Estate Planning for Clients With Disabled Beneficiaries
| Publication year | 1984 |
| Pages | 1626 |
| Citation | Vol. 13 No. 9 Pg. 1626 |
1984, September, Pg. 1626. Estate Planning for Clients With Disabled Beneficiaries
One of the cardinal goals of investing money is to hold onto what you have and avoid going backwards. Similarly, one of the objectives of estate planning should be to protect family funds from unnecessary expenditures. Estate planners usually focus on taxes---and sometimes on the spendthrift or inept beneficiary---as the cause of financial drain. This article, however, deals with protection of the family resources when an intended beneficiary is disabled and is or will be receiving social welfare benefits.(fn1) Many of the suggestions that follow are also applicable when protection of such benefits is not a concern.
Other than the beneficiary's capabilities, concern for protection of financial resources is twofold. First is the realization that property given outright is subject to attachment by creditors of the beneficiary and that property given in trust with sufficient distribution rights enforceable by the beneficiary also may be available to satisfy the beneficiary's creditors.(fn2) A governmental agency or private organization which supplied social services or care to the beneficiary could be among those creditors anxious to replenish its own funds.
The other concern is that many social programs contain limitations on the other financial resources that may be available to a recipient of benefits. If gifts are made directly to the beneficiary, or to a trust with sufficient distribution rights enforceable by the beneficiary, then the beneficiary could be disqualified for further benefits under some social welfare programs. Thus, on the one hand, there is a need to guard against loss of family capital by attachment and, on the other hand, a need to avoid loss of family income sources by discontinuance of social benefits.
Before considering what can be done for a client, counsel should explore certain considerations. First, what are the resources involved? It is important to know what social benefits are at risk and what financial resources are available. Next, what are the client's estate planning objectives with regard to the non-disabled family members? Finally, how does the client want the funds available for the benefit of the disabled person to be used: for survival only, medical care, education, or for some of life's pleasures that welfare programs usually do not make available? With this information and the client's objectives in hand, a dispositive plan can be designed.
All of the following suggestions will not be applicable in any one particular matter---perhaps many will be, only a few or even none. They may prompt ideas for other means of solving the problems. However, it should be noted that this is not a technical or analytical article, with footnotes liberally used to point out problems and provide some answers. Accordingly, the attorney should analyze the tax and other legal...
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