Estate Planning Blog

Planning for Retirement with a Special Needs Child

Retirement is a time to relax and enjoy life after years of hard work. However, parents of children with special needs will need to handle this transition with care. By planning early, you can ensure your child’s long-term care and your own financial future.

Start Early and Plan Ahead

Beginning your retirement planning early is crucial. Likewise, this process should be an extension of your existing financial planning. Starting early allows you to anticipate state and federal benefits changes and adjust your strategies accordingly.

For instance, Medicaid waivers and other support systems can be unpredictable. Just because these benefits systems can supplement your needs today doesn’t mean they’ll be able to do so tomorrow. Flexible, far-sighted financial preparation can help you absorb changes in benefits programs.

What Conversations are Needed?

Open communication between both parents is vital. It’s common for parents to prioritize their child’s needs over their own retirement savings. However, finding a balance is key. Both parents should be on the same page regarding their goals for retirement and their child’s future. Involving a financial planner and a special needs attorney can help align these goals and create a comprehensive plan.

Realistic Planning with Jeff and Emily’s Insights

Two professionals with Special Needs Alliance weighed in on planning for retirement with a special needs child. One, Jeff Yussman, emphasizes the importance of honest discussions about assets, liabilities, and the desired retirement lifestyle.

Another advisor, Emily Kile, highlights the need to leave an advocate for their child in advance. It may be smart to move a child with special needs to a future housing option while parents are still alive. This can reduce the pain and uncertainty of making such moves when the parents pass away.

Financial Preparation to Retire with a Special Needs Child

The first step is reviewing the titles on your accounts, beneficiary designations and estate plans. Ensuring that the chosen trustees and agents align with the goals for your child with special needs is critical. You should consider the financial security available through life insurance policies, such as second-to-die life insurance.

How to Arrange Future Care for a Child with Special Needs?

Parents must also plan for the long-term care of their child with special needs. This includes preparing for the potential loss of private health insurance and understanding the longevity of their financial plans. It is important to have regular estate planning meetings that account for these factors.

How Can I Involve Family in Retirement Planning with a Special Needs Child?

While well-intentioned family members might offer to care for your child, their circumstances can change. Marriages, divorces, and other life events can impact their ability to provide consistent care. Plan for these variables to ensure your child’s stability.

Begin Your Retirement Plan Today

Planning for retirement when you have a child with special needs can be challenging. However, you don’t have to do it alone. Our firm focuses on all matters related to estate planning. Reach out today for a consultation. We’ll help you create a comprehensive plan to secure the financial futures of both you and your child with special needs.

Key Takeaways

• Start Early: Begin planning for your retirement and your child’s future as soon as possible to anticipate and adapt to changes in benefits and needs.
• Open Communication: Ensure that both parents are aligned on goals and involve professionals, like financial planners and special needs attorneys.
• Financial Preparation: Review and update account titling and beneficiary designations and consider life insurance policies to secure your child’s future.
• Long-term Care: Plan for your child’s long-term care, including potential loss of private health insurance and regular updates to your estate plan.
• Involve Family Carefully: Consider the potential changes in family members’ circumstances and plan for your child’s stability accordingly.

Reference: Special Needs Alliance (Oct. 7, 2022) “How to plan for retirement when you have a child with special needs”

Pet Insurance and Naming Someone to Care for My Pet When I Die?

Americans love our animal companions, whether cats, dogs, lizards, mice, or chickens. Ninety-five percent of 16,000 dog and cat owners said their pets were part of the family, and most said they would pay any amount if their pet needed veterinary care. It’s a nice sentiment, but according to a recent article from The Street, “Best Tips For Navigating Pet Insurance and Estate Planning Costs,” the rising costs of pet medicine may not always allow this to occur.

Consumer Reports says few pet owners have pet insurance, and even when they do, coverage is not always a slam-dunk. One large insurance company canceled 100,000 pet insurance policies, leaving these owners few options. Pre-existing conditions aren’t covered in pet insurance, so older pets may be left in shelters when owners can’t pay for their vet bills.

If a pet policy is in place and the owner dies, the policy typically ends. The new pet owner must purchase a new one. This may be prohibitive for the new owner, making pet estate planning necessary.

Pet estate planning is exactly as it sounds—estate planning with a pet in mind in case the pet owner dies before the pet. The typical plan includes a pet trust containing funds dedicated to the animal’s care, with a trustee named who will be in charge of the assets.

A pet estate plan also names a person as the pet’s custodian. This person may or may not be the same person who is a trustee of the pet trust.

Estate planning is important for senior pets, who are less likely to be adopted if they are in a shelter and more likely to have expensive medical costs. Another reason for a pet trust? If the owner becomes incapacitated, admitted to a hospital, or needs to spend an extended time in a rehabilitation facility and won’t be able to care for the pet, the trustee can act.

How do you know how much to place in a pet trust? The amount depends upon the type of animal, their life expectancy, and the overall cost of their care. For instance, a pet trust for a horse would need to be far larger than one for a domestic cat.

Why can’t you give someone money in your will to take care of your pet? Unless the money is in a trust, there’s no way to ensure that the funds will be spent on the pet’s care. A trustee is a fiduciary bound by law to use the trust’s assets for the pet’s well-being.

An estate planning attorney can create a pet trust and guide the owner in naming a trustee and custodian. Just as an estate plan needs to be reviewed and updated every few years, the pet trust should also be reviewed.

Reference: The Street (June 10, 2024) “Best Tips For Navigating Pet Insurance and Estate Planning Costs”

Don’t Wait for Surgery or Health Crisis to Create an Estate Plan

Estate planning is essential for everyone, regardless of age or health status. Good estate planning protects your wishes, assets, and your loved ones. However, many don’t start thinking about estate planning until they have a health crisis. This tends to bring stress, complications and other problems that are avoidable with proactive estate planning.

What are the Risks of Delaying Estate Planning?

Many people delay estate planning until they face a serious health issue. Without a plan, you might lose control over your assets, healthcare and even your children. Your loved ones may also face legal battles in probate. Many families have suffered avoidable financial hardship because the courts held up a deceased loved one’s assets.

Estate planning isn’t just for your loved ones. If you cannot care for yourself, the courts must appoint someone to make your financial and health decisions. Laying out a power of attorney, medical proxy and other documents can keep you in control.

Common Barriers to Estate Planning

Even those who understand the importance of estate planning often procrastinate. According to a study by Caring.com, the main reasons include:

• Lack of assets: People believe they don’t have enough assets to leave behind.
• Complicated process: Individuals fear the process is too complicated and don’t know where to start.
• No beneficiaries: They don’t have someone to leave assets for.
• Other priorities: More pressing issues need to be addressed.

When to Start Estate Planning?

According to ElderLawAnswers, you should begin estate planning when you turn 18. Even young adults can benefit from having basic documents, like a will and a healthcare proxy. The sooner you start, the more prepared you’ll be for unexpected events.

What are the Essential Estate Planning Documents?

Before you can start estate planning, you’ll need a few estate planning documents. These include:

• Will: A will specifies who will inherit your assets and who will be the guardian of your minor children.
• Power of Attorney: This document allows you to designate someone to make financial decisions on your behalf if you become incapacitated.
• Healthcare Proxy: A healthcare proxy lets you appoint someone to make medical decisions if you cannot.
• Living Will: A living will outlines your wishes regarding medical treatment and end-of-life care.

Don’t Wait for a Health Crisis

Estate planning is a crucial step to protect your future peace of mind. Don’t wait for a health crisis to start planning; start today. Contact us and schedule a consultation with your estate planning attorneys to develop a custom plan.

Key Takeaways

• Ensures Control: You maintain control over your assets, healthcare decisions and guardianship of minor children.
• Reduces Stress: Proper planning prevents unnecessary stress and legal battles for your loved ones.
• Protects Assets: An estate plan safeguards your assets from legal complications and unnecessary taxes.
• Provides Peace of Mind: Knowing your wishes are documented and will be respected provides peace of mind for you and your family.

References: Caring (2024) “2024 Wills and Estate Planning Study – Caring.com” and ElderLawAnswers (April 5th, 2023) “Don’t Wait Until You’re Sick to Create an Estate Plan”

Smart Estate Planning In 13 Steps

People never understand how expensive it is not to do any estate planning, explains an article from Kiplinger, “13 Smart Estate Planning Moves.” Consider these steps for your estate planning checklist:

The SECURE Act changed distribution rules for non-spouse beneficiaries. The ten-year rule requires most beneficiaries to empty the account within ten years of the original owner’s death. It may be time to rethink how your IRA is invested.

Consider a Roth IRA conversion. This allows heirs to receive distributions tax-free. Consider converting annual distributions instead of moving an entire IRA into a Roth.

Use the annual gift tax exclusion, which is $18,000 in 2024. You can give as many people as you want up to $18,000 without incurring gift taxes. A related choice: superfund a 529 college savings plan, putting five years of gifting into one year—up to $90,000 all at once. Check with your estate planning attorney to see how this could impact your estate plan.

Use up your lifetime gift exemption early. This is especially useful if you believe the gift and estate tax limits will be lowered when the Tax Cuts and Jobs Act expires.

Pay medical or tuition costs directly to the school or healthcare provider as long as checks are written directly to the institution; paying medical bills or tuition doesn’t count towards the annual exclusion or estate tax exemption.

Talk with your estate planning attorney about a Spousal Lifetime Access Trust. This is an irrevocable trust for a spouse, with each spouse opening one for another. The trusts must be different to avoid drawing the IRS’s attention.

Find out whether carrying forward any remaining estate tax exemptions unused by a deceased spouse is right for you. If you have appreciated assets, a bypass trust might be better.

Protect yourself and your estate from creditors and litigation with a domestic asset trust. This irrevocable, self-settled trust is available in twenty states. The person funding the trust can be the grantor.

Explore the use of revocable trusts. Some may not help with avoiding probate or trimming taxes but may work well for managing assets as you age or if you have health problems and expect someone to help manage your finances.

Make a plan for Medicaid and Special Needs family members. The massive cost of nursing home care makes this a necessity. Discuss the creation of a Medicaid Asset Protection Trust with your estate planning attorney.

Simplify your investment life. If you have investments in multiple accounts and different bank accounts, your executor will have more work to do.

Consider whether or not your estate should be managed by a professional, especially if you have a particularly argumentative or litigious family.

Finally, don’t delay having your estate plan created or updated. We all think we have plenty of time until we don’t. Meet with an estate planning attorney to update or create a new plan.

Reference: Kiplinger (May 9, 2024) “13 Smart Estate Planning Moves”

Don’t Leave for Summer Vacation without Proper Planning

Families excitedly leave their daily grind for vacations during summer, anticipating relaxation and adventure. However, amidst the packing and planning, there’s a crucial aspect often overlooked: legal planning to prepare for the unexpected. The inconveniences of traffic jams, flight delays, or returning to a disaster at home like pipes breaking seem minor compared to the potential chaos your loved ones may face if you become incapacitated while away. The lack of proper legal preparations could lead to significant complications, making a forgotten bathing suit the least of your worries.

The Risks of Not Planning before Summer Vacation

Situations change unexpectedly—accidents, illnesses, or unforeseen events don’t take a break during your summer vacation. Without proper documents, such as a will, power of attorney and healthcare proxy, as explained in a National Law Review article, your family could face daunting legal hurdles or disputes when stability is most needed.

Common Estate Planning Mistakes Due to Procrastination

1. Financial Disarray: Without a power of attorney, no one may be legally recognized to manage your finances should you become hurt or incapacitated while on summer vacation. This could freeze assets and complicate the care and support for your dependents.
2. Medical Decisions: A healthcare proxy is vital if you cannot make medical decisions for yourself. Without this, your loved ones may struggle to make crucial health decisions, leading to potential conflicts or delays in treatment.
3. Guardianship Concerns: For families with minor children, not designating a guardian in your will means the courts will decide who cares for your children if both parents are badly hurt or even pass away unexpectedly. The guardianship decision-making process can be lengthy and stressful, possibly leading to outcomes you wouldn’t have chosen.

Why Plan Before Your Summer Vacation?

Here’s why making estate planning part of your pre-vacation checklist is as important as packing your passport:

• Peace of Mind: Knowing your affairs are in order allows you to fully relax and enjoy your time away.
• Protection for Minor Children: Ensuring that you have a guardian designated in your will provides certainty about who will care for your children, no matter what happens.
• Streamlined Legal Processes: An updated estate plan can simplify the probate process, making it easier for your loved ones to navigate what would otherwise be a complex legal system.

Steps to Take Now

1. Review and Update Existing Documents: If it’s been a while since you last reviewed your estate plan, now is the perfect time. Changes in your family, like a new child or marriage or changes in your assets, require updates to your plans.
2. Establish a Living Trust: Consider setting up a living trust to manage your assets. This can help avoid probate and ensure a smoother transition of your estate.
3. Consult with an Estate Planning Attorney: Professional advice is invaluable. An attorney can help ensure that all your documents are up-to-date and reflect your current wishes and circumstances.

Secure Your Summer with Proper Planning

Add estate planning to your pre-vacation to-do list as you prepare for your summer adventures. Like checking the weather or confirming your reservations, a check-up on your estate plan ensures you’re ready for any situation. This summer, let the only surprises be the fun and unexpected discoveries of your travels, not the avoidable legal entanglements that could await your return. Request a consultation with our estate planning team before your summer vacation to plan for the anticipated fun and unexpected consequences.

Key Takeaways:

1. Estate Planning is Essential: Just as you wouldn’t leave for a trip without an ID, don’t overlook the importance of having your estate planning documents in order before you go. This includes having a valid will, power of attorney and healthcare proxy.
2. Protect Your Family: Ensure that your children and financial dependents are safeguarded by designating guardians and providing for their care in your estate plan. This action prevents courts from having to make these critical decisions on your behalf.
3. Avoid Legal Complications: Having your estate planning documents ready and updated minimizes the risk of legal issues and familial disputes, especially in unforeseen circumstances like accidents or illnesses during your vacation.
4. Consult an Estate Planning Attorney: Professional advice is crucial. An attorney can provide guidance tailored to your family situation and financial circumstances, ensuring that your estate plan meets all legal requirements and accurately reflects your wishes.

Reference: The National Law Review (Sep. 12, 2023) “Don’t Wait until Time Is Up”

Why Unmarried Couples Need Protection of an Estate Plan

Couples decline to marry for a variety of reasons. Some are pragmatic, such as protecting health insurance eligibility. Taxes are another reason, as is qualifying for government benefits, like Medicaid or needs-based student financial aid. However, a recent article from the Journal of Accountancy, “Forgoing marriage? Estate planning for unmarried couples,” explains why unmarried couples must protect themselves from life’s unexpected but inevitable events.

There is an old saying that marriage is the cheapest estate plan available, and in part, this is true. Here’s what unmarried couples can do to protect themselves.

How are assets titled? Having the home titled as a joint tenancy/ownership with the right of survivorship protects both partners. If one partner dies, full ownership automatically switches to the other partner, with no need for court documents or other paperwork.

Beneficiary designations. Each partner should review the beneficiary designations on all applicable financial accounts and products. This includes life insurance, pensions, retirement accounts, and, if possible, bank accounts. If the couple doesn’t want to make each other joint owners of the bank accounts, see if they can be added as beneficiaries.

Cohabitation agreement. This document clarifies everything from financial responsibilities during and after the relationship, from who will care for a shared pet to the distribution of jointly owned property if there is a breakup. Think of it as a prenup for unmarried people.

Power of Attorney. This allows the partners to step in and manage each other’s affairs if one should become incapacitated. It’s also effective if one person travels and needs the other partner to manage daily financial matters.

Advance Care Directive. This document states a person’s wishes about medical care if they cannot communicate on their own. It should include a Health Care Power of Attorney, allowing the partners to make medical decisions for each other. Without it, adult children, siblings, or parents will be the only ones who can make these decisions. This will also permit the partners to access personal health information for each other during an illness or an emergency.

Last Will and Testament. Distribution of property or assets not owned jointly takes place through the will. The will is also used to name an executor in charge of the estate and carrying out the instructions in the will, as well as a guardian for minor children. If there is no will, an unmarried surviving partner will have no control over any property or assets. Without a will, the laws of intestacy take control, and usually surviving children, parents, siblings and even distant cousins who are related by blood come before the unmarried partner.

Trusts. If the couple wishes to keep their possessions and distribute them privately, a trust can be created to own assets, with the trustee being one partner and the successor trustee being the other. Couples with minor children, shared real estate investments, or assets in more than one state may find using trusts more efficient than passing assets through a will. Assets in a trust are not subject to any instructions in a will, do not become public and do not go through probate.

A consultation with an estate planning attorney can provide unmarried couples with a clear path to protect each other for the rest of their lives. This is the peace of mind provided by an estate plan.

Reference: Journal of Accountancy (April 30, 2024) “Forgoing marriage? Estate planning for unmarried couples”