As life unfolds, our loved ones change and have evolving needs; and, new loved ones are born or join our family through marriage and adoption. When creating your estate plan, consider your beneficiaries’ potential needs.
Special Needs and Governmental Assistance
At some point, one or more of your beneficiaries may be receiving governmental assistance because of a special need. It may be Grandma Allison in a nursing home or Grandson Jeremy with autism. You don’t need to disinherit family members with special needs; instead you can leave them an inheritance, in trust with special needs provisions, so your assets are used to supplement governmental assistance, not replace it. If you give a special needs beneficiary an outright gift or inheritance, you will likely disqualify him or her from governmental assistance which means that your assets go down the drain.
Alcoholism, Drug Addiction, Gambling, and Other Addictions
Assets going to a beneficiary with an addiction are likely to be squandered and may actually hurt your loved one. You can protect these beneficiaries by including provisions for an independent trustee to administer the trust; assets are used to pay for your beneficiaries’ needs but not given directly to them. For example, doctor and rehabilitation bills are paid directly to the medical provider; rent is paid directly to the landlord; and, utilities are paid directly to the appropriate companies. Assets are not put directly into the hands of an addicted beneficiary.
Divorce, Bankruptcy, and Lawsuits
You can protect the assets you give or pass at your death from your beneficiaries’ divorcing spouses, bankruptcies, and lawsuits. To do so, create a trust with spendthrift provisions. This keeps the assets available for your beneficiaries, but not the beneficiaries’ creditors.
If your current estate plan doesn’t take into consideration your beneficiaries’ potential needs, consult with an experienced and qualified estate planning attorney.