Everyone has an Estate Plan--- is it the correct plan?

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Estate Planning for Families

with Special Needs Children

NICKERSON LAW GROUP PC WWW.JULIANICKERSON.COM

Presented by Julia Nickerson, JD

Board Certified in Estate Planning and Probate Law by the Texas Board of Legal Specialization

Nickerson Law Group PC

Estate Planning and Asset Protection 3801 N. Capital of Texas Highway, Suite J220 Austin, TX 78746

512.461.1383

Everyone has an Estate

Plan---is it the correct plan?

If you haven’t created a plan of your own, the government has one for you

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Government’s plan . . .

Involves probate, Expensive, Time Consuming, Drama, Favors the government over special needs child’s inheritance, Relies on a judge to make decisions

Don’t Worry…

Children with special needs may never be able to compensate for your failure to plan

Guardianship of Estate needed if incapacitated adult receives inheritance outside of a trust (expensive and administrative hassle—don’t let this happen!)

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Commit to updating your plan

Make it a goal that the transition of your financial wealth will be as easy as possible for your family

Estate Planning isn’t the most

fun thing on your ‘to do’ list

Know going in that creating your plan may be ANNOYING, TIME CONSUMING AND EXPENSIVE

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Purpose of a will

Legal instrument signed with all the correct legal

formalities which states the wishes as to how assets will be transferred upon death

What is probate

Court process after someone dies to transfer decedent’s assets

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What is probate

Will is filed in the county in which decedent lived

Lawyer prepares legal paperwork: MUST have a lawyer! Executor attends court hearing

Can be simple or complex depending on how good the will is

A word about ‘Do It Yourself’

Wills

Probate attorneys love legalzoom, online do-it-yourself forms and people who don’t sign their wills in an estate planning law firm!

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Texas Estates Code

If your will is not prepared with necessities and signed with formalities, probate is not an easy process

Probate is public

File all documents. Most counties: online List of decedent’s assets becomes a court record

People in the future can find out who beneficiaries are, how much beneficiary received

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Probate takes some time

Assets are frozen while waiting to go through the probate process

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Will v. Living Trust

Will Living Trust

Probate No Probate

No incapacity planning Incapacity Planning

Maybe 2nd_spouse

protection

Confirms 2nd_{spouse protection}

Public Private

What about a special needs

trust though . . .

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SPECIAL NEEDS TRUST

AND WILL/LIVING TRUST

COMBO

Will or Living Trust

Special Needs Trust

SPECIAL NEEDS TRUSTS



Why do they work?



The different types

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What are they?

Hold assets for the benefit of a disabled person without disqualifying disabled person from SSI and Medicaid

Why people set them up

 In Texas, if someone qualifies for SSI, then they automatically qualify to received Medicaid

 SSI is means based

 If recipient makes too much money or owns too much, then they are disqualified

 Thus, SSI recipient wants to receive inheritance in a Special Needs Trust

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Its easy to be disqualified from

SSI

 Owning more than $2,000

 UTMA (once a child turns age 21 in Texas, UTMA accounts are considered a resource)

 A job earning more than $1,070 a month(gross)  Inheritance—from parents & grandparents

Big Mistake . . .

Disinherit special needs child only so they can qualify for SSI & Medicaid

The one person who needs an inheritance more than any other is a special needs child!

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Payback v. Non-Payback

You don’t want your inheritance going into a payback!

The right type . . .

No payback provisions required

Allows parents, grandparents, relatives and friends opportunity to preserve beneficiary’s SSI and to supplement those benefits during lifetime

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Public v. Private

 Private

 Prepared by your attorney

 You choose the terms and the trustee  Your trustee determines investments  Your trustee makes distributions  Pooled Trust

 Joined through ARC of Texas ($600 +1.75% annual)

529 ABLE

What are they?

 New savings vehicle

 A simple account for disabled people  Achieving a Better Life Act of 2014  You will hear about them!

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529 ABLE

Good things:

 Easy and no cost to set up

 A disabled, but mentally competent person can have more than $2,000 without losing eligibility for SSI or Medicaid.

 Post income tax contributions but grow tax free!

Should you get one?

 Beneficiary is in charge of the account

 Good for small amounts: if over $100k, disqualified!  Each beneficiary can only have one account

 Not good for inheritance  Works like a pay back trust

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SPECIAL NEEDS TRUST

AND WILL/LIVING TRUST

COMBO . . . Is this enough?

Special Needs Trust

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Beneficiary Designation

Need to make sure your beneficiary designation forms are filled out so they work in conjunction with your will or living trust and special needs trust

Don’t put minor or special

needs individual as beneficiary!

Disqualification problem!

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SPECIAL NEEDS TRUST,

WILL/LIVING TRUST and

BENEFICIARY DESIGNATION

COMBO

Special Needs Trust Life Insurance Retirement IRA or 401(k)

“Estate Plan” not just for the

wealthy

Counsel to get it right: you don’t know what you don’t know Trusted people to call with a question or emergency

A place to go when you need updates due to life changes or law changes

Will/Living Trust Financial Power of Attorney Special Needs Trust Medical Power of Attorney Beneficiary Designations Naming guardian of minor or

special needs children Title of assets

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How much does it cost?

Will Plan

Single $1,500-$3,000 Couple $2,500-$4,500

Living Trust Plan

Single $2,500-$4,000 Couple $3,500-$5,500

Prices reflect medical directives and powers of attorney, beneficiary designation instructions, coordination of account titling, organized estate planning binder, deed retitling.

Supplemental Needs Trust $1,500

To work with our office: expect to spend between

$4,000 to $5,000 for a single person $6,000 to $7,000 for a couple

How much does it cost?

A LOT Less than trying to fix it after a parent passes away!

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Special Needs Forum Events

2014-15 School Year

October 23, 2014 Financing Life Long Care November 20, 2014 How to Apply for SSI February 19, 2015 Estate Planning

March 26, 2015 How a Special Needs Trust Works April 16, 2015 Residential Choices