaos” — for three major reasons:

First, as noted in previous columns, an ever-increasing number of Americans suffer a period of legal disability later in life.  Without your own private plan for disability, consisting of a trust and a “prescription strength” elder law power of attorney, you run the risk of a state appointed legal guardian.  Do you want the people you choose to be in charge in the event of your disability, with the freedom to act immediately in your best interests, or do you want the state to appoint someone who will require court permission to protect your assets and your family — which permission is sometimes denied. A guardianship proceeding is expensive, time-consuming and stressful — in other words, chaotic. Trusts create an orderly process whereby your appointed trustees consult with your elder law attorney and are free to act immediately without court interference.

Secondly, trusts avoid probate court proceedings on death whereby wills, even though supervised by an attorney, with two witnesses and a notary, must first be proven to be valid in court proceedings.  The client has no control over probate court proceedings – the time they will take or the amount they will cost.  Typically, it takes months and, not unusually, one to two years or more.  Meantime, property cannot be sold and assets cannot be reached to pay bills.  In other words, chaos.  With a trust, the trustee may act immediately upon death, list property for sale and access investments and bank accounts.

 

    1. Makes sure your estate goes to whom you want, when you want, the way you want. Most estate plans leave the assets to the next generation outright (i.e., in their hands) in equal shares. However, with a little bit of thought on your part, and some guidance from an experienced elder law estate planning attorney, you may dramatically improve the way your estate is ultimately distributed. For example, you may delay large bequests until children or grandchildren are older or give it to them in stages so that they have the chance to make some mistakes with the money without jeopardizing the whole inheritance. Similarly, you may place conditions on receipt of money such as “only upon graduation with a bachelor’s degree” or “only to be used to purchase an annuity to provide a lifetime income for the beneficiary”. The possibilities, of course, are endless.
    1. Allows you to give back to the people and places that have helped you. Again, most people leave their assets to their children in equal shares. Yet time and again we see children who really don’t need the money or, unfortunately, don’t deserve it. Even when they do need and deserve it, there is a place for remembering those people and institutions who have helped make you what you are today.
    1. It proves stewardship by showing your family that you cared enough to plan for them. When you put time, thought and effort into planning your affairs it sends a powerful message to your loved ones. You are saying that you handled the matter with care and diligence. This will reflect itself in how the money is received, invested and spent by your heirs.

In the recent case of Clark v. Clark, two brothers initiated legal action against another brother concerning the other brother’s ability to function as trustee of a trust as the result of a brain injury. The men’s mother established a testamentary trust previously that held family business and appointed the third brother as trustee. The will stated that if anything happened to the third brother, the other two brothers would be designated as co-trustees. The two brothers claimed that due to the brain injury, the third brother could no longer function in this role. As a result, the two brothers thought to be named successor co-trustees under the will. 

While the court also considered a nuanced injunction issue, the court ultimately relied on a plain text reading to determine that due to the third brother’s brain injury, the brother had stopped or was not capable of functioning as a trustee and that the other two brothers were appointed successor co-trustees. 

What Makes Succession Planning Critical

Families throughout New York who have children with disabilities are frequently questioning how to best provide for their children’s needs–both now and in the future. It can be a complex issue, because relatives must balance their ability to provide help via their own private resources with available support through Medicaid and Supplemental Security Income (SSI). SSI is designed to help those with certain disabilities with basic needs and is funded through general tax revenues, not Social Security taxes.

The government programs hinge on the specific income available to those with disabilities, and so relatives who provide support may unintentionally lead to disqualification of their loved one from Medicaid or lower SSI payments.

Special Needs Trusts in New York

Financial Planning News shared a helpful article earlier this month about a difficult situation faced by many New York families: Planning for retirement with a special needs child. If you have a child with various special needs, those circumstances must obviously be built into both an estate plan and a retirement plan.

On the estate planning side, it is important to balance the child’s need for access to public support services and the effect an inheritance may have on that eligibility. In these situations a special needs trust is often critical to meet the needs.

When it comes to retirement planning, the article shares how it is essential to fully understand the future costs for advanced medical care, physical therapy, behavioral therapy, and much more. There is a mistaken assumption that these costs only exist when the child is growing. In reality, even many adult children with special disabilities have significant needs that parents must work into their long-term plans.

The Huffington Post recently reported on the aftermath of the tragic death of former boxing champion Hector “Macho” Camacho. The boxer had only recently retired from the sport after nearly three decades in the ring against some of the sports biggest stars. In his 50s, the boxer lived in Puerta Rico following his 2010 retirement. Tragically, earlier this month he was gunned down outside of a bar on the island. Emergecy responders were able to stablize the fighter, but not before he was declared brain dead by medical professionals at a nearby hosptial. What ensued was a bit of family feuding over the star’s end-of-life wishes–a testament to all of us of the importance of making these wishes well-known before tragedy strikes.

Camacho’s family disagreed on whether or not to remove life support to the boxer. Reports indicate that there was mass confusion and infighting. However, in the end, the extra life support measures were removed and the boxer passed away. The disagreement between the family members in the final few hours, however, may very well affect the family dynamic for years to come.

New York Health Care Proxy

The New York Times published an interesting story last week discussing the “psychic toll” paid by families working to raise a child with special needs. The article attempts to delve into some of the more nuanced issues related to conducting special needs planning to take care of the finances and long-term care issues for these loved ones. The basic tasks–often including things like creating a special needs trust–are not necessarily confusing or complex. However, that doesn’t mean the planning is easy. That is because there are a plethora of mental and emotional challenges that go into this work.

The author explains, for example, that simply deciding on the appropriate living situation for a family member with special needs can be emotionally and spiritually taxing, regardless of the financial issues tied into the decision. Should the child live at home for as long as possible? Is it better for him or her to move into a group home? What happens if the child lives at home but is then forced to move out into unfamiliar territory after the parents pass away? These and many similar questions must be discussed thoroughly to ensure long-term financial plans best matcht the family’s wishes.

On top of that, the story explains how working through this issues must be done in such as way as to ensure other family dynamics are kept intact. Stress and disagreement associated with these challenges has led to many divorces or other family feuds. It is helpful to be aware of these risks and make decisions in a manner that does not destroy important relationships. One frightening and oft-repeated statistic is that 75% of couples with a special needs child ultimately get divorced. Many have challenged that accuracy of that statistic, but it is accepted that various strains are placed on a relationship when raising a child with these challenges. Couples must undoubtedly be proactive in their planning efforts so that the situation is as controlled as possible. Leaving things up to chance and simply taking every new crisis fresh is a recipe for relationship drama.

by Peter Lennington, Esq.

This post by American Association of Trust, Elder Law and Estate member, attorney Peter Lennington, examines the unique planning requirements of families with children, grandchildren or other family members with special needs including the establishment of Special Needs Trusts.

COSTLY MISTAKE #1: Disinheriting the child.

by Michael Ettinger, Esq.elderlaw.JPG

“Elder Law Estate Planning” is a niche area of the law which combines the features of elder law and estate planning that pertain most to the needs of the middle class.

Estate planning was originally for the wealthy few. Middle class families did not consider themselves as having “estates” to plan. During the Reagan years (1980-1988), a great economic expansion occurred, raising the asset level of the middle class into the realm of estate planning. With middle class people suddenly exposed to “estate taxes”, the need arose for estate planning, to reduce or eliminate those taxes. A few years later, in 1991, the American Association of Retired Persons (AARP) published “A Consumer Report on Probate” which concluded that probate was a process to be avoided, in all but the most exceptional cases. This marked the beginning of the end of traditional will planning and started the “living trust revolution”. AARP recommended that families start using trusts rather than wills, to avoid probate and save their beneficiaries tens of thousands of dollars in the estate settlement process.

By Michael Ettinger, Esq.

me consult.jpgReflecting on this comment made to us by a client recently, the following thoughts came to mind. What do we actually do at Ettinger Law Firm?

All we do is save our clients a lot of time, many thousands of dollars and the not so petty annoyances they might otherwise have in settling their family’s affairs on the death of a loved one. We help them reduce or eliminate taxes on the estate so that more passes down to help their children and grandchildren. These days, we also protect the inheritances our clients leave so that it is not lost should the heirs get sued or divorced and, better yet, we assure them that their wishes will carry on for decades after they are gone, by passing the inheritance on to their grandchildren one day. Should disability occur, our clients have had their assets protected years earlier through asset protection planning. For many who come to us in their hour of need, without preparation, we take on the burden of helping them through the Medicaid maze and help them save and protect much more of their assets than they ever thought possible.

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