How a Special Needs Trust Can Benefit You and Your Family

special needs, DuPage County estate planning attorneysIt can be terribly challenging to plan for a time when you are not around to care for your loved ones. However, facing this reality by making an estate plan is one of the most selfless actions you can take. This is an especially true if you have a child, sibling, or other close loved one who has a serious disability. If you have been responsible for caring for a loved one who cannot care for himself or herself, you may want to find a way of providing for him or her after you pass away. One way to do just this is through an estate planning tool called a special needs trust.

Planning for the Care of a Loved One with Special Needs

A special needs trust or supplemental needs trust is an estate planning instrument that can be critically important to individuals who have a disabled loved one in their care. This instrument works by allowing the caregiver to place funds in the trust, which can then be used for the future care of their disabled loved one. A special needs trust allows you to put aside money for your loved one without affecting the disabled person’s eligibility for government assistance programs. Special needs trusts can be funded through gifts and inheritances or a lump-sum settlement. Without a special needs trust, money left to your loved one could potential disqualify him or her for certain government aid programs.

Leaving Money to a Loved One Could Increase His or Her Available Assets Too Much

The majority of government-funded aid is distributed to individuals under a certain income level. For example, Medicaid, Supplemental Security Income, and housing subsidies all have income criteria that a person must meet in order to qualify for the financial assistance. If you leave money to your disabled loved one without the appropriate estate planning instrument, it could be counted toward his or her available assets. If the funds are substantial, this money could bump your loved one’s income up to a level which makes him or her ineligible for programs with income or asset limits.

A properly-drafted special needs trust helps you ensure that your disabled loved one will receive the funds he or she needs in a way that does not jeopardize participation in other government assistance programs. Ideally, a special needs trust will help your disabled family member enjoy a high quality of life even after you have passed away.

Contact a Wheaton, Illinois Estate Planning Attorney for Help

Drafting a special needs trust or other estate planning instrument can be quite complex. For quality legal assistance from a knowledgeable DuPage County estate planning lawyer, contact Stock, Carlson, Oldfield and McGrath LLC. Schedule a consultation by calling 630-665-2500 today.

 

Sources:

http://www.americanbar.org/content/dam/aba/publishing/rpte_ereport/te_lewis.authcheckdam.pdf

http://www.americanbar.org/newsletter/publications/law_trends_news_practice_area_e_newsletter_home/0501_estate_financialplanning.html

Rethinking Trusts and Estate Planning

DuPage County estate planning lawyers, estate planning, trusts, trusts and estate planning, transfer-on-death beneficiary, payable-on-death in orderToo often, people think that estate planning and trusts are not applicable to their lives. They may feel they are not old enough to begin to plan, and therefore mistakenly believe that only senior citizens make estate plans and set up trusts. Additionally, they may think that only people who are rich set up trust funds. Again, this is not true.

Although many wealthy individuals do set up trusts to ensure their loved ones are taken care of and their estate is not eaten up by taxes, trusts can be set up by people who have a limited means.

trust is useful in several ways. Whether the person setting it up is rich or has a limited income, it ensures that a person to whom the trust is being left, such as a young adult, will not spend all the money at once. Quite often, a trusted family member or friend is named as trustee to cut down on expenses of administrating a trust.

Another reason why people avoid creating trusts is that they feel it will take too much work to create a trust. Yet the act of moving the money that will fund a trust does not have to be difficult. One option is to name a trust as a transfer-on-death beneficiary or payable-on-death in order to fund it. Hence, immediate action does not have to be taken. This helps keep the funds out of probate.

Many also believe that issues, such as trusts and estate planning, are only necessary when a person is dead and does not realize how helpful they can be when a person is still living. Trusts can help in the event one is stricken with a debilitating illness or injury. Having plans in place for unexpected tragedies can also help ease the burden off one’s family since an estate plan will already have his or her wishes in place.

It is never too early to begin estate planning. If you need help developing an estate plan in Illinois, contact Stock, Carlson, Flynn & McGrath, LLC. Our experienced DuPage County estate planning lawyers offer solutions to protect your rights and assets and help you plan for a better retirement. We can assist clients in Downers Grove, Hinsdale, Lombard, Naperville, and throughout DuPage County. To schedule a consultation, please contact our office at 630-665-2500.

Estate Planning Guidelines When you Have a Non-Citizen Spouse

resident alien, Illinois estate planning lawyer, estate planning, estate tax, Standard estate planning tax advice might not work for situations in which one or both spouses are resident aliens. The term resident alien is used by the U.S. government to describe non-citizens who are permanent U.S. residents, and it could be beneficial for those in this circumstance to get some guidance from an estate planning attorney.

Under federal tax law, resident aliens and American citizens are governed by the same estate tax rules. In cases where the taxable estate assets are above $5.34 million, the IRS will want 40% of those excess funds. With careful planning, the implications of the federal estate tax can be avoided or minimized.

U.S. citizens are eligible to take advantage of the unlimited marital deduction, which allows for as many tax-free transfers to your spouse during your lifetime as you would like. Unfortunately, non-citizen spouses can't take advantage of this program. This can be a big hit when it comes to the estate tax, since the IRS will always want to go after 40% of the excess.

There are several solutions to this issue if you are already married to a non-citizen. First, your spouse can become a citizen. This can even occur after you have passed away provided that it is done before the due date for your federal estate tax return, allowing your spouse to reap the rewards of the unlimited marital deduction.

Second, you can reduce your taxable estate by making big gifts to your spouse while you are alive- married couples can transfer $145,000 to one another in 2014. Finally, you could set up a qualified domestic trust, deferring the federal estate tax on any assets inside until your spouse removes them or passes away.

As you can see, estate tax planning with a non-citizen spouse can be complicated, but there are opportunities for you to reduce the federal estate tax. Consult with an Illinois estate planning attorney today for more details.