15.8 Special Needs Trust for Handicapped Child

• Library: A Lawyer's Guide to Estate Planning: Fundamentals for the Legal Practitioner (ABA) (2018 Ed.)

15.8 Special Needs Trust for Handicapped Child

A widow has two adult children, who are the only heirs to whom she plans to devise her estate. One of the children is handicapped and has little prospect of improving to the point of being self-sufficient. The handicapped child is in good health and thus may live much of her life in institutional care. The child presently qualifies for federal and state public assistance payments owing to her handicap.

The widow does not want the child's inheritance to cause her to be disqualified from receiving her present public assistance payments. She also does not want the child's inheritance to be received in a manner that will require it to be expended as a condition of receiving public assistance payments. Further, she does not want the inheritance to be subject to attachment by the government as reimbursement for the public assistance payments. Her desire is that the child's inheritance be available if needed for the child's benefit, but that any portion not needed should be allowed to accumulate until the child's death. The principal can then be paid to the widow's other child or to such other beneficiaries as she may desire. The will that follows carries out this intention.

This will is based on a form from the Foundation for Lifetime Advocacy, Seattle, Washington, and is used with permission. A helpful ABA publication is C. Kruse, Third Party and Self Created Trusts: Planning for the Elderly and Disabled Client (3d ed.; ABA, 2002).

LAST WILL AND TESTAMENT OF MARY JANE ROE

I, Mary Jane Roe, presently residing in Madisonville, Hopkins County, Kentucky, make this my last will and testament, hereby revoking all prior wills and codicils.

ARTICLE I

I direct that my just debts, funeral expenses, costs of administration of my estate, and all estate, inheritance, or other transfer taxes imposed due to my death, be paid as soon as practicable after my death.

? Comment: This is a rather standard clause, but before using it, a determination must be made that the clause is appropriate. For example, should all taxes be charged against the residue? In the hypothetical situation presented this would appear appropriate, but that may not be the case if the will contains specific bequests or the estate contains life insurance or other nonprobate property that is paid outside the estate and yet is subject to estate tax. Also, the estate may have indebtedness that the testator would not want paid during administration, such as a mortgage on real estate. If so, the will should specify that a devise of real estate that is subject to a mortgage is not to be paid, but rather that the devisee should receive the real estate subject to the mortgage.

ARTICLE II

I have two children whose names are Mary Ellen Roe and Jane Elizabeth Roe. My child Jane Elizabeth Roe is handicapped to such a degree...