Most of us want our day to day activities to be effortless. We do not want complicated processes and procedures to frustrate what should be simple tasks. Instead, we want easy-to-follow directions and a clear path to getting the job done. When you find yourself caring for a loved one, especially a loved one with special needs, you may find this holds true in most areas of your life.
The reason why is simple. As a caregiver, most of your energy will dedicated to the daily responsibilities involved in caring for your ward. Managing medication, supervision of your ward, and handling activities of daily living are just the beginning of the many tasks you find yourself facing each day. We know that this can leave you with little time for yourself throughout the day, let alone time to think about the future and plan for yourself.
We work with our clients and their family members who are caring for a special needs child or adult, and share this mindset. They also want to ensure that their loved one is protected against uncertainty. They do not want there to be a time when he or she is vulnerable, which all too frequently happens at the death of the primary caregiver. The parents, grandparents, and siblings come to our office to ensure that there is an estate plan in place that will create a secure future for their disabled loved one.
Despite these concerns, many of the people we meet with initially have made planning decisions that could negatively impact their loved one with special needs. Often these planning decisions were made inadvertently without the family realizing what the long range impact could be on their family. These planning decisions seemed to be good, well meaning and easy, but, for a disabled person on government benefits, these same decisions could have devastating consequences.
A specific example of where we see this issue frequently arise is with the use of pay-on-death accounts.
The purpose of a pay-on-death account appears simple at first. The bank or financial institution asks you who you would like to leave your money to should you pass away. They offer you the opportunity to name the person as a beneficiary on this particular account. At the time of your death, this money can be transferred, in many instances, to the person you named as the beneficiary upon furnishing a death certificate.
This can be an appealing option at first glance. Utilizing a pay-on-death account could mean that your family member will be able to receive money without the involvement of the probate court or any legal proceeding. Although the premise is appealing, it is also cause for concern as things are rarely as simple as they seem. This is especially true when your beneficiary is disabled, either from birth or later in life due to a serious injury from a catastrophic event. While the former instance of disability is known ahead of time and can be planned for, none of us know what the future may hold. It is in the latter instance where a comprehensive estate plan that contemplates this potential issue is critical as a pay-on-death account could jeopardize access to valuable benefits.
Unfortunately, this type of account can cause more harm than good when it comes to protecting your disabled beneficiary. When you are planning for a loved one with special needs you need to plan for not just his or her person but also his or her property and access to benefits. This includes protecting valuable government benefits such as Medicaid and SSI that your loved one could be disqualified from should he or she inherit money directly from you.
By contrast, through a special needs trust or estate planning that allows for the creation of a special needs trust should the time arise, your loved one can be protected. Through this type of trust, parents, grandparents, and other family members can leave money safely to the disabled person without fear that he or she will lose access to critical benefits. Just like a pay-on-death account, it will avoid the probate process. Better than the pay-on-death account, however, it will be managed by a trustee of your choosing to be there when your disabled beneficiary needs it the most for his or her health, education, maintenance, and support.
We know this article may raise more questions that it answers for you. Please do not hesitate to contact our office to schedule a meeting with one of our attorneys today.