If you have a family member with special needs, financial concerns are more than likely always top of mind. Family members or friends who want to help by gifting or leaving an inheritance to them may have good intentions. Unfortunately, many times there are unintended consequences that do more harm than good. For people who rely on certain needs-based government benefits, receiving an inheritance can rid them of their benefits. If that person has too many resources to push them over a specific cap or threshold financially, they will lose them.
In this episode of Absolute Trust Talk Live, fellow Absolute Trust Counsel attorney Madison Gunn joins Kirsten to discuss different methods to resolve inheritance issues. Kirsten and Madison review and assess a handful of special needs estate planning scenarios highlighting what went wrong as well as how to save benefits. More important yet, this expert duo will share key strategies you can use to prevent future problematic inheritance challenges in your family. While the cases review hone in on special needs, the lessons shared can impact anybody who is doing an estate plan, which hint hint, should be everyone! So, find a quiet spot and get ready to strengthen your legacy.
Big Three from Episode #076:
- If someone with special needs receives an unexpected inheritance that jeopardizes necessary benefits, there are solutions to help save them.
- If you are doing an estate plan, you should have what Kirsten calls a “just in case provision,” With special needs terms built in. You never know what could happen down the road.
- If you are the parent of a special needs person, set up a special needs trust and tell all your family members to plan accordingly if they intend to leave an inheritance or gift behind.
Time-stamped Show Notes:
2:22 – Start listening now to hear Madison reveal one of the most common inheritance issues they see in special needs cases.
2:56 – There are many kinds of government benefits available. However, the type discussed here are largely impacted by an inheritance.
4:23 – What happens if someone passes away, leaving behind an inheritance without an estate plan? How does that impact a person with disabilities?
5:22 – Madison shares two other scenarios that could disqualify a special needs person from their benefits. Press play now for more information.
7:37 – So, if the inheritance is outright? What would the fix be? Start listening here to find out.
9:14 The two requirements for a first-party special needs trust is the person receiving the money has to be under 65, and there has to be a provision to pay back Medi-Cal in the trust. Here are the details.
10:26 What if the beneficiary is not under 65? Can they still set up a special needs trust?
11:30 A recurring question clients usually ask, why they cannot just take the inheritance and give it away. Tune in here to find out the answer.
12:48 Did you know? Even if the inheritance does not actually go to the beneficiary, they still need to claim it and report it? Even then, there could still be penalties. Start listening now for more.
13:58 Question from the Ask Kirsten Segment: My mother died in 2018, but we still have not received our inheritance, and it’s been three and a half years. What can we do?
15:47 – What can be done to help a special needs person protect their benefits if they receive an inheritance in a trust?
18:04 – Jump here to find out here what a petition for modification actually means!
19:24 – Live Q&A: What if the person inheriting property is receiving SSDI?
20:49 – Can you do a petition to modify a trust into a special needs trust if there is more than one beneficiary and not all the beneficiaries are special needs persons?
21:12 – Can you add the inheritance to a special needs trust that the parents set up for when they die?
22:08 – Kirsten ends the podcast with two big takeaways. One, don’t forget your “just in case provision” to be prepared for the future. And two, set up a special needs trust and tell your family!
[Ad] If you need help planning for the future of a special needs family member or are ready to update your estate plan to better prepare for the future, we’re here to help. California estate law is our specialty. We can put the proper protections in place to ensure your loved ones are cared for properly no matter what life transitions or challenges face your family. Getting started today is easy. You can get in touch with our team by calling 925.943.2740 or sending an email to info@absolutetrustcounsel.com. Or, if you’re ready, schedule your free discovery call and let’s discuss your unique needs.
If you’re someone who needs to include Medi-Cal planning in your estate plan, we can help. For more information on what Medi-Cal planning should look like, visit https://absolutetrustcounsel.com/practice-areas/medi-cal-planning/ for even more resources to help get you started.
