Americans the single largest minority group in the country. If you have a child or a loved one who is disabled, you are right to be concerned about how he or she will support him or herself if something were to happen to you. Due to medical advances, people with disabilities are living longer lives and may often outlive their parents or caregivers. However, setting aside money for a person with a disability is not a straight-forward task. The following are just a few examples of estate planning mistakes that well-meaning loved ones have made when considering a person with special needs.
Example 1: Unbeknownst to the rest of the family, Grandma, passes away, and leaves her special needs adult grandson a lump sum gift of $50,000.
While Grandma thought she was doing a good thing, her gift may hurt, not help, her grandson. What did Grandma do wrong? If the grandson relies on government aid, like SSI or Medicaid, he cannot have assets greater than $2,000. Therefore, he may need to spend down these assets or lose his benefits.
Example 2: Dad leaves his entire estate to his son and nothing to his special needs adult daughter, for fear of her losing her government benefits. Dad passes away.
In this example, Dad wanted to avoid the mistake that Grandma made, but he was most likely ill-advised. Yes, his daughter needs the benefits that provide her with food, housing, and medical insurance, but disinheriting her from his will is not the solution. The government benefits that special needs individuals receive while necessary will not cover all daughter’s expenses.
Example 3: In her will, Mom leaves everything she owns to her daughter. Mom does this with the intention that her daughter will use the funds to take care of her brother with special needs. Mom passes away.
This example is fraught with potential problems. One possible problem is that the daughter passes away at the same time (i.e., car accident) or shortly after Mom. Either situation could result in the money being inherited by someone who may or may not spend the money for brother’s needs. Or the money could be inherited by the brother anyway, causing the same problem as in Example 1. Another potential problem is that daughter could experience financial problems and be forced to file for bankruptcy protection, and the inheritance would be gobbled up by her creditors. Another possibility is that daughter could mismanage the funds, and her brother has inadequate funds to meet his needs.
These examples highlight why parents and loved ones with special needs persons in their life need special needs estate planning. A qualified estate planning attorney can review your options and may suggest that a special needs trust be incorporated into your estate plan.
If you want your child or other special loved one to be properly taken care of in the event you become seriously ill or pass away; then you need to speak with experienced Kansas City Estate Planning Attorneys. A seasoned Estate Planning Attorney can help you meet your loved one’s needs while avoiding common estate planning mistakes. The Estate Planning Attorneys at Hubbard & Kurtz, L.L.P. have helped countless individuals in both Kansas and Missouri. To find out how the attorneys at Hubbard & Kurtz, L.L.P. can help you, contact our office at (816) 472-4673 to schedule a consultation. Their future cannot wait, make an appointment to talk to one of our Estate Planning Attorneys today!
