Estate planning is one of the best ways to provide for your family when you are gone. When you have a disabled child, it’s even more important to have a plan in place before you actually need it since they will likely need ongoing assistance. While many people set up trusts to distribute funds to their children, your disabled child might benefit from a specific type of trust known as a special needs trust (SNT). The following guide goes over what you need to know about creating an SNT for a disabled child.

What Is a Special Needs Trust?

A special needs trust is a legal document that outlines your wishes for the distribution of funds from your estate to support your disabled child. Since many public benefits require the recipient to qualify as having low income or few assets, you don’t want to leave a large inheritance directly to your disabled child because those assets might disqualify them from receiving government benefits. An SNT protects them financially by distributing funds in a way that does not interfere with any government assistance the child might be eligible to receive. 

Funds in an SNT generally pay for expenses that would not otherwise be covered by public benefits, including:

• Education
• Clothing
• Food
• Vacations and travel
• Hobbies
• Entertainment
• Support services (e.g., a personal care attendant; Meals on Wheels, etc.)
• Certain therapies and out-of-pocket medical care

Special needs trust application with clipboard and notepad.

How to Set up a Special Needs Trust

There are several important steps to take when setting up an SNT.

Choose a Trustee

First, you want to designate a trustee who will be responsible for managing the assets on your child’s behalf. Some important considerations when choosing a trustee include that the person is trustworthy, is willing to serve in this capacity, is young and healthy enough to help your child long-term, has a good relationship with your child, and has the appropriate knowledge and ability to manage finances and comply with legal requirements.

Draft the Trust

Consult with an experienced estate planning attorney who specializes in special needs trusts to help you draft your document. Working with a professional will ensure that your trust is in compliance with relevant state and federal laws and will not interfere with government benefits like Medicaid or Supplemental Security Income. They can also assist you in assessing the future needs of your child and in clearly defining how the funds should be used.

Fund the Trust

After you have created the SNT, you can decide what assets you would like to fund it with, including cash, real estate, investments (including stocks and bonds), and other assets. On your life insurance policy, you can list the SNT as the beneficiary, so assets will transfer to the trust rather than directly to your child. You can also set up the fund so that other people, such as family members, can contribute as well. 

Want to Set Up a Special Needs Trust? We Can Help!

Establishing a special needs trust is a thoughtful step you can take to help safeguard the financial future of your special needs child. Our estate planning group at Lonich Patton Ehrlich Policastri has significant expertise in preparing estate planning documents, including SNTs. Contact us today to schedule your free consultation where we can discuss your unique situation and go over your options with you. 

Disclaimer: this article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter. 

Starting a new chapter as newlyweds is exciting, but it also comes with new responsibilities, especially when it comes to financial planning. One crucial yet often overlooked aspect is estate planning. 

Creating an estate plan not only protects your assets but also ensures that your spouse is taken care of should the unexpected happen. Here are some essential estate planning tips for newlyweds to help safeguard your financial future.

1. Create or Update Your Will

A will is an essential estate planning document that outlines how your assets will be allocated after you pass away. As newlyweds, you may want to leave your assets to your spouse or other family members, but without a will, state laws will determine how your estate is divided, which may not align with your wishes.

Steps to Take

• Draft a new will: If you’ve never created a will before, now is the time to do so.
• Update existing wills: If you already have a will, update it to reflect your new marital status and any joint assets you may have acquired.
• Name an executor: Choose someone you trust to ensure your wishes are carried out as outlined in your will.

2. Designate Beneficiaries

Your will doesn’t govern all of your assets. Some accounts, such as life insurance policies and retirement accounts (401(k), IRA), pass directly to the beneficiaries named on those accounts. As newlyweds, it’s essential to update these designations to ensure your spouse is the primary beneficiary.

Key Accounts to Update

• Life insurance policies
• Retirement accounts
• Pension plans
• Payable-on-death (POD) or transfer-on-death (TOD) bank accounts

By keeping these beneficiary designations current, you avoid potential delays or disputes in asset distribution.

3. Establish Joint Ownership of Assets

Many newlyweds combine their finances, and joint ownership of assets can simplify estate planning. Consider holding major assets like homes, vehicles, and bank accounts in joint tenancy with rights of survivorship. This ensures that if one spouse passes away, the other automatically inherits the asset without it going through probate.

Benefits of Joint Ownership

Assets held jointly can transfer directly to the surviving spouse without the lengthy probate process. It also makes managing and accessing your shared assets much easier during your marriage.

4. Set Up a Power of Attorney

A financial power of attorney allows your spouse (or another trusted person) to manage your financial affairs if you become incapacitated. Without this in place, your spouse may face legal hurdles to access your finances or pay bills on your behalf.

Medical Power of Attorney

Similarly, a medical power of attorney gives your spouse the authority to make healthcare decisions if you’re unable to do so. It ensures that your spouse can make critical decisions about your care during emergencies.

5. Consider a Living Trust

A living trust allows you to transfer assets to a trustee to manage for your benefit during your lifetime and for your beneficiaries after your death. It offers more control over asset distribution and can avoid the probate process altogether. Newlyweds with significant assets or complex financial situations might find that a living trust adds a layer of protection and flexibility.

Just Married? Start Estate Planning With LPEP!

Estate planning might not be the most romantic task on your newlywed to-do list, but it’s one of the most important. At LPEP, our experienced estate planning attorneys specialize in the preparation of estate planning documents, such as wills, revocable living trusts, and more.

Financial fitness for newlyweds isn’t just about managing day-to-day expenses; it’s about securing your future together. Contact LPEP to set up your free consultation. 

Disclaimer: this article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter. 

Have you heard about the “Great Wealth Transfer?” It’s predicted that over the next couple of decades, $84 trillion will pass from the Baby Boomer generation to Gen X and millennials. This is an opportunity to build generational wealth that will provide financial security for years to come. Unfortunately, approximately 67% of American adults don’t have any estate plan. So, what will happen to all that money when they die?

California’s Intestate Succession Laws

First and foremost, California is a community property state. If you die without a will and are survived by your spouse, they will get 100% of the marital assets. In addition, California recognizes registered domestic partners who have the same inheritance rights as a spouse.

Separate assets acquired before the marriage or an inheritance are treated differently. The intestate succession laws break down as follows if you have:

• A spouse, no children, parents are deceased, and no siblings: Spouse inherits everything.
• A spouse and one child: The assets are split evenly between the two
• A spouse and more than one child: The spouse receives ⅓ of the separate property, and ⅔ is divided evenly among the children
• A spouse and parents of the deceased: The Spouse gets half, and the parents receive the other half. If the parents are no longer living, any siblings of the deceased will receive the other half to be divided evenly.

If you don’t have a spouse, everything will go to your children. If you don’t have any children, the line of succession will go through all living residents until the closest one is found, who will inherit everything.

This process can become costly and time-consuming. Furthermore, any verbal bequests you may have made while living won’t be recognized by the court after you die.

Beyond Asset Distribution

A will covers much more than who will receive your estate when you die. It encompasses several critical aspects of your personal and financial affairs, such as:

Appoint a Guardian for Minor Children

One of the most significant roles of a will is the ability to appoint a guardian for your minor children. You can designate someone you trust to take care of your children in the event of your untimely passing. You can ensure they are raised in a stable environment. If you don’t have a will, the court can decide upon guardianship for your children, which may be a person that doesn’t share your values.

Specify Funeral Arrangements

In your will, you can outline your wishes regarding funeral and burial arrangements. By specifying your final wishes, you relieve your loved ones of the burden of making these decisions during an emotional time.

Appoint an Executor

An executor is the person who oversees the handling of your estate. Their duties include petitioning the court to open probate, paying your debts and final expenses, and ensuring your beneficiaries receive their inheritance per your wishes. You can name a trusted individual as executor in your will and help ensure your estate is handled honestly and efficiently.

Minimize Family Disputes

Family arguments over inheritance can lead to long-lasting conflicts that may never fully resolve. Your will can help minimize misunderstandings and disputes among family members by clearly outlining how you want your assets distributed.

Finding Peace of Mind with LPEP Law

Ultimately, a will provides you and your loved ones peace of mind. Our lawyers at Lonich Patton Ehrlich Policastri have extensive experience in estate planning and can work with you to create a will that’s tailored to your specific needs. We will ensure your estate is handled according to your wishes. If your wishes change, we can help you with that as well.

Contact us for a free consultation by calling (408) 553-0801.

Disclaimer: this article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter. 

A common worry among older adults is that they will go into a nursing home and spend all of their retirement savings on skilled care. This is a realistic concern, considering that 70% of people aged 65 and older will spend some time in a nursing home. When you realize that the monthly cost of a nursing home in California is about $13,000, you understand that it won’t take long before your savings are thoroughly depleted.

However, with advance planning and examining your options, you can create an estate plan that will protect your retirement savings, no matter what may happen in the future.

Estate Planning Goes Beyond Asset Distribution

There’s a misconception that estate planning is something only done by rich, elderly people to ensure their belongings are distributed to their heirs after they die. In truth, estate planning is something every adult should do.

Estate planning is more than just creating a will outlining your final wishes. It’s also planning for the unexpected and asset protection. Estate planning also involves:

• Naming a power of attorney to act on your behalf if you’re incapacitated
• Providing advanced directives regarding end-of-life care
• Creating trusts and naming a guardian for minor children or ones with special needs

Asset Protection Trusts

You’ve spent several years saving for your retirement. Ensuring your savings are well-protected within your estate plan is just as important. 

Medi-Cal is a joint federal and state program that can help pay for nursing home care if you meet certain financial eligibility requirements. This means that you will need to pay for your care until your savings have been spent far enough to be eligible for Medi-Cal.

An irrevocable trust can help protect your assets from being counted towards Medi-Cal eligibility. Assets transferred to this trust are no longer considered your property, allowing you to qualify for Medi-Cal. By transferring your assets into an irrevocable trust, you can protect them from being used to pay for long-term care. You can still receive income from the trust’s assets, providing financial support during your lifetime. 

Not only will a properly structured trust protect your retirement savings, but it can also offer tax advantages. When you pass away, the assets will automatically transfer to your beneficiaries without going through the probate process.

Protecting Your Retirement Savings with Long-Term Care Insurance

Long-term care insurance is another effective strategy to protect your retirement savings. This type of insurance specifically covers the cost of nursing home care, in-home care, and other long-term care services.

You should choose a policy that covers a broad range of services and provides sufficient coverage to meet potential future needs. 

Early Planning is Critical

Protecting your retirement savings requires careful planning and the right strategies. The earlier you start planning, the more options you have, and it helps ensure you are not caught off-guard by sudden healthcare needs. Our attorneys at Lonich Patton Ehrlich Policastri have extensive expertise in estate planning and asset protection. We will work with you to develop a comprehensive plan tailored to your situation. 

Contact us for a free consultation by calling (408) 553-0801. Being well-prepared for any eventuality will allow you to enjoy your retirement with peace of mind.

Disclaimer: this article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter.

Estate planning is essential to protect your family’s future, especially if you have children. Having a plan in place before the unexpected occurs can make an otherwise stressful situation more manageable and ensure the best possible situation for your family. Depending on your children’s ages and needs and the size of your estate, though, different solutions might be the most appropriate way for you to leave money to your children. The following are some options to consider.

Establish a Trust

In many cases, especially if your children are minors or have special needs, a trust is an excellent way to provide for them, establish specific guidelines for the distribution of your assets, and protect their interests. It’s important to understand the different types of trusts that are available to pick the one that’s most appropriate to your specific situation. 

Revocable Trust

Also known as a living trust, a revocable trust sets out in writing what you want to happen to your assets in the case of your death. You maintain control over all assets you place in your living trust throughout your lifetime and can make changes and updates as needed. The main advantages of a revocable trust are that you can avoid the lengthy and expensive probate process and can have a trusted friend or family member manage the assets if you are incapacitated. 

Irrevocable Trust

An irrevocable trust, comes in many forms, one of the most common is known as a life insurance trust.  An irrevocable trust cannot be changed once it is established but it can offer significant tax savings and asset protection for your family. If you have a large estate, an irrevocable trust might be a good choice. 

Special Needs Trust

If you want to provide for your child’s special needs without affecting their eligibility for government-funded benefits, consider establishing a special needs trust. This type of trust allows you to designate a trustee who will manage the funds on your child’s behalf, ensuring their standard of living and care are properly maintained.

Set Up A College Savings Account

For older children, many parents choose to set up college savings’ accounts like 529 Plans to help cover future educational expenses. Assets in this type of account are excluded from annual gift taxes and estate taxes, however, your children must use the funds for educational purposes to avoid penalties, which makes them somewhat limited.

Designate Them as a Direct Beneficiary

Minors cannot receive assets directly, so you should only make your children direct beneficiaries if they are adults. Many legal documents – a will, insurance policies, retirement accounts, and bank accounts – require you to designate a beneficiary to receive the assets after your death. Designating your adult children as your direct beneficiary in these cases can be an effective way to pass on wealth. Just remember to go over your accounts and update them regularly. 

Consult with Estate Planning Professionals 

At Lonich Patton Ehrlich Policastri, we believe that estate planning should not use a one-size-fits-all approach. Instead, our Estate Planning Group works closely with every client to address their unique situation, needs, and wants. Our estate planning experts offer a full range of legal services, including setting up trusts and preparing wills. Call us today to schedule a free, no-obligation consultation to discuss your options.

Disclaimer: this article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter.