Estate Planning for Disabled Beneficiaries

Estate Planning for Disabled Beneficiaries

Many of us know the joys the family can bring to us—but with these joys also come worries and fear. Even when you do all you can for your loved ones while you’re living, you may be concerned for their well-being after you pass away. To address this, many people set up wills and estate plans that leave certain assets to their children or others who are close to them to ensure they’re looked after in the long term. However, these considerations may change if the person you’re providing for is disabled in some way.
Estate plans like this are almost always more complicated, but an experienced estate planning attorney can help you through it.

If you live in Westerville, Ohio, Worthington, New Albany, or anywhere in Delaware County and Franklin County, reach out to The Law Office of David G. Bale to schedule a consultation.

Providing for a Family Member With a Disability After You Pass

When a client comes in with concerns about a loved one with unique needs, it’s essential to answer the question, “How do I factor my disabled loved one into my estate plan?” Before doing this, though, keep in mind three items that must be fully understood before a plan can be put into place:

  • Understand Your Loved One’s Current Needs: Most likely you’re already providing care, be it physically, emotionally, or financially for your disabled loved one. The first step is to get a realistic idea of what this looks like. This could include medical care, special services, financial assistance, or money management.
  • Understand Their Future Needs: Next, you’ll need to assess the future needs of your loved one. You may have to take into account their condition worsening as they grow older, or their needs changing as time goes by. You may consider accounting for in-home nursing and health care, funding for assisted living facilities or long-term care, or support for caretakers.
  • Learn the Government Benefits They Can Rely On: Many people who are disabled will be eligible for government benefits and this may depend on the severity of their condition (ie. how much it limits their ability to take care of themselves) as well as their income. Examples of government benefits are Social Security Disability Income (SSDI), Medicaid, and Supplemental Security Income (SSI). Importantly, many of these benefits have income caps. If money or assets are simply handed down to disabled beneficiaries, this could cause them to lose these services.

Pros and Cons of Disinheritance

One option that family members have when estate planning for a disabled loved one is disinheritance, but this won’t always be the best choice. Essentially, this means that you intentionally leave this person out of your will and instead leave assets to another family member like a sibling who agrees to use this money to take care of them. There are advantages and disadvantages of this approach:

Pros of disinheritance:
  • Your loved one to continue receiving government benefits
  • They can still benefit from your assets via the other family member
Cons of disinheritance:
  • If the sibling gets divorced or declares bankruptcy, the inherited money will be in jeopardy
  • If the sibling dies before the disabled family member, they may not have anyone to look after them

Special Needs Trusts

Another option is to make use of special needs trusts. This is a type of irrevocable trust wherein the trustee is in charge of providing for the disabled individual after the grantor has passed away and the trust goes into effect. The assets will stay in the trust and under the control of the trustee who will meter out funds and use them to provide care while also protecting the beneficiary’s ability to receive government benefits.

Discretionary Trusts

One last option is to explore discretionary trusts. These are referred to as “inter vivos,” meaning they go into effect during the grantor’s (the person who funds the trust) lifetime. Like a special needs trust, the assets won’t legally belong to the beneficiary as long as they are held in the trust and instead will belong to the trustee. The trustee is then responsible for administering the funds in the trust according to the grantor’s guidelines while ensuring the beneficiary never receives too much to disqualify them from benefits like SSDI, Medicaid, or SSI.

Anytime a trust like this is considered, it’s highly recommended that you work with a trusts attorney  who can look at your specific needs and goals and help you move forward with confidence.

Build a Comprehensive and Personalized Estate Plan

If you’d like to sit down with an estate planning attorney who will take the time to truly understand the needs of you and your family, reach out to The Law Office of David G. Bale in Westerville, Ohio to get started.


Reach Out Today To Set Up Your Case Evaluation.

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