Estate Planning: One Size Doesn’t Fit All – Part III (Special Circumstances)

In Parts 1 & 2 of this series we discussed the potential for older documents to involve too much or too little estate planning (i.e. “over planning” and “under planning”, respectively).  In addition to under planning and over planning you should also be aware of some unique circumstances that require consideration in your estate plan.

For instance, if you intend to leave a gift to a beneficiary with special needs, it is important to plan to protect their eligibility to continue receiving government benefits.  Many adults with special needs are entitled to receive government benefits for their daily care that are based upon the beneficiary’s financial eligibility.  Accordingly, when their parents, siblings or other loved ones leave them an improperly planned gift it may have the unintended consequence of disqualifying the beneficiary from receiving those benefits for a period of time.  The ultimate result being that the gift that you left is consumed paying for daily care costs that would have otherwise been covered by governmental benefits.  However, with planning and the use of an appropriate trust, we can often make sure that the gift is preserved to enhance (rather than replace) the government benefits that are available to the special needs benefits.

A blended family is another common circumstance that bears careful consideration when completing estate planning documents.  It is natural for a spouse in a blended family to want to leave all or most of their assets available for the care of their surviving spouse.  Generally, the expectation is that any funds that are left when the surviving spouse passes will be split evenly between both spouse’s children (whether they are step-children or natural children of the surviving spouse).  However, statistics tell us that this rarely happens.  More often than not, the assets of the first spouse end up with the surviving spouse’s natural children and/or the surviving spouse’s new partner/spouse.  With planning and careful use of trusts your assets can be made available to your surviving spouse while still protecting those assets for eventual transfer to your children when the surviving spouse passes.

Accordingly, you should seek the advice of an estate planning professional in connection with the preparation of your documents to ensure that your gifts are ultimately enjoyed by your intended beneficiaries.

Royce S. Lanning

Phone: 281-367-1222

Fax: 281-210-1361

[email protected]