Estate Planning Bits

10 common estate planning pitfalls

1. Not having a Will: Personal wishes, whether written or oral, will most likely not be followed in the absence of a will. Without a plan, your assets will pass to your heirs according to your state’s laws of intestacy.


2. Not funding your revocable living trust: A property drafted trust will prevent putting your loved ones through the expensive, lengthy and emotionally draining court probate process. 


3. Failing to understand the impact of life insurance proceeds: Many people do not realize that life insurance proceeds are normally included in the estate of the deceased, which can result in approximately 50% of the proceeds going to the IRS instead of your intended beneficiaries. Depending upon the situation, an Irrevocable Life Insurance Trust may be appropriate.


4. Failing to adequately plan for children with special needs: A child with special needs risks being disqualified from receiving SSI benefits and may have to use their inheritance to pay for their care. Depending upon the situation, a Special Needs Trust may be appropriate.


5. Not properly planning for incapacity: People are living longer, and therefore the risk of lacking capacity during your lifetime is increasing. Only with proper estate planning can you be sure that your health and financial affairs will be taken care of in the event of your inability to take care of them yourself.


6. Business planning: With a properly executed plan, you can choose who will own and control your business upon your death, which increases the likelihood of the business continuing as a viable operation.


7. Not preparing for minor children: If you have minor children, you should have a will nominating personal guardians for the children, in the event that both you and your spouse should die prior the children reaching the age of 18. Without a plan, the court will decide without your input where the kids will live and who will make important decisions about their money, education and life.


8. Improper beneficiary designations: Not updating the beneficiary designations on bank accounts, life insurance, IRAs and other assets can lead to unintended beneficiaries.


9. Not periodically updating an estate plan: Generally, people do not like to discuss dying, and therefore people often want to simply execute their estate plan documents and be done with it. However, economic, family, and health changes require revisions to your estate plan.


10. Doing it yourself: Even if a self-prepared will or trust is legally enforceable, estate planning is a complex legal process requiring knowledge in several areas of the law, including estate law, tax law and property law as starters.

by: Todd C. Ratner, Esq.

Amending special needs trusts, revocable and irrevocable

If a trust is revocable, it may be amended by its creator at any time. However, what do you do with an irrevocable trust when changes occur within your family, with your beneficiaries, or possibly the law?

Some states are more liberal than others in reforming and amending documents, and changes are often necessary, especially with a special needs beneficiary. While this may not be a simple procedure in some jurisdictions, others may allow them routinely.

For example, a federal statute was changed in 2004 relative to Title XIX of the Social Security Act regarding exemptions of trusts for beneficiaries who are receiving benefits, including social security. A recent case involving the statute was decided by the State of Kansas where the trust was determined to be a countable, available resource based on the state’s interpretation that the trust did not contain sufficient language to comply with the law. The family requested a hearing on the matter, and the case was eventually heard by the Kansas Supreme Court. The decision was that the trust did meet the test, and the beneficiary should not be disqualified from receiving governmental benefits, as the trust was properly modified to meet the standards and tests. The court determined that the statute was not a circumstance anticipated by the settlors, and due to the fact that the trust was in fact modified to clarify the trust and conform to the statute, the beneficiary should not be harmed by terminating benefits.

Therefore, it may be helpful in many cases where a trust has been deemed irrevocable by either the terms of the trust or the incapacity or death of the creator to have the documents reviewed to make sure that they will work as anticipated. If not, the trust should be amended as soon as possible so there will not be any disqualification of benefits for any beneficiaries.

by: Hyman G. Darling, Esq.

Victory for the Down Syndrome community

In late September of 2008, after approximately three years of advocacy, a victory occurred when the Senate and House passed a unanimous law called the Prenatally and Postnatally Diagnosed Conditions Awareness Act. This law will ensure that pregnant women who receive a positive prenatal test result and parents who receive the postnatal diagnosis will be more likely to receive up to date scientific information about life expectancy, clinical course, intellectual and functional development, and prenatal and postnatal treatment options.

Within the Act, there are provisions that offer referrals to support services such as hotlines, websites, adoption registries, and parent support networks and programs. In the past, much of the information provided was outdated and inaccurate. Many treatment options and opportunities were not provided, and there were decades-old stereotypes still persisting.

Under this new law, families and society will receive knowledge and information about individuals with Down Syndrome. This is a major victory, as it is hardly a routine occurrence with unanimous consent.

Senators Edward Kennedy (D-MA) and Sam Brownback (R-KS) were the original co-sponsors of the Bill, and they led this through the Congress for the ultimate benefit of all families and their children. It is hopeful that many of the myths and stereotypes will be dismissed, and that the future for these families and people will be better served. If you need for further information please contact the National Down Syndrome Society or the National Down Syndrome Congress.


By: Hyman G. Darling, Esq.

Demystifying terms used by estate planning attorneys

Agent: The person given legal authority to make financial decisions for a person through a durable power of attorney document or the legal authority to make health and medical decisions for a person through a health care proxy document.

Artificial Life Support: Medical equipment and other technology used to prolong the life of a person who is seriously ill by sustaining essential body functions, like breathing.

Assets: Personal possessions of value, including cash, bank accounts, real estate, vehicles and investments.

Beneficiaries: The people named in the will to receive the estate of the person upon his or her death.

Conservator: The person appointed by the courts to make financial decisions on behalf of a person.

Custody: Legal responsibility of a person.

DNR:  Stands for “Do not resuscitate” and refers to a person’s instructions that, if his or her heart or breathing stops, the doctor should not try to restart it.

Durable: When a power of attorney document is durable, it is valid even after the person with dementia can no longer make his or her own decisions.

Execute: To legally sign or “carry out” a legal document.

Executor: The person named in a will to manage the estate of the person upon his or her death.

Grantor: The person for whom a living trust is created.

Guardian: The person appointed by the courts to make health care decisions on behalf of a person (sometimes also includes financial decisions.)

Health care agent: The person given legal authority to make health care decisions for a person through a health care proxy document.

Legal capacity: The level of judgment and decision-making ability needed to sign official documents.

Probate:   The process used by the court to distribute the property of a person who has died.

Trustee: The individual or bank chosen to manage the property (assets) in the trust document of a person.



by: Todd C. Ratner, Esc.

Planning for the continued care of your disabled child after you’re gone

One of the most pressing issues for parents with a disabled child is probably the concern about what will happen to their child when they become incapacitated or die. This issue often is so difficult that the parents have a difficult time in making decisions, and therefore procrastinate to the extent that nothing gets done until very late in life.

It is estimated that there are over 700,000 adults with disabilities who have parents over the age of sixty in the United States. This statistic reflects the need for people to plan in advance. Once a plan is prepared, it is relatively easy to amend or change it as times change.

For instance, the selection of a guardian for your child when he is a minor may be about who is best able to suit his needs at that age; and this may be his grandparents or possibly an aunt or uncle. As time goes on, it may be better to appoint someone who is younger, such as one of the siblings of your disabled child, when they are mature, responsible and ready to take on the future needs of their disabled sibling.

In preparing the plan for your disabled child, the usual documents should be completed, including a Health Proxy, Will and Power of Attorney. However, a "so-called" simple Will may not be sufficient to attend to your child's needs. You might need a Special Needs Trust in addition. This will protect your child against losing governmental benefits available to him.

The Trust becomes the primary document that provides for your child's needs to the extent that medical care, food, shelter, etc. are not otherwise provided. The funds may also provide for luxuries, which may include massage therapy, vacations, companions, television, etc. These items may also provide medical, educational and social benefits and will hopefully enrich the life of your child.

While attending to these important decisions, you must also consider the potential for public benefits and assure that they are not lost. This may include supplemental security income, food stamps, housing, fuel assistance and possibly a monthly benefit from other sources. However, in the event that governmental benefits are ever diminished, then the funds in the Trust may be available to or for the benefit of your disabled child.

A properly established and funded Trust will also provide the additional benefit of avoiding probate. In addition, estate taxes may minimized or eliminated, which will allow for preservation of additional funds for your disabled child and other beneficiaries.

Another important document to consider is a care plan, which would allow a guardian and trustee to be aware of the special needs of your child. This will list all of the educational, social, financial, and any other necessary information about your child's needs that must be attended to on a daily basis.

The care plan will list of any basic and special information regarding the plan for the child and provide detailed information that will help the trustee and guardian to determine the best housing and social situation for your child. It will also provide detail your wishes for the future as your child transitions from minority to majority and then beyond. Every year, this care plan should be updated, and a copy kept with the Trust Agreement.

It is important to contact professionals who are knowledgeable in this area, as the rules change quite frequently. It is also important to know what services and programs are available to support individuals with disabilities in your community. The trustee and guardian must be provided with information about how services such as therapy, medications, and transportation will be paid for.

The details of the administration and taxation of a Special Needs Trust are quite involved and require professional assistance. One of the best sources to locate this type of attorney is through the Special Needs Alliance, which is made up of approximately one hundred lawyers from across the United States, who must be invited to join the organization. These attorneys are recognized by their peers for their competence, caring and their expertise in preparing plans for disabled families. They may be located at www.specialneedsalliance.com.


By: Hyman G. Darling, Esq.

Earned Income Credit – a sometimes unclaimed benefit for the disabled

There are many disabled people in the United States who are not taking advantage of a credit offered to them by the Internal Revenue Service called the Earned Income Credit. This was originally provided as an anti-poverty program for hard working low income employees aimed at reducing taxes.

Many individuals who are disabled do not file a tax return, as they do not believe that they have made enough money to do so. However, by not filing a return, they may be failing to claim funds that may be due them through a tax credit. Rather than merely a reduction of earned income or an itemized deduction, this Earned Income Credit is a direct credit against the tax, if there is one, and if not, then the tax payer is entitled to receive a refund of this credit.

A qualified person may receive a credit up to $428, with a family of two or more children being able to receive up to $4,716! However, the credit is not going to be paid unless it is claimed on the return.

Many people may not be filing a tax return because they fear they will lose governmental benefits if they receive too much of a refund. Included in this situation are people with disabilities who receive supplemental security income (SSI) or Medicaid, since these people may not have more than $2,000 in assets, or possibly income above a certain level based on where they are living and what programs they are receiving. However, the earned income credit does not count as income in determining eligibility for benefits such as cash assistance, Medicaid, food stamps, SSI or public housing.

Naturally, there are limits for individuals to claim the refund, and for 2007, the calculations are as follows:

1. A person who has no children must have income below $12,590.
2. A person with a child must have income below $33,241.
3. A person with two or more children must have income below $37,783.

It is estimated according to 2000 Census, that there are over 22,000,000 individuals between the ages of 18 and 64 who have a disability. Approximately one-fourth of these individuals have total annual income of less than $15,000, and 83% of the people surveyed stated that they had never claimed an income tax credit.

The government designated January 31, 2008, as Earned Income Tax Credit Day. Each year, the government designates a day to attempt to encourage more people with disabilities to file their taxes and apply for the credit.

In order to claim this credit, a return must be filed, but if there is no availability to claim the credit by a person who may not be able to file their own return, they should attempt to contact their local disability center or senior citizen center, who should have the forms available to file the return online. By filing an online return, the person may have their credit deposited directly into their bank account, and thus be more expeditious than if a manual check has to be issued.

By: Hyman G. Darling, Esq.

Special Needs Trusts – protecting government benefits for your loved one and much more

Special needs trusts can fund more than their name implies. Importantly, they can be structured and managed so that trust distributions do not reduce government benefits such as Supplemental Security Income (“SSI”) or Medicaid.

Government benefits generally aim to fund basic living necessities like shelter, food, clothing, and medical expenses. Special needs trusts can supplement these government benefits thereby enhancing the quality of life of a disabled person.

The breadth of disbursements available from a special needs trust is limited by the trustee’s duty to act in the best interest of the beneficiary and by limitations on distributions that would replace governmental benefits already being received. Still, the trustee could purchase a new home, make a down payment on a new home, or fund a security deposit for an apartment.

Domestic appliances, such as televisions, stereos, computers, microwaves, refrigerators, and washers or dryers, can be purchased and maintained with funds from a special needs trust. Domestic services, such as cable television, internet access, house cleaning, and home improvements, can also be funded by a special needs trust. The special needs trust can even put new drapes in the living room, towels in the bathroom, and linens in the bedroom.

Special needs trusts are also flexible enough to support extracurricular activities. They can pay for clubs and dues, massages, tickets to sporting or concert events, and haircut or salon services. They can pay for transportation to the club or ball games, including taxi service, a rental car, a bus pass or even a new car. And, when it is time for a vacation, the trust can also fund travel and lodging.

Special needs trusts are very effective when they are designed and administered correctly. A properly designed and administered special needs trust can vastly improve the quality of life of the disabled beneficiary while still allowing the disabled individual to maintain vital government benefits.

By: Gina M. Barry, Esquire

Planning to care for your special needs child after you’re gone

The most pressing issue for parents with a disabled child is probably determining what will happen to that child when they die. It is estimated that there are over 700,000 adults with disabilities who have parents over age 60 in the United States. This statistic reflects the need for people to plan in advance, since decisions will have to be made for a disabled child when his parents are no longer capable of caring for him.

A simple, so-called life plan will serve as a road map for all the people who will help raise the child, determine his daily care, assist with medical decisions and attend to finances. This plan may be written, recorded, or perhaps put on a computer disk, which may be updated every year as the child’s needs change.

In addition, parents should establish their child’s anticipated expenses and then fund a special needs or supplemental needs trust to ensure that his needs will be met in the event that governmental benefits are insufficient. This may include medical, housing and enrichment programs. The cost of inflation should also be considered.

While attending to financial issues, parents must also consider the potential for public benefits to assure that they are not lost. These may include supplemental security income, food stamps, housing, fuel assistance and possibly a monthly benefit from SSI or some other government source. Parents must be sure that their child’s needs are met even if that means losing one form or another of government benefits.

In short, a trust that attends to all of the needs of the child and a life care plan are important considerations that parents must not overlook when planning to provide support for their special child throughout his lifetime. In addition, the right trust may make it possible to avoid probate, minimize or possibly eliminate taxes and also preserve additional funds for the ultimate beneficiaries after the disabled child has died.

A “special lawyer” should be consulted who understands the needs of disabled individuals and their families while attending to all of these issues. One of the best sources to locate this type of attorney is through the Special Needs Alliance, which is made up of approximately 100 lawyers from across the United States, who must be invited to join the organization. They are normally recognized by their peers for competence, leadership and their expertise in preparing plans for disabled families. These attorneys may be located at www.specialneedsalliance.com, and I am a member.

By: Hyman G. Darling, Esquire