Responses to Out-of-the-Ordinary Inheritance Planning Scenarios

One of the reasons why it is important to discuss your unique inheritance planning needs with a licensed attorney is because there are different approaches you can take. The ideal course of action for one family may not be appropriate for the next, and a legal professional can guide you in the right direction.

With this in mind, we will look at some estate planning solutions that can be implemented when certain circumstances exist.

Preservation of Government Benefits

Most Americans with disabilities are enrolled in the Medicaid program as a source of health insurance. They also receive cash payments in the form of Supplemental Security Income (SSI).

These benefits are only available to people that have very sparse resources. As a result, an improvement in financial status could result in a loss of eligibility.

How do you account for this if you are planning your estate and you have someone with a disability on your inheritance list? The most commonly embraced solution is a supplemental needs trust or special needs trust.

To implement this strategy, you fund the trust during your lifetime or at your death and you name a trustee to act as the administrator. The person you want to help would be the beneficiary. Under the rules of these programs, the trustee would be allowed to use funds in the trust to make the beneficiary more comfortable in many ways.

As long as the trustee follows the guidelines correctly, ongoing eligibility for Medicaid and SSI would not be impacted.

Providing Assets for Minor Children

Inheritance planning is important for adults of all ages, especially if you are a parent of dependent children. Under these circumstances, you can take steps to provide for a child who is not old enough to handle a direct inheritance.

The same scenario can exist for grandparents that want to leave assets to grandchildren.

There are different ways to proceed when this is your objective, and it will typically involve the use of a trust of some kind. If you explain the situation to an estate planning attorney from our firm, we can make the appropriate recommendations.

Estate Planning for Parents That Are Remarrying

If you are getting remarried as a parent, you may have estate planning concerns. You want to provide for your spouse if you pass away first, but you also want to make sure that your children are not disinherited. This issue can be amplified if you are marrying someone considerably younger than you.

As a response, you could establish a qualified terminable interest property trust (QTIP trust). With this type of trust, you convey assets into the trust and you name a trustee to manage the assets after your death. Your spouse would be the first beneficiary, and your children would be the successor beneficiaries.

If you do in fact predecease your spouse, the trustee would distribute the earnings from assets in the trust to your surviving spouse for the rest of his or her life. You can also give the trustee the latitude to distribute portions of the principal if this is your choice.

Your spouse would have no ability to change the terms of the trust or directly handle assets that are owned by the trust. After the death of your spouse, your children would inherit the resources that are left in the qualified terminable interest property trust.

We Are Here to Help!

Our firm is here to provide assistance if you are ready to put an estate plan in place. It is also wise to consider a review if you put your existing plan into place years ago.

To schedule a consultation in Kentucky, call us at 606-324-5516 (Ashland, KY) or 859-372-6655 (Florence, KY). Our North Carolina office can be reached at 704-944-3245 (Charlotte, NC or Huntersville, NC), and there is a contact form on this website that you can use to send us a message.