Annapolis, Maryland Wills, Trusts & Estate Planning

Frankel Sims Law And Holden & Campbell Have Merged To Create Sims & Campbell - Annapolis Estate Planning

Jane Frankel Sims and Frank Campbell are pleased to announce the newly formed boutique Trusts & Estates law firm - Sims & Campbell. The firm will provide comprehensive services in the fields of Estate Planning, Estate Administration, Trust Administration and Charitable Giving. The combined firm now has offices in Towson and Annapolis. Jane Frankel Sims and Frank Campbell will lead and hold equal ownership in the firm.

Sims & Campbell has 9 attorneys and 15 legal professionals that manage every facet of estate and wealth transfer planning, including wills, revocable living trusts, irrevocable trusts, estate and gift tax advice, and charitable giving strategies. The firm will serve a wide range of clients, from young families to ultra-high net worth individuals. This allows clients to remain with the firm as their level of wealth and the complexity of related estate and tax implications change over time.

“Though we are joining forces, the focus of Sims & Campbell will continue to be helping our clients maintain and enhance their family’s wealth – with the highest level of personalized service,” said Jane Frankel Sims.

“Jane and I have always admired each other’s firms and recognized the opportunity to provide even greater depth and breadth of focused expertise to help families amass and protect their wealth from generation to generation,” stated Frank Campbell.

The Sims & Campbell Towson office is located at 500 York Road, at the corner of York Road and Pennsylvania Avenue in the heart of Towson. The Annapolis office is currently located at 716 Melvin Avenue, and is moving to 181 Harry S Truman Parkway in August, 2019.

Visit www.simscampbell.law

Taking Control After Alzheimer’s By Planning for Care Costs - Annapolis Estate Planning

Facing Alzheimer’s is never easy. The impacts of this condition can be felt in every area of life, and it can be hard to escape the added stress. While there is no easy fix for dealing with the repercussions of Alzheimer’s, there are ways to plan ahead to cope with and cover the costs of care.

Budget for Care and Insurance Costs

Regardless of whether you have a family history of Alzheimer’s, you should still make an effort to prepare for long-term care when planning for the future. Even without an Alzheimer’s diagnosis, long-term care is almost an inevitable part of every senior’s future, so it makes sense to include this kind of care in your financial planning. Doing so helps you avoid unpleasant surprises, like finding out that Medicare will not cover the care you need.

Contrary to popular belief, Medicare offers no financial support when it comes to long-term care. However, if you know this ahead of time, you can plan for other ways to finance these costs. For veterans, there may be additional benefits you can tap into. This may include using a VA long-term care facility or accessing financial resources to help you hire in-home care or modify your home. Another benefit of planning ahead is that you are more likely to afford long-term care coverage. This kind of insurance is not for everyone, but if you know you are at increased risk for Alzheimer’s and you are planning in your 50s, long-term supplements may be more accessible for you.

Though death can be difficult to think about, you should consider planning ahead for when that time comes. Burial insurance can ease the financial burden of loved ones when it’s time to make funeral arrangements. This type of insurance can cover funeral costs and help pay off debt, such as loans and medical bills. Before you purchase a policy, decide on a budget by thinking about the funeral arrangements and any debts you want to be covered.

Know How Alzheimer’s Care Needs Will Progress

Often, the need for long-term care is sudden for seniors. This can make it a little more difficult to find compassionate, affordable care. If you or a loved one is showing signs of Alzheimer’s and have had a medical diagnosis, you are in a position of being able to plan out your care more efficiently. That’s because Alzheimer’s typically follows a predictable path of progression. The level of care needed will follow this same path. During the beginning stages, Alzheimer’s patients can still take care of themselves, but they may have difficulty controlling emotions, staying organized, and interacting with others. At this point, seniors may just need a little extra help around the house with cleaning and other daily tasks.

As the disease advances, however, those with the condition can become a danger to themselves and will need constant care. This can mean living with a family member or hiring a home health aide to provide more stable supervision and assistance. In the final stages of Alzheimer’s, nursing homes or skilled-care facilities are a necessity, and unfortunately, death is also inevitable. Knowing this information can be heartbreaking, but it does help individuals and family members better prepare for the financial strains of Alzheimer’s.

 Prepare Yourself and Your Family for the Emotional Costs

Bracing your finances for the costs of Alzheimer’s care can save you and your family a lot of headaches as time passes. The real costs of this devastating disease, however, are those that don’t impact your bank account. Knowing what is ahead can be disheartening, but watching the progression of Alzheimer’s in a loved one can be emotionally draining as well.

So, in addition to putting together a financial strategy, be sure to find ways to manage those complicated emotions. For patients, that may mean going to therapy, finding a support group, or looking for a constructive outlet for your pain and anger. It’s common for seniors to experience depression and anxiety after being diagnosed with the disease, but it’s crucial to your well-being that you seek self-care and support. Self-care is also important for caregivers and loved ones so that they can stay strong throughout this painful journey.

 Alzheimer’s can leave individuals and their family members feeling helpless. However, you do have the power to plan for the costs of Alzheimer’s care and prepare for the years ahead. By doing so, you will give everyone peace of mind during a time already filled with pain.

Reference: Rise Up for Caregivers, http://riseupforcaregivers.org/blog/

Holden & Campbell, LLC – Annapolis Estate Planning Attorneys

When the Unexpected Occurs - Annapolis Estate Planning

We’ve all had fender benders, but a catastrophic auto accident can be life-altering. Having all the right insurance is necessary to protect your retirement.

Part of retirement planning is making sure that you have enough assets to protect yourself against the ever-rising costs of healthcare. We talk about this and we plan for it. However, one topic that is often overlooked is the impact that a serious auto accident can have on investments, retirement savings and your economic future. A plan for risk management is something everyone needs to do.

It’s estimated that 3.14 million Americans were involved in an auto accident in 2016, according to the National Highway Safety Administration. This shows how common they are.

Think Advisor’s recent article, “How Car Accidents Can Wreck Retirement Accounts,” looks at the case of a 35-year-old single professional with more than $600,000 in her investment account.

This woman, Sue, was driving home from work, when an uninsured motorist ran a traffic light and ran into her new convertible. The car was totaled and she was severely injured. Sue was rushed to the hospital, required surgery for several broken bones and then went to a rehab facility for physical therapy upon her release.

Fortunately, Sue’s medical coverage from work covered her hospitalization, rehab stay, and at-home visits during her recovery. Sue’s own auto insurance policy paid for a new car. However, Sue was unable to work for a year. Her employer-paid short-term disability insurance that covered about 65% of her lost income for three months, but she had no long-term disability coverage and had to pay some health-related expenses out of pocket. In total, Sue lost $120,000 in income, had to pay $10,000 in medical expenses not covered by her plan, and spent $65,000 for at-home assistance during her recuperation.

Luckily, she had savings outside her investment accounts that covered those expenses. However, there are many other accident victims who aren’t as fortunate as Sue. They must use investments that may have been intended for their children’s education and their retirement. The result is paying penalties for tapping into qualified accounts.

Sue didn’t tap into her investments. However, she did have to stop making contributions to her qualified accounts and adding to other investments. Because the accident occurred during her prime earning years, the compounded effect on her nest egg will be significant.

In addition, Sue could’ve avoided the loss of income and the out-of-pocket expenses if she’d been covered by a more comprehensive auto insurance policy and purchased additional disability insurance.

Review your coverages and your entire estate plan with a knowledgeable attorney to be certain you have the best protection.

Reference: Think Advisor (March 26, 2019) “How Car Accidents Can Wreck Retirement Accounts”

Holden & Campbell, LLC – Annapolis Estate Planning Attorneys

Estate Planning for Collections, From Coins to Cars - Annapolis Estate Planning

Inheriting bank accounts and IRAs may seem complicated, but they pale in comparison with inheritances that includes tangible goods, like coins, stamps, automobiles and other collectibles.

If your favorite uncle is an avid collector, be prepared for a challenge says Forbes in the recent article, “Astute Estate Planning For Art, Antiques And Valuable Collectibles.” Unless the owner of the collection has done their homework, someone in your family—maybe you—may be spending long nights gathering information, organizing and documenting that collection. If it’s your collection, here’s a list of what you should be doing to protect your collection’s worth and make it easier for your heirs.

Tracking. Personal property items are easily “lost” or misplaced. Use inventory software or keep copious records. You should also retain receipts, appraisals and other imprimaturs and bona fides of provenance.

Assignment and Transfer. Since personal property can “walk off,” it’s smart to make certain that all applicable parties, such as heirs, are informed of inventory lists or other tracking methods, with clear instructions on who gets what. You can even add in your will an addendum “Exhibits A-Z,” to make sure that nothing gets lost. Photographs, serial numbers, and other identifying data can be added for more fungible items, like firearms.

Security and Insurance. Use precautions like safes, safety deposit boxes and alarm systems because transportable valuables present greater risks of theft and of fire/disaster. There can be different insurance rules based on the item. You may need separate deductibles, endorsements, riders and proofs of location and ownership to have proper insurance coverage.

Documentation. Particularly for art and important antiques, it is vital to have documentation that supports authenticity and records provenance. This can include certificates of authenticity, bills of sale, condition reports, artists’ notes and photographs, along with appraisals and insurance reports. A gap in documentation can result in challenges in establishing provenance and authenticity.

Valuation. Most personal property is in a very illiquid market, and the price is very much whatever the market will bear. Specialized knowledge may be needed to arrive at a fair price.

Estate Tax Issues. Retain accurate inventories to make certain that all value is properly accounted for, if an estate tax return is due. It’s not uncommon for these items to be “forgotten” at tax time since, unlike securities, bank accounts and real estate, the IRS can’t easily track estate ownership of the assets, whether or not they’re taken by members of the family.

Be aware that selling a collection is not always an easy task. Values of certain collectibles change from year to year. An artist that was once prized and whose work sells in the thousands may fall out of favor and the value of their work could shrink considerably. Coins that were promoted as investment grade may turn out to be worth face or melt value only. The items that you have gathered may hold more sentimental value for you than monetary value to your heirs. By doing all of the tasks listed above and learning what the market value of your collection is from the get-go, you and your heirs will be far better positioned as to what to do with the collection: sell, save or share.

Reference: Forbes (April 8, 2019) “Astute Estate Planning For Art, Antiques And Valuable Collectibles”

Holden & Campbell, LLC – Annapolis Estate Planning Attorneys

What’s a “Senior Freeze?” Hint: It’s Not a Milkshake - Annapolis Estate Planning

State benefit programs that help the elderly stay in their homes sometimes run into unexpected issues. Do the research before making any changes. You might unknowingly put more than the benefit at risk.

In New Jersey, the Senior Freeze Program reimburses eligible senior citizens and disabled persons for property tax or mobile home park site fee increases on their principal residence. To qualify, an individual must meet all the eligibility requirements for each year from the base year through the application year.

However, what happens if a mother and daughter share ownership of the home, and only the mother is a senior? Is the mom’s portion of the ownership eligible for the Senior Freeze? Is it worth it to have the daughter’s name taken off of the deed? What happens when the mom dies, if the daughter’s name is no longer on the deed?

nj.com’s article asks and answers this question: “I own a home with Mom. Can she qualify for the Senior Freeze?” The article explains that a senior is eligible for participation if she’s over 65, has continuously lived in the state for the past ten years and has owned and occupied her current home for the past three years. The property tax due on her home also must be paid in full.

If a senior is seeking eligibility for the 2018 tax year, she must have met the eligibility requirements in both 2017 and 2018 and her annual income in each year can’t have been more than $87,268 and $89,013, respectively. Applications for the 2018 tax year must be filed by October 31, 2019.

Eligible seniors are reimbursed for the amount by which their current annual property tax amount is greater than the property tax amount in her first year of eligibility for the program.

Therefore, if the mom in the initial scenario satisfies the eligibility requirements for the program, the fact that she co-owns the home with her adult child won’t disqualify her from receiving a reimbursement. However, she’ll only be entitled to partial reimbursement of the tax increase, in proportion to her percentage of ownership in the home.

If the child conveys her interest in the home to her mother, making her the sole owner of the property, she’d be eligible for the full reimbursement amount for the first tax year that she is sole owner for the entire year. The Senior Freeze Program doesn’t pro-rate reimbursements for mid-year changes in ownership.

If the mother and daughter decide to take the daughter off of the deed, so that the amount of the “Senior Freeze” is increased, the daughter is effectively giving up her ownership of the home. If the estate plan has been made with the dual ownership in mind, there may need to be a review and revision of the estate plan.

Before creating potential tax and ownership issues, figure out how much money will be saved by making this change. Another bit of advice: meet with an estate planning attorney who is familiar with your state’s laws and will be able to help you plan for any possible fallout from the change. They may run the numbers and discover that the change is not worth it, or it may be something worth doing that requires some tinkering with your estate plan. It’s not a do-it-yourself project: there’s too much at risk here.

Reference: nj.com (March 27, 2019) “I own a home with Mom. Can she qualify for the Senior Freeze?”

Holden & Campbell, LLC – Annapolis Estate Planning Attorneys

Will Florida Really Start to Accept Online Notarizations? - Annapolis Estate Planning

So many things that we do today take place online that this might seem like a good idea. However, many disagree saying that it could lead to elder abuse and fraud.

A bill under consideration in the Florida legislature, HB 409, would make it possible for legal documents to be notarized online. While it would certainly make some matters easier and more convenient, the potential for fraud, especially among the elderly, is a very serious concern.

The San Francisco Chronicle reports in the story “Florida may allow legal papers to be notarized online” that the legislation was proposed by Representative Daniel Perez, R-Miami. The bill moved Tuesday through the House transportation and tourism appropriations subcommittee and will be considered next in the Judiciary Committee—the last step before a House vote. However, a Senate version hasn't made as much progress.

Representative Perez remarked that he’d recently traveled to Colombia and realized as he boarded his flight, that he’d failed to assign power of attorney to his in-laws. The requirement that he appear in person before a Florida-commissioned notary made it impossible to fix his oversight, he said.

The notary bill has made it past attempts by two Democrats that would’ve limited its scope. Representative Barbara Watson, D-Miami Gardens, compared the risks of fraud under the system to college students who buy fake IDs to illegally drink alcohol. She proposed requiring notary witnesses to be in the same place physically as whoever is signing legal documents.

"When we have no one tangibly looking at this information, not having it in their hands for close inspection to verify its validity, we're in trouble," Watson said.

Representative Ben Diamond, D-St. Petersburg, said allowing wills and powers of attorney to be created online was dangerous for Florida's elderly. He said lawmakers need to balance between better business and protecting older residents.

"I have a concern about someone going into a nursing home with an iPad and walking room to room and getting people to click buttons and then they get a couple of powers of attorney," Diamond said.

Perez responded that it was possible for criminals to take advantage of elderly people, even with the current notary requirements.

The split opinion isn’t just among political people. Two different sections of the Florida Bar Association have two different opinions. The attorneys in the Elder Law section said that being able to have documents notarized online will make it far easier for Florida seniors to do their estate planning. However, the attorneys in the Real Property Probate and Trust Law section disagree, saying that the risk of fraud for the elderly would increase.

Reference: San Francisco Chronicle (March 27, 2019) “Florida may allow legal papers to be notarized online”

Holden & Campbell, LLC – Annapolis Estate Planning Attorneys

What to Do Now That We’ve Inherited Mom’s House? - Annapolis Estate Planning

The executor is in charge of managing the estate and assets. If the children have inherited the house, they have to figure out what they want to do with the house.

When kids inherit the family home, there are always a lot of questions, unless the family had conversations ahead of time about the family home and what will happen to it when the owner dies. If this hasn’t happened, which is usually the case, it’s time for the executor (also known as the Personal Representative in Maryland) to get started. Ideally, the executor and the heirs all work well together.

nj.com’s article on this subject asks, “Mom died and left us her home. What do we have to do next?” According to the article, the executor is tasked with gathering the assets, paying the debts and taxes (if any), and then distributing the assets, in accordance with the parent’s will.

If the home was in the parent’s name alone, it makes the property a probate asset that’s passed according to the will. In addition, if the will provides that under the residuary clause everything that’s left is to be distributed equally among the children, it will give the executor discretion to liquidate and then make the distributions.

There also may be a specific provision in the will covering the home.

There’s no specific timeline as to when the property has to be transferred. However, the executor is required to act prudently and in a reasonably timely manner.

In this situation, the home will most likely be sold. It is also the executor’s responsibility to pay the bills associated with the home until a buyer is found.

If one child wants to live there, and it’s agreeable to everyone, make sure that she doesn’t refuse to leave when it comes time to sell.

Note that landlord-tenant laws protect a tenant and may create an issue in this situation. The executor may want to talk with an attorney to determine what steps are necessary to protect against the tenant refusing to leave.

If a family member is staying in the house, they need to be mindful that the house is an asset of the estate. It is the responsibility of the executor to ensure that the home is maintained properly. If the home is to be put on the market, the family member needs to take care of the home. Sometimes this can spark controversy with siblings. A family meeting with the executor, possibly with the estate planning attorney present, might be useful to clarify the responsibilities and set a timeline.

Reference: nj.com (April 1, 2019) “Mom died and left us her home. What do we have to do next?”

Holden & Campbell, LLC – Annapolis Estate Planning Attorneys

Taking Control After Alzheimer’s By Planning for Care Costs - Annapolis Estate Planning

Facing Alzheimer’s is never easy. The impacts of this condition can be felt in every area of life, and it can be hard to escape the added stress. While there is no easy fix for dealing with the repercussions of Alzheimer’s, there are ways to plan ahead to cope with and cover the costs of care.

Budget for Care and Insurance Costs

Regardless of whether you have a family history of Alzheimer’s, you should still make an effort to prepare for long-term care when planning for the future. Even without an Alzheimer’s diagnosis, long-term care is almost an inevitable part of every senior’s future, so it makes sense to include this kind of care in your financial planning. Doing so helps you avoid unpleasant surprises, like finding out that Medicare will not cover the care you need.

Contrary to popular belief, Medicare offers no financial support when it comes to long-term care. However, if you know this ahead of time, you can plan for other ways to finance these costs. For veterans, there may be additional benefits you can tap into. This may include using a VA long-term care facility or accessing financial resources to help you hire in-home care or modify your home. Another benefit of planning ahead is that you are more likely to afford long-term care coverage. This kind of insurance is not for everyone, but if you know you are at increased risk for Alzheimer’s and you are planning in your 50s, long-term supplements may be more accessible for you.

Though death can be difficult to think about, you should consider planning ahead for when that time comes. Burial insurance can ease the financial burden of loved ones when it’s time to make funeral arrangements. This type of insurance can cover funeral costs and help pay off debt, such as loans and medical bills. Before you purchase a policy, decide on a budget by thinking about the funeral arrangements and any debts you want to be covered.

Know How Alzheimer’s Care Needs Will Progress

Often, the need for long-term care is sudden for seniors. This can make it a little more difficult to find compassionate, affordable care. If you or a loved one is showing signs of Alzheimer’s and have had a medical diagnosis, you are in a position of being able to plan out your care more efficiently. That’s because Alzheimer’s typically follows a predictable path of progression. The level of care needed will follow this same path. During the beginning stages, Alzheimer’s patients can still take care of themselves, but they may have difficulty controlling emotions, staying organized, and interacting with others. At this point, seniors may just need a little extra help around the house with cleaning and other daily tasks.

As the disease advances, however, those with the condition can become a danger to themselves and will need constant care. This can mean living with a family member or hiring a home health aide to provide more stable supervision and assistance. In the final stages of Alzheimer’s, nursing homes or skilled-care facilities are a necessity, and unfortunately, death is also inevitable. Knowing this information can be heartbreaking, but it does help individuals and family members better prepare for the financial strains of Alzheimer’s.

Prepare Yourself and Your Family for the Emotional Costs

Bracing your finances for the costs of Alzheimer’s care can save you and your family a lot of headaches as time passes. The real costs of this devastating disease, however, are those that don’t impact your bank account. Knowing what is ahead can be disheartening, but watching the progression of Alzheimer’s in a loved one can be emotionally draining as well.

So, in addition to putting together a financial strategy, be sure to find ways to manage those complicated emotions. For patients, that may mean going to therapy, finding a support group, or looking for a constructive outlet for your pain and anger. It’s common for seniors to experience depression and anxiety after being diagnosed with the disease, but it’s crucial to your well-being that you seek self-care and support. Self-care is also important for caregivers and loved ones so that they can stay strong throughout this painful journey.

Alzheimer’s can leave individuals and their family members feeling helpless. However, you do have the power to plan for the costs of Alzheimer’s care and prepare for the years ahead. By doing so, you will give everyone peace of mind during a time already filled with pain.

Reference: This post is by guest writer June Duncan, caregiver and author of the upcoming book, The Complete Guide to Caregiving: A Daily Companion for New Senior Caregivers. Books can be purchased at her website, http://riseupforcaregivers.org/.

Holden & Campbell, LLC – Annapolis Estate Planning

Do My Debts Die with Me? – Annapolis Estate Planning

If you’ve amassed a multitude of debts, don’t expect them to vanish when you die. Your executor will have to deal with them and your heirs could even get stuck with them.

Your debts won’t be your problem when you pass—but they are likely to become your children’s problems. For starters, your executor will have to pay the debts using assets from your estate, if there are any. If you’ve asked someone to co-sign a loan, they’re responsible for the entire amount. That’s not much of a legacy to leave behind.

Reader’s Digest’s recent article, “This Is What Happens to Your Debt When You Die,” explains that not all debt is created equal. With secured debt, like a mortgage or car loans, your estate can either pay off your debts in full or continue making installment payments. Another option is to sell the property or turn it over to the lender to satisfy the debt.

However, any unsecured debt, such as credit cards, bills, or personal loans, is typically just paid from the estate. The estate is everything you own, such as assets, bank accounts, real estate and other property.

Note that student loans are the exception, but there are some caveats. Most federal student loans, along with private loans without a cosigner, are discharged with proof of death. Thus, your heirs won’t be responsible for those loans. However, if your private student loan was cosigned, that person will be required to pay it off. There are also some loans, like PLUS loans, that while technically forgiven, could leave the parent who took it out with higher taxes.

The way to protect both yourself and your family is to speak with an experienced estate planning attorney to get your affairs in order.

Creating an action plan for your outstanding debt is a critical component of the estate planning process. You also need to ask about other end-of-life plans, like medical directives, wills and trusts to manage your assets when you pass away.

You should also review your life insurance policy to make certain that it’s up-to-date and don’t forget to review your named beneficiaries.

At the very least, check your beneficiaries on assets that you own. If this is done properly, it might let your heirs receive assets directly without needing to go through probate. The assets will also be protected from creditors.

Reference: Reader’s Digest “This Is What Happens to Your Debt When You Die”

Holden & Campbell, LLC – Annapolis Estate Planning Attorneys

What If I Don’t Want to Give My Kids the Same Inheritance? – Annapolis Estate Planning

One of the challenges of asset distribution comes when your children’s lives have taken different turns. Do you leave your successful daughter the same amount of money that you would leave to a son who can’t seem to find a direction? It’s not always easy, but decisions do need to be made.

The discussion of how to decide which child gets what is not always as simple as an even split. Equal is not always fair. For families with children whose adult lives are in different places, it’s a challenge that needs to be thought through with kindness and consideration of the future impact of your decision.

What and how you leave your wealth can be a hard decision if you have more than one child. This is particularly true if your kids’ circumstances are dramatically different or you’re much closer to one than another. The easiest solution might be to split whatever you have equally among them. However, is equal the same thing as fair?

Ladders.com’s recent article, “More parents are leaving unequal inheritances to their adult kids” says that a growing number of parents say that answer is a resounding “no.”

According to a new study from Merrill Lynch Bank of America/Age Wave, responding parents with more than one child who are planning to leave an inheritance are okay leaving different sums to each child based on the situation. In fact, the research showed that 67% of Americans think that under certain circumstances, an uneven split is just fine.

Other studies have shown the same trend. A 2015 study by IZA Institute for Labor Economics, based on data from a large government study, found that among Americans at least 50 years old who had a will, the percentage who left unequal inheritances to their children had more than doubled from 16% in 1995 to 35% in 2010. However, an unequal division can generate ugly sibling fights, jealousy and meltdowns.

An Ameriprise survey found that among siblings who fought about money as adults, 70% of the fights involved issues with parents, like how the inheritance gets divided. If you go with unequal inheritances, you need to manage expectations so you don’t have one sibling blaming another or you.

There are many reasons why parents consider another option. In the Merrill Lynch Bank of America/Age Wave study, nearly one in four of respondents said a child who has children of her own deserves more money than a child who doesn’t have kids. About 66% said that a child who steps in as primary caregiver for an aging parent deserves to inherit more than other siblings. A total of 40% of participants with blended families say they should treat stepchildren the same as biological or adopted children.

Because of the potential different circumstances of each child, you may want to give one child the money outright and with the other, you may want to put it in a trust. The reason for doing this is to protect the child, not to punish them. If a child struggles with addiction or overspending, a trust makes certain that she has access to the money, but the trustee has control over its disbursement. In some cases, parents may also be concerned that a child’s marriage may be in trouble or feel uneasy about their son- or daughter-in-law.

A family meeting with your estate planning attorney might be a good way to discuss your decision to distribute your assets differently among your children. The presence of a non-family member might facilitate a different kind of conversation. While every family is different, completely avoiding the topic and leaving it for the survivors to grapple with could create more family discord.

Another strategy is to create a trust for each child or for all of them and appoint a trustee with highly specific directions as to when and how the assets are distributed.

Reference: Ladders.com (March 25, 2019) “More parents are leaving unequal inheritances to their adult kids”

Holden & Campbell, LLC – Annapolis Estate Planning Attorneys

Special Needs Planning – Annapolis Estate Planning

It is important to understand the basics of special needs planning, so that you can plan for your child’s future. There are many issues to address, but experienced professionals will be able to help.

Special needs planning is challenging. It’s important to have a strong team to work with. An estate planning attorney with experience in helping special needs families will be able to guide you through the process. They will also likely have access to other professionals to help.

A recent Forbes article, “Special Needs Kids Require Specialized Estate Planning,” says that if you have a child with special needs, it’s critical that you look at your planning options with your estate planning attorney and discuss your child’s health, capabilities and prognosis. You can then customize a plan that works for your child, with as much flexibility as possible.

Those with enough assets often would rather not have their child get any government benefits and will set aside an amount to cover all the child’s living expenses in trust. Since the parents aren’t concerned with government benefits, the trust can be a discretionary trust that will distribute income and principal at the trustee’s discretion for the benefit of the child throughout the child’s life.

If there is a good chance the child will receive government benefits, many parents create special needs trust to supplement (not replace) the government benefits that the child will receive. The trust must be drafted so the child doesn’t become ineligible for the government benefits. These benefits provide for the child’s basic needs like a place to live, so the special needs trust will defray the cost of extras such as trips and entertainment.

If the parents can’t determine if their child will be eligible for government benefits, another option is for the parents to give their current trustees the authority to create a separate special needs trust at the time of the surviving parent’s death. Therefore, if the child is receiving benefits, the trustee can create the trust at that time with the goal of preserving the child’s benefits.

All these trusts can be funded now. The parents can establish the trust and transfer cash or other assets to it, or the trust can be created now and left empty until a parent passes away. At that point, money can move into the trust from the parent’s estate, another trust, or from a life insurance policy.

Some parents elect not to create a trust for their child and to disinherit him completely. The thinking is that the child can be supported solely by government benefits. Others go with a combination approach. They disinherit the special needs child and leave more assets to their other children with the understanding that the other children will care for the special needs child. However, this isn’t a great idea. The siblings have no legal obligation to care for his or her sibling with special needs, just a moral one. If the child who inherited the bulk of the estate gets divorced, the assets are also susceptible to division upon divorce. Finally, the assets are liable to a creditor’s claim if the child is sued.

Give yourself the peace of mind that comes from knowing you have done everything possible to ensure that your special needs child will have what he or she needs when you are no longer here to protect them.

Reference: Forbes (March 27, 2019) “Special Needs Kids Require Specialized Estate Planning”

Holden & Campbell, LLC – Annapolis Estate Planning Attorneys