Wednesday, December 26, 2018

There's No Limit on Assets Going into a Special Needs Trust

There’s no limit on the amount of cash or assets that may be put into a trust for a child with “special needs”, but setting up and administering a special needs trust (SNT) is no simple matter due to state and federal laws, which dictate a host of rules about:
  • how SNTs are created
  • how SNTs are funded
  • how SNTs are run
  • how SNTs end
With special needs planning being one of our practice areas at Geyer Law, we take a lot of time explaining to parents and grandparents how these rules work.  The purpose of a special needs trust is to allow a disabled beneficiary to benefit from funds while not disqualifying that beneficiary from receiving governmental benefits.  Funds in a special needs trust can be used to provide the beneficiary with services and things  not covered by government benefits programs.  These might include:
  • medical expenses
  • dental expenses
  • equipment
  • special dietary needs
  • insurance
  • education
  • recreation  and vacations
  • gifts for others
  • funeral arrangements
Three specific things that a SNT should NOT do include:
  • pay cash to the beneficiary
  • pay for food
  • pay for shelter
The reasoning behind these “no-nos” is that is that special needs trusts are designed to supplement, not replace the support by government programs such as Medicaid and Supplemental Security Income (SSI).

Third party special needs trust are formed with money or property belonging to someone other than the beneficiary. Often, at Geyer Law, we help clients create special needs trusts as part of their estate plan for the purpose of providing for the needs of a disabled child after they, the parents, have died, but occasionally, the funding for the trust comes from a direct inheritance or even from a settlement from a personal injury lawsuit.  In those two instances, the trust must be set up as a self-settled special needs trust because the funds belong to the disabled beneficiary, and the trust must include a payback provision to pay the state for care provided during that individual’s lifetime.

No, there is no limit on assets going into a special needs trust.  On the other hand, there seems to be no limit on the number of federal and state laws that must be navigated to make sure the beneficiary’s government benefits remain in place. Our job as estate planning attorneys is to help our clients understand and navigate these laws so that they achieve peace of mind.

- by Rebecca W. Geyer

Wednesday, December 19, 2018

In Estate Planning Discussions, Philanthropy Should Get Personal

Philanthropy can be a differentiator,” the CEO of Exponent Philanthopy tells financial planners. “It can strengthen a client relationships over the long term and even extend to multiple generations.” Yet, in a U.S. Trust survey of 100 people with $3 million or more in investable assets, less than half reported being satisfied with the philanthropic discussions they’ve had with their advisors.

It’s not about asking clients “Are you philanthropic?” philanthropic leadership consultant Arlene Cogen says. So what are good questions to kick of a discussion about charitable giving?
  • What do you want to be remembered for?
  • How do you define success?
  • What is something meaningful that happened to you that was made possible by the money you have?
At Geyer Law, we agree that the estate planshould reflect the legacy the client wishes to leave.
Yes, there are certainly both tax benefits and estate planning benefits to be gleaned through charitable giving, but we agree with Financial Planning author Kerri Anne Renzulli, who advises financial planners that their clients would prefer talking first about the more personal aspects and motivations for giving.
With the motivating factors having been clarified, advisors can move to the “how tos”. As just one option, recognizing certain tax law changes set to take effect in 2019, our attorneys at Geyer Law have been coordinating with clients’ tax advisors along with representatives of their favorite charities, to set up donor-advised funds.

A well-crafted estate plan is by nature a very personal affair. It provides for loved ones, while at the same time protecting them from unnecessary hassles and delays. Most important, it answers the question for your survivors - What do you want to be remembered for? 

- by Rebecca W. Geyer

Wednesday, December 12, 2018

Using Horse Sense in Indiana Estate Planning

“The Indiana equine industry is an important component of the Indiana economy, a report from Purdue Extension pointed out, serving a variety of needs, including:
  • racing
  • showing (second largest use in Indiana)
  • recreation (largest use in Indiana)
  • work counts the horse population in our state at approximately 140,000. And, “while it may be a dream for you to be able to watch horses graze peacefully outside of your house’s back window, the website cautions, “a lot more goes into it than simply picking out a horse ranch for sale and buying it.”

A lot more also goes into estate planning when it comes to horse ownership. “What happens to your horse in the time between your death and probate of your will?”, attorney Karen L. Perch asks. “Will your wishes regarding care of your horse be enforceable?”.

Since 2005, Indiana residents have had the option of creating a trust for the benefit of pets. The purpose of an equine trust is to make sure that after its owner’s death, a horse continues to enjoy the quality of care to which it is accustomed. One important specialty aspect of our work at Geyer Law is dedicated to helping clients provide for equine pets.

Any equine trust will include several elements:
  • The animal is placed in a revocable (or irrevocable) living trust.
  • A sum of money to support the animal is assigned to the trust.
  • Specific instructions concerning the care of the horse are included in the trust document, including vet visits, and how the horse is to boarded, groomed, and maintained.
  • Instructions specify who is to receive money left over after the animal has died.
  • A person is named to own and take care of the pet in the event of your disability or death.
  • Instructions specify how the beneficiary will take physical possession of the pet.
“Everyone with a horse should have a horse trust in addition to the other estate planning documents,” one Massachusetts estate planning attorney colleague asserts. At Geyer Law, we agree. With our empathetic and compassionate approach, we understand that horse owners feel the need to provide for the ongoing care of pets who have brought pleasure and joy to their lives.

 - by Ronnie of the Rebecca W. Geyer blog team

Wednesday, December 5, 2018

Big Age Difference Between Spouses Demands Extra Estate Planning Initiatives

“Sizable age gaps (between spouses) can create special challenges from a financial and retirement planning standpoint,Christine Benz points out in Morningstar. Why?
  1. They may need to plan for different retirement dates.
  2. They need to plan for different life expectancies, which affects portfolio withdrawal strategies and Social Security filings..
 When it comes to planning their retirement portfolio, Benz advises, “couples with big age gaps should craft their plans to accommodate the partner with the longest life expectancy.”  A big age differential would also mean the couple will need to be significantly more conservative with their initial withdrawal amount to ensure that their assets last throughout the younger spouse’s longer time horizon, she adds.

Separating assets:
There may be situations where each partner would want to separately manage and draw from their own pools of assets, Benz explains, which is particularly common if spouses each have children from previous marriages.

Converting the younger spouse’s IRA to a Roth:
When a spouse has a longer time horizon, that increases the likelihood that the long-term tax benefits of the Roth will offset the taxes paid on conversion.

Delaying Social Security filing:
If the older partner had the higher income over his/her lifetime, but the lifetime benefits for the surviving spouse.

Long-term care planning:
Long term care insurance is particularly important for spouses with a  big age difference. Single individuals can rely on Medicaid to shoulder their long term care costs if they exhaust their financial resources, Benz notes, but “long term care expenses for an older spouse can have disastrous effects for the financial well-being of the younger partner.”

Time planning:
If the older spouse retires, while the younger one keeps working, hard feelings can develop.  It’s important for the couple to set clear expectations for their new roles and for how their time – and their money – will be spent, Kerri Anne Renzulli points out in Financial Planning magazine.

Estate planning:
As estate planning and elder law attorneys at Geyer Law, we know the special challenges faced by couples with a big age gap. Working as a team with our clients’ tax, insurance, and financial planning advisors, we help couples contend with all those moving parts. And while one primary goal of estate planning is the protection and passing on of wealth, we take a lifetime planning approach, helping couples with a big age gap deal with all the moving parts of their combined situation.

 - by Rebecca W. Geyer