Watch Vincent J. Russo Legal Correspondent on Catholic Faith Network’s CFN Live! Vincent appeared on…
One of the most frustrating things as a special needs planning attorney is creating an estate plan for parents who tell me they need to disinherit their special needs children because they are receiving some kind of government benefits. While I appreciate that the client is looking out for their loved one, in reality, they may be unnecessarily disinheriting them.
Sue has two sons, Michael and James. James is disabled and still living with Sue. She explained all the wonderful things that James does to maintain some independence despite his extreme needs and mentioned he is currently on Social Security Disability and Medicaid. Sue’s other son Michael is married and has children.
Concerns About Disinheriting
While creating a trust for Sue’s assets, she informed me that she did not want to leave anything to James because she worried about creating problems for his Medicaid coverage. She explained that she had already spoken with Michael about it. Sue wants to leave everything to Michael, who promised he would take care of James. I explained to Sue that I have the following concerns:
- What if Michael has to file for bankruptcy?
- What if Michael gets divorced?
- What if Michael dies before James?
- What if Michael gets sued?
In all these scenarios, Sue is leaving James with no guarantee that he will be cared for. If the assets are held in Michael’s name and not a trust, it is subject to Michael’s life events, and there is no assurance that he will actually use the funds for James, despite his best intentions.
As a special needs attorney, I recommended a much more practical solution for Sue to establish a supplemental needs trust for James’s share of the inheritance. This guarantees that James’s share is always there for his needs without affecting his government benefits like Medicaid. Sue can have Michael act as the Trustee of that trust and then name alternates. By making this change, Sue is protecting James from life events that may happen to Michael, and that gives Sue peace of mind.
When implementing an estate plan, it is important to consult with and retain experienced attorneys. The knowledgeable and compassionate special needs attorneys at Russo Law Group, P.C., can provide professional services and share how to secure the future of special needs children. Contact us today! We invite you to visit our comprehensive website and take advantage of our free seminars and webinars to learn more about how Russo Law Group, P.C. may assist with special needs planning and offer peace of mind.