If you are considering estate planning and you have children with special needs, you should discuss your options with an estate planning attorney. It’s important to understand the factors that impact how your assets will be handled. In developing your estate plan, you can generally choose between leaving an inheritance via a will and establishing a trust. There are key differences that may impact your child’s eligibility for certain benefits. Call us today.
Consider the Differences Between an Inheritance and a Trust
You could decide to leave an inheritance to your child with special needs. This may seem like a solid option if the child has the capability to manage these finances. However, this could reduce or eliminate government benefits. These may include Medicaid, Supplemental Security Income (SSI), and the Supplemental Nutrition Assistance Program (SNAP). These programs require that the eligible recipient have a limited amount of income and assets to qualify for benefits. Receiving an inheritance may push your child’s assets or income above this threshold.
You could decide to leave your whole inheritance to your special needs child’s siblings. The intent in such a situation may be for these siblings to care for your child with special needs. However, this poses a high potential for conflict within the family. The funds may not be used for their intended purpose. In some cases, the money may become part of a divorce settlement or be spent on other things.
You could decide to establish a special needs trust. The funds would be held in the trust and managed by a trustee. This means that the funds cannot be considered income, thereby preserving eligibility for public programs. The trust is structured in such a way that the child cannot override the trustee.
Understand the Different Types of Special Needs Trusts
Three main types of special needs trusts exist with varying implications. A first-party trust is funded by assets that belong to the beneficiary. This type of trust is often used if the beneficiary is expected to receive a sizable sum, such as an inheritance. Eligibility for programs like Medicaid is unaffected. However, in the event of the beneficiary’s death, there will be a requirement for the remaining funds to pay back amounts for Medicaid benefits received.
A third-party trust is similar to a first-party trust, although they differ in the source of the funding. A third-party trust is funded by assets that belong to someone other than the beneficiary. These could include parents, siblings, or other family members. A third-party trust also does not impact eligibility for public programs. In addition, there is no payback provision for Medicaid. This means that in the event of the beneficiary’s death, the remaining funds can be passed on to other family members. A third-party trust is commonly used for a beneficiary with special needs.
A pooled trust is also similar to a first-party trust, although it is managed differently. A nonprofit organization holds the funds in an account and manages the investment. They do this for multiple beneficiaries who each have their own account with the organization. There is a payback provision in the event of the beneficiary’s death. A portion of the remaining funds would also go to the nonprofit.
Determine Whether an ABLE Account Is Right for Your Situation
An Achieving a Better Life Experience (ABLE) account is a savings account that can pay costs like living expenses and education. The stipulations are that the beneficiary must have become disabled before age 26 and that a maximum of $15,000 can be contributed to the account annually. The ABLE account earns interest and does not affect the child’s eligibility for federal benefits. There is a payback provision for Medicaid benefits received in the event of the beneficiary’s death.
Think About Who Would Make the Best Trustee for Your Children
When establishing a trust, this decision is critical. The individual who serves as trustee will be making many decisions as they make sure your child is taken care of in your absence. People to consider may include siblings, close family friends, your attorney, or a financial advisor. In any case, this person should have the time and resources necessary to manage care for your child with special needs.
Discuss Your Situation with an Estate Planning Attorney
Estate planning can seem overwhelming and stressful. There are a significant number of details to understand and consider. The future implications of decisions you make today may not be obvious. In order to navigate this process successfully, you need to speak with an experienced estate planning attorney. They have the knowledge and understanding to guide you through the myriad of decisions before you. An experienced lawyer will be able to advise you about making the best decisions for your children’s future.
Contact Us Today
If you are setting up your will and have children with special needs, we can help. Call (319) 363-8199 to speak with one of Arenson Law Group, PC’s Cedar Rapids estate planning attorneys today. Our team will be glad to schedule an initial consultation to discuss your situation with you. Let us put your mind at ease as we guide you through your options. Call us now.
If you are considering a do-not-resuscitate order (DNR), you need to speak with an experienced estate planning attorney. While a DNR is a medical form that you complete but that your physician must sign, it’s important to be aware of the legal implications. You owe it to yourself and your family to understand how a DNR may affect your future.
What Is a DNR?
A do-not-resuscitate order is a specific type of medical order that is signed by a doctor. A DNR tells health care providers not to revive you if you experience certain conditions. Specifically, the order instructs providers not to perform cardiopulmonary resuscitation (CPR) if either your heart stops or you stop breathing. These health care providers may include doctors, emergency medical personnel, and em
ergency room staff. A DNR does not include any instructions about pain management.
During CPR, medical techniques are used to perform resuscitation. These may include mouth-to-mouth breathing or, in some cases, breathing tubes. Medication and electric shock using an automated external defibrillator (AED) machine may be used as well.
When Is a DNR Used?
Typically, a DNR is used in specific cases, such as when a person has a terminal illness that is in advanced stages. In such a situation, a DNR works in complement with a living will. You may want a DNR for a variety of reasons. The intent is usually to have a DNR in place prior to an unexpected emergency.
Generally, there are considerations of what a person’s quality of life would be like after resuscitation. You may worry that you’ll be dependent on medical devices indefinitely for life support. You may also be concerned that CPR may involve a significant amount of pain. While this may be the case in some instances, it’s critical to discuss this with your physician. They will be able to help you decide if a DNR is right for you. Your doctor will also help you understand the implications of how this will affect situations you may encounter. A DNR is not usually used by someone who is in good health.
Who Can Override a DNR?
Once you have a DNR in place, you are the only person who can override the order. This means that you need to be able to communicate your wishes about receiving CPR. If you have a DNR in place and you change your mind about it, you need to speak with your doctor as soon as possible.
In the event that you are unconscious or unable to speak, no one else can override a DNR for you. This is true even if you had previously changed your mind about the DNR and told someone else about this decision. They still would not be able to override the order, no matter who the person is. This includes your spouse, children, and other family members.
What Alternatives to a DNR Should I Consider?
Sometimes a person may have an incomplete understanding of what a DNR is or how it works. A DNR is also often confused with other end-of-life documents. While these legal instruments are similar in some facets, they differ in key ways. It’s important to understand these differences because they are legally binding documents. If you are considering creating a DNR, you may benefit from considering these options as well:
- Living Will– This is also called an advanced health care directive and is used to specify instructions for end-of-life medical care. These instructions may impact your future degree of personal independence and self-sufficiency. A living will might include directives regarding pain management, dialysis, use of a ventilator, intubation, and organ donation.
- Medical Power of Attorney– This is also called a health care proxy. A medical power of attorney allows you to authorize a specific person to make all major healthcare choices for you. These choices include decisions regarding end-of-life care. They also include things like surgery and day-to-day healthcare choices. The authority of a medical power of attorney to make decisions on your behalf is greater than the authority of other people, such as your spouse or children.
Contact Arenson Law Group, PC Today
Our experienced Cedar Rapids estate planning attorneys are ready to discuss your unique situation with you. This can be a sensitive topic, and there are many complex decisions to make. Call us at (319) 363-8199 to speak with a member of the Arenson Law Group, PC legal team and set up an initial consultation. We can help you navigate the process of planning your estate with compassion and understanding. Let us guide you so you can make the best decision for your family’s future.
How to Ensure That Your Home Is Passed on to Your Children
Whether your home is a legacy left from a previous ancestor or one you just bought and want to hand down to your children, the house is a special place and one you want to keep in the family. You could leave it to your child or children in your will, but are there other ways to be sure the house goes to your children and isn’t sold or gobbled up by estate or property taxes?
There are, but you need to start planning for it now. It’s never pleasant to think ahead to your eventual death, but you need to think ahead if you want to be sure your kids get your house when you’re no longer here to tell the court what you want. If you have immediate questions, go ahead and reach out to us today. We’re here to help.
Gifts, Revocable Trusts, and Life Estates
Property law is filled with archaic, medieval terms like “fee simple,” “life estates,” and “reversion.” Back then, the terms had to do with who owned the land and who could live on it. Today, we use them to define who has title to property now and in the future.
When planning your estate, one thing you need to decide is whether you intend to continue living in the house or whether you plan to move out at some point. This will let you and your attorney, if you decide to consult one, make the best decisions about how to transfer your property.
- Gift. The easiest way to ensure your home is transferred to your children is to give it to them as a gift. Iowa has no gift tax, but there is a federal gift tax on property that must be paid by the recipient. Gifting lets you continue to live in the property until you choose to leave, at which point the gift becomes the property of whoever you gave it to. This tax, the capital gains tax, is on the appreciated value of the property, if any, and it can be expensive.
- Tenants with right of survivorship. You are allowed to take title to property as “joint tenants with right of survivorship.” Your attorney can explain this phrase in more detail, but it means that if you enter into this type of title with your kids, you and your children all own the property equally. When you die, the property immediately passes to them without the need for a will or trust. There are significant downsides to this method, the greatest of which is the lack of division of property. Still, it avoids probate, and if you want to ensure the property goes to your children without delay, this will ensure it.
- Living or revocable trust. The most complex but safest route is to consult an estate planning attorney and draw up a living trust. As with titling the property, a trust bypasses probate by taking effect immediately upon your death or incapacity. Unlike a will, trusts need not be probated since the trustee is tasked with immediately distributing property, including all real property. In a trust, you can specifically detail which property is to go to which individuals. Your children can take title immediately, although they will have to have the property titled in their names. You can also leave property to minor children since a trustee can be designated to hold the property on their behalf until they reach a suitable age.
Even if you decide to handle your estate plans yourself, it is best to discuss them with an estate planning attorney. Your attorney can explain your options and go over the pros and cons of each alternative. It is also a good idea to have an attorney review your living trust before you sign it, to be sure that everything is included and properly listed. Some types of property transfer and powers of attorney require legal language to be binding on the agent. It’s a good idea to have someone who understands this language make sure you did the right things, so go ahead and contact us today.
Contact a Cedar Rapids Estate Planning Lawyer for Help Today
If you are considering estate planning and have a home you want to protect, or you have any questions about your will or trust, contact the Cedar Rapids estate planning lawyers of Arenson Law Group, PC at (319) 363-8199 and talk to one of our attorneys. We can help you review your options and make the best decisions for the disposition of your property and the protection of your loved ones.