Many hire an estate planning lawyer in Brookline to provide for family members after death. When a loved one is disabled, it’s important to set the plan up carefully, especially if a loved one receives (or may receive) government benefits. In many such instances, an inheritance can force the loved one to spend those assets before being able to collect those benefits. In this article, readers will learn how to structure an estate plan for a disabled beneficiary.
Creating an Estate Plan for a Disabled Relative
Planning an estate when there’s a disabled beneficiary can be complex because they have special needs that must be taken into consideration, such as:
- Understanding of the person’s limitations and abilities
- Determining the person’s future needs
- Considering the types and amounts of government benefits the person may get
- Deciding whether the person will need additional help in the future as the condition worsens
A carefully crafted estate plan can help maximize the resources available to a disabled relative without affecting eligibility for government benefits. A plan created with the help of a Brookline estate planning attorney can save federal and/or Massachusetts estate taxes and avoid probate, the primary goal is to ensure the family’s assets do not unnecessarily disqualify a disabled beneficiary from receiving government benefits, thereby reducing the amount of the family’s overall inheritance. The following sections detail some options for planners.
Disinheritance is the simplest option a person can exercise with the help of a Boston estate planning attorney. Although it may seem counterintuitive, disinheriting a loved one (for example, a disabled child) often allows that beneficiary to continue receiving benefits like Medicaid, while also being supported by other family members. An estate plan using the disinheritance strategy would leave the estate to the disabled person’s family members (typically his or her siblings), and use some of those assets the disabled child would have otherwise inherited for his or her care. However, there are dangers with this strategy, namely if the disabled beneficiary’s family members are subject to any of the following:
- Creditor seizure
- A relative’s failure to fulfill their obligation to support the person
A disclaimer is another potential option. In this scenario, an estate plan does not specifically address the concern that an inheritance could disqualify the beneficiary from government assets. Instead, the planning is done after the fact (i.e., after the parent has died). The disabled person (or his or her guardian) would sign away the inheritance, and it would be given to other beneficiaries. This typically does not work, however, because the act of disclaiming can actually disqualify the beneficiary from receiving government benefits. It is better to plan ahead of time, as opposed to after the fact, especially when relying upon a beneficiary’s refusal of the inheritance.
The most effective way to care for a disabled person after a planner’s death is with a discretionary trust. In this plan, the disabled beneficiary’s inheritance is administered by a trustee, who is legally obligated to distribute the assets according to the trust’s terms, which are specifically designed to allow the beneficiary to enjoy the inheritance so long as it does not disqualify him or her from receiving government benefits. If the trustee fails to uphold its duties, the beneficiary can bring them to court.
Does a Person Need an Attorney to Plan an Estate for a Disabled Relative?
Estate planning is very complex, especially when it involves the care of disabled relatives. A Brookline estate planning lawyer can help a person foresee problems, and they can help them find a way to avoid the issues. A Boston estate planning lawyer can help one clearly express their intent, and they can ensure the person’s wishes are followed after their passing.