Medicare and Medicaid

Considering the accessibility and inundation of online services recently, many people have turned to the internet to prepare their estate planning documents. The cost and ease of using the service however does not mean a better value or a better plan. Usually, using this type of service will give you a false sense of security because your loved ones will only realize the failure of your planning after you have passed away.

Do your documents comply with local law?

Each State has it’s own set of laws regarding the process of executing legal documents and what is actually required within the document to make it valid. Generally the online service creating your estate planning documents does not take each individual jurisdiction’s requirements into consideration and a failure to properly execute the documents will result in their invalidity for administration purposes. This could mean that the money spent to procure these documents is wasted and instead the State laws where you live will determine who inherits under the intestacy (passing away without a Will) laws.

Does your planning minimize your taxes and expenses?

In addition to execution considerations, each State has specific laws regarding taxes including inheritance taxes and estate taxes and a failure to take these specific laws into consideration could cost your loved ones more in taxes than what you saved by preparing your own plan. Again, this type of misstep would only be discovered after you have passed away when it would be to late to change the documents and provide any kind of tax relief.

Do your documents accurately reflect your specific family circumstances?

Finally, the online process is "cookie cutter" and does not take into consideration your specific goals and needs with regard to your family. Meeting with an estate planning attorney will help to create a set of documents that are specific and tailored exactly to your needs and family situation. For example, do you have a child who is in the process of a divorce or bankruptcy or who is currently receiving state and/or federal benefits? Leaving money to that child without any further planning could result in that child’s inheritance ending up in the hands of an ex-spouse or creditor or could disqualify him from the state and/or federal benefits he is receiving. Without a consultation with an estate planning attorney, there is a much greater chance that your wishes for the inheritance left to your loved ones will not be carried out. There is no way an online service could contemplate your individual concerns and provide you with the necessary vehicles to protect your assets after you pass away.

Are there steps necessary beyond creating your documents?

Another issue to consider is what happens with your documents after you have signed them. Often, the creation of a revocable trust is just the beginning of the estate planning process, a trust must be "funded" by re-titling assets in the name of the trust in order to provide any benefit. An online service cannot properly advise you as to funding matters since it is necessary to know exactly where your assets are and how they are titled to complete this process.

There is a varying level of uncertainty that your planning will save time and money for your loved ones after you pass away when you use an online service. An estate planning attorney can assist with documents that are customized to your family’s specific situation while saving taxes and the expense and time associated with the probate process.

As developmental issues like autism, down syndrome and attention deficit disorder become more frequently diagnosed in their children, parents and guardians should be concerned about care for their children after they have passed away. In addition, many public benefits plans, which such children may be eligible for, are asset based. Many common estate planning vehicles, if used for these children, will result in the child’s disqualification from programs like Supplemental Security Income (SSI) , Medicaid and Social Security Disability Income (SSDI). The purpose of special needs planning is to create a fund of money to care for a child for his or her lifetime without the concern of disqualification.

There two types of estate planning vehicles, in the form of irrevocable trusts, that provide the proper format for special needs planning. One type of special needs trust is called a "third party" special needs trust because it is created by a person other than the special needs individual with a special set of instructions for use of the trust for the benefit of a special needs individual. The trust provisions state that a Trustee holds any assets inherited by the special needs individual in a separate trust and that those assets are only to be used to supplement the lifestyle of the special needs individual, but that such assets cannot be used to replace benefits which would otherwise be provided through public benefits. This basic structure and language is how the trust prevents the special needs individual from being disqualified from any state or federal disability benefits he or she is receiving. In addition, the trust sets forth the distribution of any remaining assets upon the death of the special needs individual.

The second type of special needs trust is a "first party" or "self-settled" special needs trust. This trust is funded by the special needs individual using his own assets. The most common situation where a self-settled special needs trust is needed is where the individual is receiving a settlement from a lawsuit usually stemming from the cause of his disability. A major difference between the third party and self-settled trusts is that when the disabled person passes away, any funds remaining in the self-settled trust must be used to "pay back" the state for any medicaid benefits provided to the individual during his or her lifetime. Another difference is that a self-settled trust beneficiary must be disabled whereas with a third party trust, the beneficiary does not necessarily have to be receiving benefits or considered disabled at the time the trust is created.

As with any estate plan, every family situation with a special needs child is unique and requires customized planning. Please contact our office to schedule an appointment to discuss your specific situation.