Getting Your Estate Plan Right

Parents With Disabled Children Might Need More Than a Will

Growing up, I had a friend whose parents always took separate planes when they traveled. They were afraid of orphaning the children. We all thought they were a little kooky.

Now that I’m a parent myself, I’m more sympathetic. I understand better their somewhat unconventional approach to estate planning.

The thing is, we can’t always take separate planes — or trains or automobiles (after all, despite recent tragedies in the skies, you and your spouse are more likely to perish in a car on your way to dinner at a local restaurant than you are on an intercontinental flight.)

What we can do is arrange our affairs accordingly.

For starters, that means making a will.

“I’ve worked with clients in their 40s and 50s who have never done a will,” says Jake Loescher, a financial adviser with Rockford, Ill.-based Savant Capital Management.

Indeed, there is a “growing sense of urgency” among baby boomers — the youngest of whom turn 50 this year — to get their estate plans in order, says Richard Newman, an accountant and insurance agent in Boca Raton, Fla. This is especially true for boomers who have children with disabilities, he adds.

The will is the foundation of any estate plan. It details who gets what and names guardians for minors (and sometimes adult children with disabilities). If you die “intestate,” without a will, the state will decide these things for you.

Some people also create trusts within their wills for the benefit of their children, and designate an institution and/or a responsible person to serve as trustee. Without a trust, your children would get their inheritance outright once they come of age.

A will and a “special-needs trust” are crucial if you have a child with a disability who is unlikely to be able to support him- or herself in adulthood. If your assets were to pass directly to the child, it could jeopardize his or her eligibility for means-tested government benefits. The trust assets can be used to supplement the child’s basic needs.

Many parents set up the trust as a repository for gifts from well-meaning friends and family members, says Shomari Hearn, a vice president and financial adviser in Palisades Hudson Financial Group’s Fort Lauderdale office. Whatever the good intentions, birthday presents and inheritances can quickly add up to more than the $2,000 in cash the child is allowed to have outright and still qualify for Supplemental Security Income and Medicaid, he says.

Typically, parents serve as trustees and name a successor or successors to take over after they die. Many advisers recommend using a corporate trustee along with an individual co-trustee with the power to remove the corporate trustee if necessary and replace it with another institution.

Difficulty choosing a guardian is the main reason a lot of wills never get done, says Sheila Gugliuzza, a managing director in the Chicago office of TIAA-CREF. “Particularly for moms and dads whom I’ve worked with who’ve had kids in their 40s and who’ve wanted kids for an incredibly long time, the process is painful,” she says.

Her advice to these couples: Make a choice but know that you can and should revisit it every few years or if circumstances change.

“Understand the impact of not making a decision,” she adds. “You may be leaving your family to fight over your child.”

As an alternative, consider the team approach. You might designate a guardian for the child, plus a different person to manage the child’s assets, plus successors to these people, plus any number of people to look after the child in an unofficial capacity.

Estate-planning attorney Barry Nelson of North Miami Beach recently traveled to Israel, Paris and England with his wife and three of his four grown children. His youngest, Jesse, remained home with a care giver. Jesse, 20 years old, has severe autism.

Mr. Nelson had long ago drawn up a will and a special-needs trust for Jesse, naming his other children as Jesse’s guardians, “but this trip really made me focus to a greater degree,” he explains. “I said, ‘Whoa, if we don’t come back, who’s going to be watching over Jesse as a care giver and over his money?’ “

Since Jesse isn’t able to judge whether he’s getting adequate care or a reasonable return on his assets, Mr. Nelson explains, “I want a number of people to be overseeing his situation.”

The week before the trip, he dashed off an email to a dozen of his closest friends, in effect, assembling Team Jesse. It read in part:

” … I am in the process of updating my estate planning documents….I may include some of you formally … but regardless if you are or are not in the documents this email reflects my intent that you have access to Jesse and have meaningful input to his care … .

“Btw. U all should do something like this as part of your estate plans.”


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