What is needed before you contact an attorney to prepare an estate plan?
Collect the following information and documents for your appointment with InSight Law:
- Your wishes for the distribution of your assets
- Names of an executor and alternate executor — individuals you trust to manage the affairs of your estate after you pass
- Names of guardians of your minor children — individuals you trust to care for your children
- The nature of your assets and your approximate net worth — if your net estate, including life insurance, exceeds the current or future federal estate tax threshold, tax planning may be necessary to avoid substantial death taxes
- If your family member has a disability, include information about the nature of the disability and the long-term prognosis for that person
- Your existing estate planning documents, including wills, powers of attorney, trusts, child support orders and guardianship decrees
What is a trust?
A trust involves the transfer of property from one person — called a settlor — to the control of another person — called a trustee — to be held and used for the benefit of a third person — called a beneficiary.
What is the benefit of having a trust?
Many estate plans do not require a trust. However, trusts are often essential to ensure the proper management of property left to individuals who are minors, disabled or irresponsible.
Trusts — such as credit shelter trusts, disclaimer trusts or irrevocable life insurance trusts — can also significantly reduce the death taxes of larger estates.
What is a discretionary trust?
A discretionary trust is created either during the lifetime of the settlor or through a person’s will, for the benefit of one or more persons, and in which the trustee retains discretion to determine the level of assets provided to the beneficiaries of the trust. Under current Pennsylvania law, one kind of properly drafted discretionary trust, which may include a special needs trust, can make assets available for a person with disabilities without disqualifying that individual from important government programs.
What is a living trust?
A living trust is created by an individual during his or her lifetime. The settlor of the trust often manages the trust and will retain the rights designated in the trust. The use of a living trust does not typically save death taxes unless it is created as an irrevocable trust.
What is a special needs trust?
Leaving funds to individuals with special needs may sometimes prevent them from qualifying for important benefits under the Supplemental Security Income (SSI) and Medicaid programs. These limited benefits programs will not provide them with the assets that would allow them to enjoy a better quality of life, above and beyond the government’s assistance with food and housing costs. But if parents leave any assets to a child (grown or not) who is receiving public benefits, they run the risk of disqualifying the beneficiary from receiving this assistance. Fortunately, the government has established guidelines allowing assets to be held in trust, called a “Special Needs Trust” or “Supplemental Needs Trust”.
A Special Needs Trust should be established as early as possible, but no later than the beneficiary’s 65th birthday. One benefit of having the Trust in place is that if the beneficiary becomes the recipient of gifts, bequests or a settlement from a lawsuit, these funds can be transferred to the Special Needs Trust without affecting that individual’s eligibility for government benefits. Because the funds in the Special Needs Trust are not counted as “available assets” for the purposes of government benefit eligibility, more of this money can be used for those extra expenses that will allow your disabled beneficiary to enjoy a better quality of life.
The creation of a Special Needs Trust can also help protect your disabled beneficiary from potential creditor harassment and potentially losing these funds in a lawsuit. Whether you need to discuss establishing a Special Needs Trust to provide for a loved one, or need help administering a Special Needs Trust that is already established, the legal professionals with InSight Law are here to help.
What is a living will?
A living will is also sometimes called an “advance medical directive” and is a set of medical directives to healthcare professionals made by a person while competent that is to be used in the event that the person should become incapacitated or be in an end-stage medical condition, i.e., a terminal condition or a state of permanent unconsciousness.
What is a power of attorney?
A power of attorney is a written document signed by a competent individual that authorizes another to act as the individual’s agent — typically in financial or medical matters. If it is drafted as a durable power of attorney, the authority to act by the holder of the power survives the incapacity of the maker.
What is a guardian?
A guardian is a person appointed by a court to make financial and personal decisions for an adult incapacitated person.