6 - Special Needs Trusts

Episode Summary

In this edition of the show, we go over the importance of getting the proper assistance with estate planning and how not seeking the services of estate planning and elder law experts can be problematic. Even if you feel like you do not have enough assets worth protecting, it is better to go to an estate planning and elder law attorney and do whatever planning you can. Start planning as soon as possible with a financial power of attorney once you turn 18. We also talk more about wills and intestate succession, which is better to avoid if possible. Another important topic we cover in this episode are the do-it-yourself kits and online estate planning, and why they are not ideal. It is worth spending a little extra money to talk with experts in estate planning and elder law, making sure you plan the right way and do what is best for you and your family’s future. We hope you join us for our workshops and continue to learn about all things estate planning and elder law with us!

Key Takeaways 

Takeaway 1: Power of attorney

01:53 - 06:24

• You don’t need millions of dollars to start estate planning. You can and should start with a power of attorney when you’re 18. Anyone over the age of 18 should have planning.

• If you don’t have a power of attorney in place and you lose capacity and the ability to make decisions for yourself, you can’t make payments and somebody has to do that for you.

• The mechanism that the law has in place is a guardianship hearing, which can be less than ideal.

• Just because somebody doesn’t have the capacity does not mean that they don’t understand that they don’t like it. 

• It might not feel right being in a courtroom with a person filing a petition at a different table, a different counsel, a judge, somebody transcribing, etc.

• We want to make sure that nobody is taking advantage of you and doing something that you don’t want. Guardians can take away your right to make a decision for yourself.

• That’s why it’s important to have a financial power of attorney as soon as possible.

• There is a healthcare statute, but it can lead to a family battle and potentially a guardianship hearing, so it is better to plan early with a financial power of attorney.

Takeaway 2: Wills and intestate succession

06:25 - 10:41

• If you do not have a will, the government provides one for you. It’s not perfect, just like the healthcare statute, but it is better than nothing.

• Intestate Succession - when the government has to make a decision about what somebody would want to do and create rules based upon what they believed to be true.

• If you don’t have a will, it is not guaranteed that all the money from a parent who passed away suddenly will go to their spouse. 

• The children could take a good portion of the money and be in a situation where they cannot give the money back to their living parent. 

• Intestate succession is at least something, but it is better to be the one in control, making the decisions.

Takeaway 3: Do-it-yourself kits

10:42 - 22:55

• Once again, do-it-yourself kits and any online sources are better than nothing, but these kits are done nationally and do not take into account the differences between states. Each state has different requirements and laws.

• Pennsylvania tends to be more strict and difficult with its requirements.

• Another thing we often see are powers of attorney that are drafted through a kit or online are not going to provide the powers that you need.

• We are able to do asset protection in PA. The key is that the document, the powers of attorney, provides in it that you are allowed to do unlimited gifting for the purposes of Medicaid planning, asset protection, asset preservation, etc. That specific language must be in the document.

• We see 9 times out of 10 “limited gifting” in the DIY kits. They are limited only to the amount of the annual exclusion gift, which is currently around $16,000.

• When someone enters a nursing home, we have to see if they have the legal capacity to enter a new power of attorney so that they can have their assets protected.

• The kits provide for outright distributions. They have generic wills that could cause problems in certain scenarios.

• Young adults could end up inheriting 100% of the assets of their parents if they both die unexpectedly, before these young adults are old enough to make responsible financial decisions with that money.

• It is not a bad idea to make sure that your children won’t receive the money until they’re older.

• Another scenario: Somebody wasn’t anticipating another individual to be disabled. If somebody is disabled and receiving public benefits, they’ve now lost their benefits and they’ve lost the money.

• We want to build into our plan special needs trusts, understated age trusts, and fallback provisions so that the money can be protected. These are things we have not seen in a do-it-yourself kit. 

Takeaway 4: Do not count on being lucky

22:56 - 23:42

• Go to a certified elder law attorney, go to somebody with knowledge and expertise in estate planning and elder law.

• Have everything done properly.

• Make sure that you are educated.

• Do not count on being lucky, make sure that what happened to the Bellomo family doesn’t happen to yours.

Links and Resources Mentioned

Bellomo & Associates workshops: https://bellomoassociates.com/workshops/ 

For more information, call us at (717) 845-5390   

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LinkedIn: https://www.linkedin.com/in/bellomoandassociates

Ways to work with Jeff Bellomo

Contact Us: https://bellomoassociates.com/contact/ 

Practice areas: https://bellomoassociates.com/practice-areas/