How To Divide Your Assets Among Children: What's Really "Fair"?

“That’s not fair!” What parent of youngsters hasn't heard that countless times? It's a complaint that doesn't necessarily vanish when children are adults. In fact, depending on how they feel they've been treated in your estate plan, your kids may be complaining about unfairness even after you are gone, to the detriment of their relationship with one another.

 

Is equal always fair? How can you avoid playing favorites in your estate plan? The most obvious approach is to split everything equally. But suppose your children's circumstances are vastly different? In those cases, treating your children "equally" in your estate plan may not necessarily be the same as treating them "fairly." Here are just a few situations when dividing everything equally may not be the best solution:

• Scenario 1: One child is far more successful financially. Example: Child A is making a killing on Wall Street as an investment banker. Child B, just as hardworking, has made teaching high school English his life’s work. If you split your assets “equally,” B may feel slighted, and miss out on money he could legitimately put to good use. If you give the financier less, he may feel rejected and punished for being successful, despite the fact that he does not need the money.

• Scenario 2: Child A is fiscally responsible. Child B makes bad financial decisions and seems always to be in dire financial straits. B may be immature, or may have a drug of mental health issue. You know that if A gets his inheritance as a lump sum up front, he'll manage it wisely. But you hesitate to give B his inheritance all at once, and would prefer to put it in trust so that the trustee has oversight over how it is used. Will B understand why he is being treated differently? Maybe. Will he resent his sibling who is getting his inheritance up front? Quite possibly.

• Scenario 3: Child A is healthy, but Child B has a disability or lifelong medical issues. Depending on B’s circumstances, you may want to leave him more than you leave A. If you expect B will need federal benefits in the future, you may want to put B’s funds in a special needs trust. Despite the unequal treatment, the need for this arrangement is likely to be understood by both children. But that does not eliminate the issue of who gets to manage child B's trust. Will your healthy child want to be his brother's or sister's keeper, or consider it a burden?

• Scenario 4: Child A has worked since the teenage years, put himself through school and never asked you for a penny. On the other hand, you gave Child B $200,000 for college tuition and room and board, and you recently gave him $50,000 as a down payment for a home. Splitting your assets equally at death between the two of them might be great for B, but is it really "fair"? Instead of equal distributions, you may want to consider the gifts you’ve made to B over the years as a kind of early inheritance, and deduct that amount from what you are leaving B when you pass away. 

• Scenario 5: Over the years Child A has been caring for you, taking you to your doctors' appointments, checking up on you by phone and in person, helping you with your paperwork and with other everyday matters. Child B is no busier than A and lives just as close, but rarely lifts a finger to help. You don't know if A resents B, but you wouldn't be surprised if he does. Is an equal division of your assets between the two really fair, you wonder? How will this play out between the two if you reward A for his efforts by giving him more? 

What are your alternatives? When they were little, all you had to do was split the cookie equally, and problem solved. It's not that easy now. 

How to distribute assets to children with different needs and histories while trying to be even-handed can be a vexing problem. Some parents, unable to find a “perfect” solution, will continuously delay making a plan or never create one, letting the State of Florida's intestacy laws determine who gets what. That will result in each child getting an equal share - but doesn't solve the potential problem of one child feeling resentful in relation to siblings.

Our job as your Florida estate planning lawyers is to help you formulate a reasonable plan that you can live with (and die in peace with), and that your kids are likely to find "fair." Obviously, there is no one solution suitable for every family. We will sit down with you to explore in detail your finances, family dynamics, family history, and your goals. 

 
If you decide not to split everything equally, it is usually a good idea to tell your children about the decision in advance and explain the reasoning behind your decision, so they are not blindsided later on. You should also make brief mention of your reasons in your estate plan. This can go a long way towards fostering a good relationship among your children after your passing - and could potentially even prevent a lawsuit against your estate from an angry child who feels "That's not fair!"

Florida ABLE Accounts now available

Florida's ABLE program is now operational. Effective July 1 (with certain restrictions which I discuss below), an individual with a qualifying disability may preserve his/her eligibility for means-tested federal government benefits while retaining more than $2,000 in assets. Assets must be held in an ABLE account, a special type of tax-advantaged savings account authorized under the Achieving a Better Life Experience Act of 2014 (which I discussed previously here and here). A person who has established an ABLE account and who depends on vital government benefits such as Medicaid, SSI or SSDI will no longer be forced to remain impoverished to qualify for benefits, resulting in greater independence and better quality of life. Individuals who are able to join the workforce will be able to do so without fear of losing benefits. 

An ABLE account is a savings vehicle modeled on college savings plans. The disabled individual (or his/her parent, attorney in fact or other authorized individual) may open, contribute to and manage the account. The disabled individual is the owner and beneficiary. Growth is tax-free, and up to $100,000 of the account is considered a "non-countable resource" for Florida Medicaid eligibility purposes. Funds may be withdrawn tax-free for qualified disability expenses such as employment training, assistive technologies, transportation, special therapies, medical expenses, housing, education, etc. 

Visit ABLE United to learn more about eligibility requirements, how to open an account, types of investments available and more. Investment options may be chosen from pre-selected portfolios, or a custom portfolio may be put together from the options offered. 

As I noted above, there are some significant program restrictions:

• The individual must have developed the qualifying disability by his/her 26th birthday. (Advocates are hopeful that the age limit can be raised or eliminated in the future.)

• If the account owner has been receiving Medicaid benefits, the state must be paid back from any funds remaining in the account when the account-holder passes away. 

• No more than $14,000 per year may be contributed by any individual to the account. 

• Once the account reaches $418,000, no additional contributions can be made.

For these and additional reasons, families and individuals may still find a Special Needs Trust or a Pooled Trust a better choice, either in lieu of or in addition to an ABLE account. Unlike the ABLE account, there is no upper limit on contributions or total amount accumulated in a Special Needs Trust or Pooled Trust. 

Contact The Karp Law Firm if you wish to explore which option is best for your or your loved one's circumstances.

Planning for your adult child with autism

April has arrived and with it, Autism Awareness Month. The Centers for Disease Control reports that the incidence of autism among school-age children is now one in 68, (up from 1 in 150 in the year 2000).

Educational support for children on the autism spectrum has greatly improved over the past decades. With early detection and interventions, many children will blossom into fully functioning, independent adults. Others will not, and will require lifetime support. Unfortunately, once a child turns 18, support systems for housing, vocational training and the like are frequently inadequate and difficult to obtain. Therefore, while concerned parents have ample reason to hope for the best, careful planning is prudent. The sooner a thoughtful plan for the child's future is put in place, the more peace of mind parents will have, knowing they are ready for whatever unfolds. 

For disabled adults unable to independently support themselves, there are two main sources of governmental assistance: Social Security Income and Medicaid. Both are means-tested programs. In order to qualify, an individual may not have assets in excess of $2,000. Thus, the central question for my clients who have children or grandchildren  diagnosed with autism is, how to help their loved one financially without providing money that would jeopardize their loved one's continuing eligibility for essential (albeit meager) government benefits?

One option that strikes many parents as logical is to leave money to another child or relative, with the expectation that that the monies will be made available for the disabled child. However, that is almost always a bad idea. Even if the individual you entrust with the funds is devoted to his disabled relative and completely trustworthy, the money could be imperiled if he/she divorces or is sued.

For most parents and grandparents, the best solution to this dilemma is to establish a Special Needs Trust (also known as a Supplemental Needs Trust), with the disabled child as the beneficiary. The trust's funds are not considered the child's available assets and therefore, will not impact negatively on the child's eligibility for government benefits. The funds may then be used for expenses over and above the basics for which the government pays. 

You don't need to wait until you actually have the money to fund the trust. The trust can be the beneficiary of retirement funds or life insurance. Once the legal structure is set up, anyone can contribute to it.

Choosing a trustee for the special needs trust can be a challenge. Although a sibling may seem the most logical choice, remember that administering a special needs trust requires a fair level of sophistication about finances and government benefits. It can be time-consuming, too. Parents often forget that even well-meaning siblings devoted to a brother or sister will eventually have their own lives and careers, and thus, administering a trust can be quite burdensome. A better option may be to appoint a third party trustee, such as a bank, accountant or brokerage firm. The sibling could then be named co-trustee and provide oversight.

If your funds are limited, you might want to look into a pooled trust. A pooled trust is a kind of communal special needs trust run by a non-profit organization. Fees to set it up are generally lower, but there is a downside: unlike a third-party special needs trust, any monies left over in a pooled trust when the beneficiary passes away will generally revert to the state, and cannot be distributed to your family. Read more about pooled trusts in Florida.

Read more about autism, including legal and financial consideration in planning, at Autism Speaks.

Supreme Court upholds Obamacare: Good news for parents of special needs children

On June 25 the Supreme Court rejected the last judicial challenge to the Affordable Care Act. Parents of special needs children are breathing a sigh of relief, because the law prevents insurance companies from denying coverage to their children based on pre-existing conditions. 

With "Obamacare" the law of the land, parents with sufficient assets to provide private health insurance for their child may now find that a Special Needs Trust is no longer their best planning tool. A Special Needs Trust can preserve a disabled child's access to Medicare health benefits, among other federal benefits. However, federal law severely restricts how the trust assets may be used. Just giving the beneficiary pocket money may imperil the individual's access to governmental benefits.

If you are a parent who can afford to furnish your child with private health insurance and don't need to preserve his/her access to Medicare, it may make sense to do away with the Special Needs Trust. Instead, you may want to consider leaving assets for your child in a discretionary trust, which gives you broader latitude to determine how the beneficiary may use the money. Or, if your child is capable of managing his/her own financial affairs, you may even wish to leave funds to him/her directly.

One caveat to the above: There is still talk about Congress taking future action to eviscerate the Affordable Care Act. If we have a president in 2016 who agrees with that agenda, special needs children could still be in peril. Please contact The Karp Law Firm to discuss your options.

ABLE Act allows people with disabilities to save and still keep government benefits

The recently passed ABLE Act ("Achieving a Better Life Experience") amends section 529 of the IRS code, allowing people with disabilities to save for the future and remain eligible for means-tested federal benefits. Prior to passage, special needs individuals who accumulated over $2,000 in assets would lost vital benefits such as Medicaid and SSI. Under the new ABLE act, these people will no longer be forced to keep themselves effectively impoverished.

The law allows for the establishment of tax-advantaged savings accounts for the benefit of a disabled individual. The funds in an ABLE account, just like the funds in a Special Needs Trust, may be used only for those services and items not provided by the government, for example, special therapies, housing, transportation, job training, assistive technologies, etc. Any number of people may contribute to the account, but a disabled individual may have only one such account. The accounts do have certain limitations, though:

• Any amount in excess of $100,000 in the account may cause a reduction in government benefits.

• No more than $14,000 may be deposited into the account annually.

• The beneficiary's disability must have developed before the beneficiary reached the age of 26.

• Upon the death of the beneficiary, the funds in the account must be used to repay Medicaid.

Given its limitations, the ABLE account can serve as an adjunct to, rather than a substitute, for a special needs trust or pooled trust. 

The accounts will become available when each state works out its administrative apparatus to comply with the new law.

Good news for military families with a disabled child: Survivor Benefit Plan funds may now be left to Special Needs Trust

Congress has given military families and their disabled children an early holiday gift. Under the recently passed 2015 National Defense Authorization Act, servicemen and women now can name a Special Needs Trust as beneficiary of their Survivor Benefit Plan.

As I noted in my July 2013 post, until now military personnel could defer up to 55% of their retirement benefits and leave it to a surviving spouse or child. However, the benefits had to be left directly to the individual. This presented a vexing problem if the benefits were left to a special needs child: the very funds intended to assist with the child's long-term needs would disqualify the child from receiving essential supports through means-tested programs such as Social Security Disability and Medicaid.

Now, a provision in the 2015 Defense Authorization Act allows a deceased person's Survivor Benefits Plan to be put into a Special Needs Trust (also known as a Supplemental Needs Trust) for a disabled child. The funds in a properly drafted Special Needs Trusts are not counted when determining an individual's eligibility for means-tested programs, and thus will not jeopardize the child's government benefits. Well done, Congress.

You can read the text of the legislation here - it is very long, and you will need to scroll to page 264 for the section that concerns the new provision.

Autism lifetime costs in the millions

A study published in the Journal of the American Medical Association -Pediatrics estimates that the cost of lifetime support for a person with autism is in the millions of dollars. If autism does not involve an intellectual disability, the cost is $1.4 million; with intellectual involvement, the cost balloons to $2.4 million. In childhood, the main cost is special education and therapies, and lost parental income. When the disabled child enters adulthood, non-employment and residential care are significant factors.The study's researchers conclude that there is a need for early and more effective interventions. Also, solutions must be found that would allow parents of autistic children to more easily remain in the workforce. Read a summary of the study. 

Our attorneys understand the legal and financial challenges faced by parents of children with special needs. Our law firm can assist you. Read about estate planning for a child with special needs.

Advantages of setting up your child's Special Needs Trust right now

When a special needs child turns 18, any monies in his/her name will be considered a countable asset when determining eligibility for SSI, Medicaid, and other government benefits. Most parents understand the importance of setting up a Special Needs Trust (SNT) to protect the child's eligibility for these critical government benefits, and to enhance the child's lifestyle and welfare. However, many parents fail to understand that it is advantageous to set up an SNT as soon as possible. It is not necessary to wait to establish the SNT until the child turns 18, or even until funds are available to place in the trust. 

Once the parent has set up the SNT, the parents can name the trust as one (or sole) death beneficiary of his/her life insurance policy and other assets, such as a pension. Of course, parents can also transfer funds into the trust while they are alive, naming themselves as trustees, and naming successor trustees for the point at which they can no longer serve due to death or incapacity.

Chances are grandparents and other family members would also like to contribute to the child's present and future welfare and maintenance. Rather than each relative having to set up his/her own SNT for the child, the one SNT the parent creates can be the one legal depository to which everyone can contribute. Just like the parents, relatives can either transfer funds into the SNT while they are alive, or upon their death by naming the SNT a beneficiary in their will or trust.

A Special Needs Trust is an extraordinarily complicated instrument. You want the best for your disabled loved one, so this is an area in which "penny wise, pound foolish" can be truly disastrous. Contact our Florida estate planning/elder law attorneys for guidance.

Proposed law would enable veterans to leave funds to disabled child in special needs trust

Shouldn't military veterans have the same estate planning options as their civilian counterparts? Unfortunately, as I posted here last year, in one important area they do not. 

Under current law, a military retiree can put aside up to 55% of his monthly pension to be distributed in the form of a stipend to his/her survivors when he passes away. A veteran may leave the benefits to his/her disabled child, but must leave it directly to the child. The funds may not be left in trust for the child. The effective result: The child will likely lose essential government benefits that are means-tested, such as Social  Security disability and Medicaid. In most cases, those benefits are what will keep a disabled child from falling into poverty. 

On the other hand, non-military personnel enjoy the right to leave their benefits in a special needs trust for the benefit of their disabled child. The funds in the special needs trust may be used to provide supplemental services to the child such as transportation, equipment, special therapies, etc. Since the funds are in a special needs trust and not directly accessed by the beneficiary, the child does not lose his/her eligibility for government benefits. Read more about Special Needs Trusts.

The Disabled Military Child Protection Act has been introduced in Congress to right this wrong and enable a veteran to put the funds in a special needs trust to benefit a disabled child. The House version is H.R.2249; the Senate version is  S.1076. The legislation has widespread support from many organizations, and you can add your support by contacting your representatives in Congress: 

Find your representative in the U.S. House of Representatives. 

Find your senator in the U.S. Senate.

Bill would remove barriers preventing mentally competent disabled individual from establishing special needs trust

New federal legislation, if passed, will eliminate the barrier that currently prevents disabled but mentally competent people from setting up their own Special Needs Trusts (aka Supplemental Needs Trusts). 

Right now, under Title XIX of the Social Security Act, only a parent, grandparent, guardian, or the court may set up a first-party special needs trust for a disabled individual, even if the individual is an adult and mentally competent. This requirement imposes an unnecessary burden on a disabled individual whose parents and grandparents may no longer be alive or who are unwilling or unable to assist. It also creates unnecessary additional work for our already overburdened court system. Says National Academy of Elder Law Attorneys President Gregory French of the current law: "It is wasteful, unfair, and wrong for the laws to prohibit individuals who have mental capacity from creating their own special needs trust just because they have a physical disability."

House Bill 2123, the Special Needs Trust Fairness Act of 2013 introduced by U.S. Rep.Glenn Thompson (R-Pennsylvania) and US.Rep.Frank Pallone (D-New Jersey), would amend the current law to enable a mentally competent beneficiary to independently create and fund his/her own special needs trust. 

A Special Needs Trust is an instrument that holds funds for a disabled beneficiary. Funds are not directly available to the beneficiary, but are released to the beneficiary for services that do not replace, but rather supplement, the services provided through Medicaid or Supplemental Security Income (SSI). This permits the beneficiary to to remain below the required maximum asset level, retaining eligibility for vital public benefits. 

 The bill has not yet been voted on in the House. You can track its progress here. 

Your child with autism: Legal planning to secure his future

April is National Autism Awareness month.  A 2011-2012 survey by the Centers for Disease Control estimates that 1 in 50 schoolchildren falls somewhere on the spectrum. If your child is affected with autism and is unlikely to be able to manage his own finances and affairs when he reaches adulthood, you should seek the advice of an experienced elder law attorney. Your elder law attorney - ignore the word "elder" for a moment - will help you set up the financial and legal framework that will secure your child's future and give you, his siblings and the rest of the family peace of mind.

The core of that legal framework is a Special Needs Trust. Here's how it works: You place property (cash, stocks, bonds, real estate, etc.) in the trust. A trustee you select will manage the trust for the benefit of the child. The child can have no ownership interest in the assets. The trust can be funded during your lifetime, or at your death. Because the money is held in the trust, not directly in your child's name, the funds will not be used by the government when it asses your child's eligibility for benefits, such as Medicaid or SSI. The trust provisions must state that the money is to be spent only for supplemental services and items, NOT on services and items provided by government benefits. For example, trust funds could be used to provide your child with a personal attendant, specialized home furnishings or equipment, supplemental therapies, transportation, etc.

Grandparents and other family members may also contribute to the trust, and you should make it clear to well-meaning relatives that contributing to the trust is the ONLY way to assist financially, since giving money directly to the child could jeopardize his government benefits.

Some parents create the special needs trust prior to their own demise, and prior to their child attaining the age of majority, naming themselves as trustees and selecting one or more of the child's siblings to serve as successor trustee(s) of the trust. Setting up the trust in advance thus gives grandparents and other family members a place to park funds for the child's benefit now or upon their own death. Frequently grandparents would like to have the ability to leave funds to a special needs grandchild, but if there is no special needs trust in place, they will simply "cut out" that grandchild.

If the trust is properly drafted and administered, the state and the federal government will have no claim to the assets and upon the death of the beneficiary, and the remaining trust assets can then be distributed to persons or entities of your choice, be it surviving siblings, a charity, etc.

The above is a third-party trust, and is the most frequently used legal tool to protect a child with special needs, but there is  another possibility: a pooled trust. A pooled trust is set up and run by various nonprofit organizations. As the name suggests, monies from various families are put into one general fund administered by the organization. Pooled trusts are always operated by a nonprofit entity. The advantages of a pooled trust may include:

• Reduced administrative fees.
• A better rate of return.
• Access to professional financial management.
• Access to professional legal management familiar with the rules governing disbursement of funds, thus ensuring your loved one's access to public benefits is not jeopardized.
• If there are limited funds, creating an individual Special Needs Trust can be economically impractical, given the costs of setting it up and maintaining it. A pooled trust can be a cost-effective way to set aside funds for a special needs individual.

However, a pooled trust also has a big disadvantage: When the beneficiary passes away, any funds remaining in the pooled trust will not be returned to the family, but instead will be used to reimburse the government for what it has expended on the beneficiary. 

For more information on the Karp Law Firm's Special Needs Trust, click here.

Sassoon's final cut: late hairstylist cut son from will

In my Feb. 18 post I noted that Florida law does not require you to leave anything to an adult child in your will. From time to time I will meet with a client who wishes to disinherit a child. It is a decision generally accompanied by considerable anguish, often following an extended period of estrangement and discord. This is the decision that was apparently made by Vidal Sassoon, the avante-garde hairstylist and business mogul. Sassoon died of leukemia in California last May. The Daily Mail now reports that Sassoon's will cuts out David Sassoon, one of his three children. The will was written two months before Sassoon's May 2012 death. David Sassoon, 41, will get none of his father's reported $152 million fortune. Sassoon had noted in his memoir that David was a "mischievous" child, but the details of their relationship are not known.  Sassoon has two other children.

Will there be an estate challenge? On what basis? How will the disinheritance impact the relationship of David and his two siblings? I suspect we have not heard the last of this story.

If you are considering disinheriting an adult child or leaving him/her a significantly lesser amount than the child likely feels entitled to, I urge you to  consult an experienced estate planning attorney and think, re-think and think again. If you decide to disinherit, your attorney will advise you on the best way to proceed. Just as there are smarter methods to pass assets to your heirs, so there are smarter ways to cut out an heir. For example, contrary to popular belief, it is not advisable to leave $1 to the child you wish to disinherit; that can open the door wider to a possible estate challenge and delay the administration and closure of your estate.

Many people mistakenly think that adding an in terrorem clause to their will or trust will defuse potential estate challenges if a child is disgruntled with the size of his inheritance or cut out entirely. The in terrorem clause states that the person challenging the estate loses the right to receive anything that he would have otherwise received under the instrument. However, Florida does not recognize the validity of the in terrorem clause.

If you need help with these matters, contact The Karp Law Firm lawyers for assistance.  

What can an elder law attorney do for you?

Could you use help from a Florida Elder Law Attorney? To answer that question, we should probably start with an even more basic question: What the heck is elder law, anyway? Since May is National Elder Law Month, this is a fitting time to fill you in. Although elder law is one of the fastest growing areas of law, it is a relatively new field. Most people don’t grasp what kind of help an elder law attorney provides - perhaps because elder law encompasses such a large number of related issues.

In Florida, only Florida Bar Certified Elder Law Attorneys can hold themselves out as elder law specialists. Florida has been certifying lawyers in this field since June 1, 1998, and I was in the initial group to earn the credential. While many of Florida's 93,000 licensed lawyers refer to themselves as elder law attorneys, the truth is, less than 100 Florida attorneys are credentialed Florida Bar certified elder law specialists. Certification requires certain levels of experience, positive peer review, and continuing education. To maintain the credential, re-certification is required every five years.

As you can surmise, a certified elder law attorney helps people and their families with the legal challenges we face as we age. Although the majority of my clients are retirees, near-retirees, Baby Boomers, the very elderly, and the disabled, I deal with the entire life spectrum. My job is nothing if not diverse!

According to The National Academy of Elder Law Attorneys, elder law attorneys assist people in one or more of these areas of life:

• Estate Planning and Probate
• Estate and Gift Tax Planning
• Guardianship/Conservatorship
• Medicaid
• Medicare
• Entitlement Programs
• Retirement Benefits
• Age Discrimination
• Elder Abuse/Neglect
• Housing
• Long Term Care Financing
• Medical Decision Making
• Disability Planning
• Insurance

To flesh out these cut-and-dried categories, here are the stories of some of the clients I've assisted in recent months. I have changed names and simplified the stories for clarity. Do you recognize yourself in any of them? 

• “Hal,” 74, is a widower with grown children from his first marriage. He is about to remarry and wants to make sure his new wife can continue to live in his home should he predecease her. Also, he wants his own kids to ultimately inherit the assets he and his late wife accumulated. Hal and I discussed his obligations to his new wife under Florida law, the necessity of a pre-nuptial or post-nuptial agreement, considered several planning options, and came up with a plan that accomplishes all his goals.

• “Dolores” is 80. Her husband “Frank” had a devastating stroke last year.Following several months in a rehabilitation facility with Medicare paying, Frank is now in a long-term care facility. Dolores is paying the enormous cost out-of-pocket and has been told the only way she can avoid going broke is to divorce Frank, a heartbreaking prospect. She was relieved when I told her she did not have to consider that option, and that there are100% legal and above-board techniques that we can use to hasten Frank’s Florida Medicaid eligibility. She will be able to preserve a significant percentage of her hard-earned nest egg, even though Frank is already residing in a nursing home.

• “Alexandra” came to see me about creating a health care power of attorney for herself. A freshly minted adult at age 18 and looking forward to college in the fall, she has realized (with a nudge from her parents) that they are no longer entitled to access her medical records, get information from her doctors, or deal with her health insurance carrier. She asked me to create a health care power of attorney appointing her folks in that capacity, so that they can step in and deal with any health emergencies that may arise. (It helped that Alexandra's parents paid for the legal work!) As you can see, an elder law attorney does not deal solely with the elderly.

• “Marilyn’s” daughter "Vivian" is 42, bipolar, and has never been able to hold a job or manage money. Marilyn's story is a good example of how elder law attorneys help with issues that go beyond traditional estate planning. Vivian is currently receiving SSI. Marilyn wants to leave something to her daughter but fears doing so will cut off Vivian's SSI benefits. She's also certain Vivian would mismanage her inheritance. We decided to create a Special Needs Trust that will accomplish Marilyn’s goal of providing for Vivian while protecting her government benefits. 

• “Phil and Jennifer” are 34 and 30 respectively, with 3 children under the age of 6. They’ve been putting off doing a will – they are young, healthy adults – but they know they need to name a guardian for their children and make plans for managing the children’s monies if both of them should die.We discussed all this, as well as the beneficiary designations on their brokerage and bank accounts and IRAs. We are creating a Will for them that protects the children and provides Phil and Jennifer with peace of mind. To round out their plan and cover all eventualities, we are also preparing Durable Powers of Attorney, Health Care Powers of Attorney and Living Wills for Phil and Jennifer.

• “Greg and Susan’s” daughter is married to someone they have never liked. Her marriage has been rocky, and Greg and Susan won't be shocked if it ends in divorce sooner rather than later.  They want to make sure their son-in-law can't get his hands on the money they intend to leave their daughter and grandson. I suggested establishing a trust for the benefit of their daughter and their grandchild that also prevents their son-in-law from accessing the funds. Greg and Susan are thrilled with the plan and say they feel like a huge burden has been lifted from their shoulders.

• “Thomas” asks me for advice about the best way to pay for his twin granddaughters’ college tuition. We discussed Thomas’ assets and the tax advantages and disadvantages of different methods of financing the grandchildren’s educations: leaving monies in trust; creating a custodial account; making direct gifts to the children’s parents; and 529 plans. Thomas is thinking it over and I’ll be seeing him again in June to finalize his plan. 

• “Monica” phoned my office from Colorado this week. Her mother is 88 and lives alone in West Palm Beach. She is adamant about remaining in Florida, despite Monica's pleas for her to relocate to Colorado. Although her mother seems lucid most of the time, Monica believes  she can no longer manage on her own, and fears for her safety. Monica is the agent-in-fact under her mother's Florida Durable Power of Attorney, and wonders what legal leverage she has to assist her mother. Monica will fly into town next week to discuss the situation with me. In addition to discussing technical legal issues, I'll give Monica advice on possible living options for her mother, such as independent or assisted living; point her to local agencies that may be of assistance; and give her names of several geriatric care managers who can monitor her mother's welfare first-hand.

• “Bill and Donna” are a married couple in their 60s.  They got into the stock market in the early days of the tech boom, and did very well. So well that under today's laws, their estate is subject to federal estate tax. We discussed how we can put more money into the hands of their children with several estate-tax minimizing strategies, gifting programs, and possibly a Charitable Remainder Trust and a Life Insurance Trust.

• “Herb” and his sister “Dawn” have arrived in Florida to be with their father, Norm, following the death of their mother. Mother's Will in hand, they all came in to see me. Obviously at loose ends, they were unsure of what to do next, and ended up deciding to let my office handle the probate and other administrative details. I advised Norm that given his new circumstances, he needs to update his own estate planning documents. We will address that issue, as well as possible Medicaid planning and V.A. planning for Norm's potential long-term care needs, at a future appointment.

If you recognize yourself in any of the above scenarios, a visit to an Elder Law Attorney’s office is in order. Contact our Florida Elder Law/Estate Planning Attorneys in Boynton Beach, Palm Beach Gardens or Port. St. Lucie for your consultation.

New bill would help special needs children of military retirees

If it becomes law, a new bill introduced in the U.S. House of Representatives will provide greater financial security to special needs children of retired military personnel. House Bill 4329, The Disabled Military Child Protection Act, would allow military retirees who participate in the Survivor Benefit Plan to ultimately place these funds in a Special Needs Trust for their child's benefit. The bill was introduced last month by Congressman Jim Moran (D-Virginia),

Under the existing system, a military retiree can put aside up to 55% of his monthly pension to be distributed in the form of a stipend to his survivors when he passes away. However, that stipend could disqualify a a child from receiving Social Security Disability and/or Medicaid benefits, since the government counts the stipend as income. Under the proposed law, military retirees participating in the Survivor Benefit Plan could have their retirement benefits transferred upon death to a Special Needs Trust for the benefit of a disabled child. Since the Special Needs Trust pays only for the beneficiary's supplemental care, the child's other government benefits would not be jeopardized.

Read more about The Disabled Military Child Protection Act. 

Read more about Special Needs Trusts.

Autism and the Affordable Care Act

Yesterday the Supreme Court wrapped up arguments on the constitutionality of the Affordable Care Act. The nation awaits the court's decision, likely to be handed down in June. The stakes are high for everyone, but especially for the many families whose children are disabled. These families have already benefited from the law's requirement that insurance companies may not deny health coverage to a child based on the child's "pre-existing condition."  Obviously, striking down the Affordable Care Act would pull the financial rug out from under these families.

   

Ironically, today the Centers for Disease Control released its latest statistics on autism. The findings: The incidence of autism is now one in 88 children -  TWICE the 2002 estimate. More children will be diagnosed with autism this year than with AIDS, diabetes and cancer combined. This sobering statistic follows the recent release of a University of Pennsylvania study showing that the typical mother of an autistic child earns 35% less than the mother of a child with any other kind of disability, and 56% less than one whose child  has no discernible disabilities.  The report attributes the gap to the fragmentation of support services for children with autism, requiring parents to not only provide direct care to the child, but to spend enormous amount of time and energy that must be spent navigating medical, educational and other bureaucracies.

One bright spot for Florida families who do not have private health insurance: This week the U.S. District Court ruled that Medicaid must provide behavioral therapy for children with autism. The Florida Agency for Health Care Administration had argued that it was not obliged to cover this service because it is an experimental therapy. Commercial insurance carriers are already required to pay for this type of therapy.  

Of course, specialized and sophisticated estate planning is required for children with significant disabilities. This ensures that the financial resources and proper legal framework  are there for the child now, and into the future.  A Special Needs Trust should be the legal linchpin of your planning. Find out more about Special Needs Trusts.

ABLE would provide help to parents of special needs children

Caring for a child with a serious disability has its rewards, and of course, its emotional and financial challenges. A bill introduced in Congress last year aims to help ease the financial  concerns. The Achieving a Better Life Experience Act, or ABLE for short, would allow families to establish tax-exempt accounts for the benefit of their youngsters, similar to the 529 accounts parents establish to save for a child's college education. The accounts would cover disability-related expenses such as transportation, housing, education, therapies and assistive technologies that help a special needs individual to live independently.  The accounts would not supplant government assistance such as Medicaid and SSI but simply supplement it. 

To learn more about ABLE, and to sign a petition urging your elected officials to support it, click here. 

A great day at the Palm Beach County Special Olympics

The Karp Law Firm attorneys and staff pitched in at the District-Wide Palm Beach County Special Olympics on March 3. Special Olympians, youngsters as well as adults, participated in several sporting events on the campus of John I. Leonard High School in Lake Worth. The "Karp Kommandos" supervised bocce ball. On hand were Attorney Joseph Karp, Attorney Genny Bernstein, Estate Planning Paralegals Khristina Iwasz and Margaret Sajiun, and Office Coordinator Liz Lebron.

Click here for information on estate planning for loved ones with special needs. 

Photos of the Special Olympics event:

Liz Lebron makes sure everyone gets a turn.

L-R Attorney Genny Bernstein, Estate Planning Paralegal Margaret Sajiun, Office Coordinator Liz Lebron, Estate Planning Paralegal Khristina Iwasz, Attorney Joseph Karp

Joseph Karp (center) and Liz Lebron at the bocce event

L-R Margaret Sajiun and Khristina Iwasz with Special Olympians

Thoughts on Steve Jobs' passing

Steve Jobs died last week at age 56. With a net worth estimated at close to $7 billion, I figure his heirs don't need to worry much about estate tax. Even with a 35% tax on anything over $5 million, his family will be set for life.

Jobs was married and had three children with his wife, and another child born out of wedlock with another woman prior to his marriage. But generally speaking, the public didn't know much about Jobs' personal life. Even the details of his medical condition were not widely known. Given that he was an intensely private person, it's likely that he made arrangements to keep his estate out of the California probate court.

Like Jobs, none of know what the future holds. All Jobs' wealth, power and creativity could not prevent his early death.. The message I take from his life - and death -  is to enjoy today, hope for the best, and protect your family and your finances along the way. RIP, Mr. Jobs.

Staff helps young bowlers at Special Olympics

Karp Law Firm staffers assisted young bowlers at the Special Olympics Bowling Classic on Sept. 10.  Youngsters with varying disabilities were cheered on by "Karp's Kommandos," who also helped them bowl and made sure everyone got their turn. The event was sponsored by Special Olympics of Palm Beach County, Florida and held at the Strike Zone in Lake Worth. Special thanks to our own Khristina Iwasz, who organized our participation. Volunteers included Attorney Joseph Karp and his son, Jonathan: Attorney Genny Bernstein; Estate Planning Paralegals Khristina Iwasz and Vicki Kulig; Estate Administration Paralegal Gail Brown and husband John; Assistant Case Manager Jenny Ramirez; Firm Administrator Audrey Yeager; and Office Coordinator Liz Lebron.

For more on how our law firm can help parents plan for a secure future for their special needs children, click here.

Jenny Ramirez and friend

Joseph Karp making sure everyone gets their turn

Genny Bernstein and Khristina Iwasz at the bowling lanes with youngsters

Liz Lebron cheers on her group

Take Care of Your Loved One with Special Needs... Now!

This article was posted originally by the Academy of Special Needs Planners on 2/2/11. Although this is a true story that occurs in New Jersey, it could as easily happen in Florida!

Have you been thinking of meeting with a special needs planner to put a plan in place for a child or loved one but you just haven't made the call? Or have you already met with an attorney and not finalized your plan, even though you swore you would get to it yesterday? If either of these examples sounds like you, then a recent case from New Jersey should make you think twice about waiting to finalize that estate plan that you have been putting off.

Margaret Flood had four children, including two daughters with special needs who received government benefits. Concerned about leaving an inheritance directly to the daughters with special needs, and thus cause them to lose their benefits, Ms. Flood consulted with an attorney about the possibility of creating a special needs trusts for them. However, Ms. Flood did not follow up with her attorney after the initial meeting, and time passed.

Tragically, Ms. Flood passed away before finalizing her plan. Because she died without a will of any kind, Ms. Flood's property became subject to New Jersey's intestacy law. An intestacy law is a state statute that dictates who will receive your property if you die without a will (some property, like retirement accounts and jointly owned property, passes outside of this system). Under New Jersey's law, Ms. Flood's $480,000 estate passed in equal shares directly to all four children, including the two daughters who could not receive funds without compromising their vital government benefits.

The administrator of Ms. Flood's estate attempted to undo the damage by filing an action in court seeking to create and fund two special needs trusts to hold the inheritances for Ms. Flood's daughters with special needs. The administrator argued that it was Ms. Flood's intent to create the trusts, and since her intent was clear, the court should put her probable plan into effect and preserve her daughters' benefits. This legal theory is sometimes used when a will or a trust is unclear and needs to be reformed after the fact in order for the instrument to function as its creator intended. In this case, the court allowed the administrator to establish the special needs trusts even though Ms. Flood had no will at all.

But Ms. Flood's heirs would run out of luck when the case was appealed to the Appellate Division of the Superior Court of New Jersey. That court reversed the lower court's decision and prevented the funds from flowing into the special needs trusts for Ms. Flood's daughters. The appellate court ruled that the trial court overstepped its bounds by bypassing the intestacy laws, and it further ruled that under New Jersey law, there was no option -- Ms. Flood's daughters must receive their inheritance directly, regardless of the effect that might have on their government benefits.

Ms. Flood tried to do the right thing and simply ran out of time to put a plan in action. Don't let this happen to you; if you are thinking about forming a special needs plan, there is no time like the present. Contact The Special Needs Planners of the Karp Law Firm for assistance.