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Wednesday, July 22, 2015

Legacy Assurance Plan Article: Communication with Loved Ones Can Help Contribute to Your Estate Plan's Success

Summary: To best ensure that your estate plan functions as intended, and will not suffer from confusion, conflict or misunderstandings on the part of your loved ones, you should have a conversation with your loved ones about your plan. In many cases, these conversations may provide essential knowledge to your loved ones and allow them to better carry out your objectives than if they were acting solely on the information contained in your estate planning documents.      

People may have many reasons for procrastinating the creation of an estate plan. Even after you've overcome all of these reasons and taken this important step, there's another thing you need to do: sit down with your loved ones to discuss the planning decisions you've made.

Some people worry that telling their loved ones about the detailed contents of their estate plans might create hard feelings. For example, they may fear that an unequal distribution between their children might lead to friction among those siblings. Alternately, others may fear that telling a loved one that he/she will receive a large inheritance may sap that person's motivation to work hard to earn his/her own money.

Nevertheless, it is essential to have this "family meeting" about your plan. Sitting down and having an open, honest conversation with your family will help remove elements of surprise about the terms of your plan and lower the possibility of a loved one making an emotional, hasty decision to launch a legal challenge in a moment of shock and disappointment after you've passed.

Additionally, this communication is particularly necessary if you are going to ask one or more of your loved ones to serve as agents in some capacity within your plan. Whether you have chosen your loved one to be an attorney-in-fact under one of your power of attorney documents, your agent under your living will, the executor of your will or the successor trustee of your living trust, that loved one needs to know that you have made this choice (ideally, you've already discussed this part of your plan and he/she has agreed to serve) and needs to know where all of your important papers so that he/she can do the tasks necessary to fulfill the objectives you've asked him/her to do.

By having these conversations well in advance, you allow your loved ones to learn about your plan in a calm and non-stressful situation. The conversation will allow you and your loved ones to have a dialogue, and for you to explain why you've chosen to leave the legacy that you have. These conversations can help your family avoid misunderstandings, confusion and strife after you've passed, which will help your executor and/or successor trustee carry out your wishes in a smoother, more efficient manner.

In many cases, these conversations can also give your loved ones vital insights into your goals, objectives and motivations and, for those loved ones selected to serve fiduciary roles (such as successor trustees or estate executors,) these communications can help these fiduciaries more effectively carry out your wishes than if they were operating based solely on what was written in your estate planning documents.

This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at legacy Assurance Plan


Wednesday, July 1, 2015

Legacy Assurance Plan Article: Using Trusts as Part of Your Needs-Based Benefit Planning

Summary: Needs-based government benefits are often a vital lifeline of income for thos who receive them. If you have a loved one who receives benefits, you must take great care if you wish to provide for that person in your estate plan. A special needs trust may serve as an integral tool to leave an inheritance to your loved one without cutting him/her off from essential benefits. 

For many families, needs-based benefit programs are an indispensable source of income necessary for making ends meet. Whether that benefit comes from Medicaid, SSI, VA or another program, the loss of that income would be devastating for most who receive it. That's why it is imperative that you use the greatest of care in conducting your estate planning to make certain that the choices you make do not result in a loved one's unintended disqualification for benefits.

Many needs-based government benefit program look at two factors in assessing whether a person is (or remains) eligible to receive a check through that program. The recipient must have a small enough income and a small enough pool of total assets to be considered in need of receiving benefits through that program. An asset or income stream is considered to belong to that person if he/she has direct control over it.

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These rules can be very confining. If you have a loved one who receives benefits, you may be unable to leave them a legacy in your will. If you do, then when you die, that inheritance is distributed directly and completely to them. This likely will result in that person have too much wealth in terms of total assets to remain eligible for benefits. What's more, you may not even be able to purchase even simple niceties for that person without disqualifying them from continuing to obtain those benefits. This disqualification can be devastating not only because of the lost income, but also because disqualification may, in some cases, cut that person off from the doctors or group homes upon which he/she has come to rely.

But there is a way around this outcome. The rules of eligibility do not count assets owned by some trusts against the recipient when it comes to determining if your loved one still qualifies for benefits. The way it works is this: you establish what's called a "special needs" or "supplemental needs" trust for your loved one. This trust must be an irrevocable trust. It must also be owned by someone other than your loved one, and the trustee of the trust must be someone other than your loved one.




This avoids the disqualification pitfall because, as an irrevocable trust not owned or managed by the benefits recipient, the rules do not consider your loved one to "control" the trust's assets, and those assets therefore do not count against him/her. You simply fund the trust with the money or assets you would have otherwise distributed directly to that person. Working with an experienced professional is a must in completing this type of planning, because the rules regarding benefits eligibility are often very intricate and even a small deviation may result in disqualification.

This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com.