Two very important facts about the Last Will and Testament:
1. It operates only after you die. If you need assistance during your lifetime, the Last Will and Testament does not help.
2. It operates only in Probate Court for the County in which you are domiciled at the time of your death. It is the Order of the Court that empowers your Executor to carry out the instructions contained in your Last Will and Testament.
Many individuals and married couples seek to avoid the processes of Probate Court in any one of three ways:
1. Titling their assets in survivorship.
2. Using Transfer on Death arrangements.
3. Using a Revocable Living Trust.
4. Using an Irrevocable Living Trust.
These alternate arrangements have various benefits and risks. These topics are beyond the scope of the present discussion. We encourage you to learn more about how each of these transfer methods works and what benefits any of these methods might offer you and your loved ones.
An Executor is appointed to administer your Last Will and Testament. Your Executor has three basic duties:
If you leave a minor (under the age of 18 years) child at the time you pass away, the Probate Court will appoint a Guardian to raise the child and handle the child’s affairs until the child reaches the age of 18 years.
You can nominate a person to serve as Guardian for your minor children. Typically you want to nominate someone who holds values and attitudes toward parenting that are similar to your own.
A Guardian has two primary responsibilities:
1. Act as a parent of the child, raising the child until it reaches the age of 18 years.
2. Follow the instructions of the Probate Court.
Then, when the child reaches the age of 18 years, he or she can leave the guardianship, collect whatever Estate money remains in the hands of the Guardian, and go on his or her way.
There is some risk in putting a lot of Estate money in the hands of an 18 year old person. He or she is legally an adult, but may not be mature enough to handle a large inheritance.
A Testamentary Trust may offer some protection for the young or immature beneficiary.
One way to protect a child from receiving too much money when he or she is too young is to include in your Last Will and Testament a Testamentary Trust:
1. A Testamentary Trust is a Trust that is created in a Last Will and Testament.
2. It is supervised by the Probate Court.
3. It holds the Estate money and uses it for the child’s expenses until the child reaches an age that you specified. (Age 25 is a very common age for our clients to select.)
4. Then, when the child reaches the specified age, he or she may take possession of whatever Estate money is left in the Trust.
It is, of course, your hope that by the time the child receives the money, he or she will be mature enough to handle it wisely.
Some people want to make gifts of specific personal items or of an amount of money to an individual or to a charity. These gifts can be accomplished in three ways.
For example, “I give the piano that I inherited from my grandmother to St. John the Baptist School.”
2. Giving a set amount of money.
For example, “I give Five Hundred Dollars ($500.00) to St. John the Baptist School.”
3. Giving a percentage of your Estate.
For example, “I give ten percent (10%) of my Estate to St. John the Baptist School.”
Specific gifts also can be given with or without conditions. Conditions are your instructions for how the gift is to be used. For example, a gift of money to your granddaughter for her education might read something like this:
“I give Five Hundred Dollars ($500.00) to my Granddaughter, Susan and I direct that she use the money for school tuition and for no other purpose.”
You also may restrict a gift to a charity:
“I give Five Hundred Dollars ($500.00) to St. John the Baptist School to use toward scholarships for children who demonstrate financial need.”
The Residuary of your Estate is defined as what is left after payment of:
2. Expense of administration
4. Specific Gifts
The Residuary of your Estate is divided among the Residuary Beneficiaries of your Estate in one of two ways:
2. Not Equally
In the case of a child or other beneficiary with special needs, that is, a beneficiary who is and who likely will remain unable to support himself or herself, a host of other matters must be considered for the special needs beneficiary after you are no longer able to provide the needed care. Among those considerations are the quality of life of the beneficiary and the standard of living of the beneficiary.
Who will decide how the funds are spent?
Who will decide what is in your beneficiary’s best interest?
Who will look after your beneficiary’s daily needs?
Who will supervise care and see to it that your beneficiary receives the necessary care?
The quality of your plan will determine the quality of life and the standard of living of your special needs beneficiary.
If your beneficiary is receiving public assistance, planning offers additional challenges in that an inheritance may produce very undesirable results. Two principal concerns arise in planning for a special needs beneficiary who is receiving public assistance.
1. An inheritance passing to a beneficiary who is receiving need-based public assistance would cause the beneficiary to lose that public assistance. Then what?
2. After the inheritance is spent the beneficiary would have to reapply under the rules and regulations in effect at the time of the new application. This scenario leads to unpredictable and possibly undesirable results.
How do you protect your special needs beneficiary and that person’s inheritance?
There are ways to provide appropriate benefits and management for your special needs beneficiary without interrupting his or her public benefits. However, these planning tools are available only to those who invest the time and effort to plan.
No one will do it for you.
Now that you have increased your understanding of Estate planning, you can make better decisions. Your better decisions will benefit you and your loved ones.
If you have not created a Last Will and Testament and other basic Estate Planning documents, you should schedule an appointment now to get this part of your life in order.
If you have a Last Will and Testament or other documents in place, you should review them to be certain they conform to current legal standards.
You also should review the names of the persons you have appointed or nominated as Executor, Guardian, Trustee, Beneficiary, Power of Attorney Agent, Medical Agent, to be sure you still are comfortable with the team you have named.
Brief your loved ones on the location of your documents, on your team of professional advisors, and on who is to step forward when it is time for someone else to handle your affairs.
We often hear the question: “When should I plan?”
The answer is simple. Plan long before the need arises.
If you don’t know when the need for your Estate Plan will arise, then the only safe thing to do is to get it done so it will be there when you need it.
Peace of mind: You and your loved ones will be glad you did.
The information contained in this Website is offered for educational purposes only. The contents of this Website are not legal, tax, or financial advice for any purpose. Your reading the content of this Website does not create an Attorney Client relationship. If you have legal, tax or financial questions about these or any other matters, please contact a professional knowledgeable in the subject matter of your questions for advice and direction in the context of your personal situation.