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How to Leave Assets to Disabled Loved Ones

The purpose of an estate plan is to provide for your family and loved ones after your death. If you have a loved one who is disabled, it is crucial to set up this plan carefully in order to best provide for that individual.

Special Considerations in Planning Your Estate

Estate planning for a disabled beneficiary can be a complicated process. A beneficiary with a physical or mental disability has unique needs that must be thoroughly understood before crafting your plan. It is important to address several important questions:

  • What are the abilities, limitations, and needs of your loved one?
  • What government benefits and services are they receiving or are likely to receive in the future?
  • What are the eligibility requirements for those benefits and services and what effect will the various forms of inheritance have on that eligibility?
  • What kind of assistance and support will your relative need after your death?

A savvy estate planner has an entire arsenal of possibilities that can be used to accomplish your goals.  The following are some estate planning options as well as some of the advantages and disadvantages of each.

Estate Planning Options for A Disabled Beneficiary

Leaving Property by Will

A will is a written legal document that determines who will get your assets after your death. If you do not make a will, Florida state law will determine who gets your property. A person who dies without a will is said to have died intestate.

Each state has its own intestacy law. In Florida, if you die before your spouse and children, your spouse will get a share of your estate (specified by statute), and the remainder will be split equally among your children, regardless of whether they are minors or have disabilities. If you die after your spouse but before your children, your property will be split among your children in equal shares. Again, this can leave a substantial sum of money directly to your disabled family member and jeopardize his or her eligibility for government benefits. With the problems involved in intestacy, it is imperative that you make a will.

There are several ways you can handle a relative with a disability in your will:

  • Gift

An outright gift or “bequest” of money to your disabled loved one will count as available assets to them and can result in his loss of eligibility for government benefits or services. It is important to consider whether the gift from your estate is sufficient to make government benefits unnecessary to meet his or her lifetime needs. To do this you will need to review the value of your estate, the needs of your relative, the type of care he or she will need, any other sources of income for him/her, and the needs of your other family members.

In addition to possibly losing government support, an outright gift may also be undesirable if the family member is unable to manage it. In such a case, a court will likely step in and appoint a guardian to oversee that individual’s assets, person, or both. Therefore, an outright bequest of money or assets to your relative by will is only desirable when he or she is able to handle his or her own affairs or when government benefits will not be jeopardized by it.

  • Disinheritance 

If the lifetime needs of your relative exceed what your estate can provide, government benefits become necessary. One way to ensure that they do not lose government benefits is by disinheritance. Although “disinheritance” can be a loaded term and seem like a counterintuitive concept, this estate planning option has the benefit of allowing a disabled individual to collect government benefits. 

Even if you choose not to leave anything of significant monetary value to your relative, you can still leave a gift that has personal or sentimental value.  Of course, this estate planning option will depend on your family’s unique circumstances.  If you decide that disinheritance is the best option for your family, your estate planning lawyer should consider adding specific language that this choice was deliberate, and not unintentional or an oversight. 

Placing Property in a Trust

A trust is a legal document that allows property to be held and managed by one person (the trustee) for the benefit of another (the beneficiary). A Special Needs Trust is a specialized trust that allows family members and friends to contribute to it to pay for goods or services that are in the beneficiary’s best interest. This includes any assets that your estate wants to contribute to the trust. A properly drafted trust can protect both your relative’s eligibility for government benefits as well as provide for financial management without the need for a guardianship.

A trust is a flexible arrangement, as the terms of the trust are defined almost exclusively by the person setting it up; that’s you! A trust can be created during your lifetime (an inter vivos trust) or can be created at your death by your will (a testamentary trust). Unlike the moral obligation of a sibling, a trustee has a legal obligation to use the funds only for the benefit of the disabled beneficiary. Furthermore, a trust can have more than one beneficiary and/or more than one trustee so the responsibility does not all fall on one person.

Creating a Guardianship

A parent may designate a guardian for a minor in his or her will, and a court will appoint that person as guardian absent unusual circumstances. In contrast, guardians are not assumed to be necessary for a person over age 18, regardless of whether that person has a disability. When an individual reaches the age of 18, regardless of any functional limitations or abilities, she or he is presumed to have the legal right to make decisions on her or his own behalf. In Florida, guardianship of an adult can only be obtained if a court determines that the individual is incapacitated.

In determining whether an adult is incapacitated, a court will consider the nature and extent of the person’s disabilities, the person’s adaptive behavior and social skills, the services utilized, the types of assistance needed, and whether less restrictive alternatives to a guardianship would be more appropriate. If the court determines that the person is incapacitated, it will also decide the scope of the guardian’s responsibilities and the duration of the guardianship. The court will prefer to appoint a limited guardian if the person is only partially incapacitated.

Do You Need An Estate Planning Attorney?

As a caregiver, you have acted as your relative’s protector, teacher, and advocate. Your relative may very well have needs in areas that will continue indefinitely. Unfortunately, you will not always be there to see those needs met. By carefully identifying what those needs are, maximizing your relative’s competence and independence, increasing your relative’s interaction with family and friends, and developing a solid estate plan with your attorney, you will be giving your relative the best chance for a happy and fruitful life.

Estate planning can be very complicated, especially when planning for the care of a disabled individual.  An attorney experienced in estate planning can help you foresee what issues may arise and help plan to avoid those problems. The skilled estate planning firm of Eldredge and Davis can ensure that your intent is clearly expressed and that your wishes will be followed after your death. Call our offices today for a free consultation. 

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