Wills and Trusts Lawyer in Blue Bell Helping Clients Protect Their Assets
Serving Philadelphia, Chester, Lehigh, Montgomery, Delaware And Bucks Counties
The recent global pandemic has caused a lot of fear and uncertainty, which led to many people rushing to make their estate plans and write their wills. Wills and trusts are important components of any estate plan, but it is important to understand how each of them works and why it may be best to work with an attorney to ensure your will is written properly and that your trust will work as intended.
What is a Last Will?
A will (also called last will and testament) is a legal document that allows you to have a written record of your wishes for how your property and wealth will be divided after your death. You may include a list of your assets and details about who should receive what. The assets you list in your will continue to belong to you for as long as you live, and your beneficiaries may not come forward and claim the assets until after you’ve passed away and your estate assets have gone through probate.
If you die without a will, your assets will be distributed by a judge who will rely on Pennsylvania intestacy laws to decide which beneficiary gets what, based on who your surviving relatives are. Priority is given to a spouse and children, so if you intend to leave a portion of your inheritance to a sibling or a charitable organization, you need to have those wishes expressed in your last will. Otherwise, your assets will simply go to your surviving loved ones.
Are There Differences Between Wills and Trusts?
There are several important differences between wills and trusts, but both are considered important tools that can work together to give you greater control over how your assets are distributed after you pass away. We have already mentioned that a will is a legal document that serves as a written record of your wishes for asset distribution, but nothing you list in your will exchanges hands until you pass away. You will remain in full ownership of your assets, and your beneficiaries only receive their share after your estate is probated in court.
A trust, however, is more of a container for your assets and is funded while you are still alive. You may create one of many popular types of trust, such as a revocable living trust, and fund it with a wide variety of assets–from real estate to financial assets, vehicles, investments, and more. Once you add your assets to the trust, they technically belong to the trust. After you pass away, the assets are transferred to your beneficiaries according to trust terms, without the need to go through probate. Trusts may have a higher upfront cost and require more work and planning, but they can generally make the asset distribution process much easier for your beneficiaries because the process can be done out of the courtroom and in less time.
Are There Assets That Should Not Be Included in a Will?
Not all assets in your estate need to be included in your will, so it is important to know the difference when working on your last will. The general rule is that assets that are solely owned by you without a co-owner or beneficiary designation will likely need to go through probate before being distributed and, therefore, should be part of your will.
This means that if, for example, you own a home and have your spouse listed as a co-owner, the home may be directly transferred to your spouse after your passing, in most cases. The same is true for investment accounts with a transfer-on-death designation, which is usually automatically transferred to a named beneficiary. Last but not least, assets placed in a trust are not usually part of your will because they also bypass probate and can be given to beneficiaries directly.
Why Are Trusts Important for Estate Planning?
Trusts are popular estate planning tools because they can help you fulfill a wide variety of estate planning goals. Some of the most popular reasons for choosing a trust are bypassing probate, having greater control over how assets are distributed to beneficiaries and when, and minimizing tax liability.
Trusts can be especially helpful if you would rather have your beneficiary receive his or her inheritance in the form of monthly or yearly payments rather than in a single lump sum. For example, if you have a beneficiary that is relatively young and inexperienced with managing his or her finances, it may be best to only allow that person to access a portion of their inheritance and thus reduce the chances they would frivolously spend it all. Trusts have many more advantages and disadvantages and can be used to help you reach many different estate planning goals. Talk to your attorney to see if a trust is right for you.
In Pennsylvania, a “special needs trust” ( also known as an “SNT”) is a trust designed to hold assets that may benefit a child or relative with disabilities or special needs. If properly drafted, assets placed into an SNT will not disqualify an individual with special needs from government benefit programs such as Medicaid and Supplemental Security Income (“SSI”), which provide a basic level of support for food, shelter, and health care.
As a beneficiary of an SNT, your special needs child or relative can maintain eligibility for the government programs they need while still having funds available from the trust to provide for their supplemental needs.
Your special needs child or relative’s special needs trust may pay for such things as:
- Care manager services.
- Guardian fees.
- Attorney fees.
- Specific personal Items.
- Entertainment and luxuries.
- Outings and vacations.
- Travel and transportation expenses.
- Their hobbies.
- Costs to make their vehicles accessible to them, and more.
Some qualifications must be met, but a well-drafted, detailed SNT will allow your loved one to receive all the supplemental income and state and federal benefits they deserve. Your meticulous and empathetic Blue Bell estate planning lawyer will thoroughly explain that needs-based government benefits may include asset limits your loved one must qualify for. A professionally written special needs trust will allow your disabled child or relative to continue receiving the additional government benefits that would be eliminated or decreased without a SNT in place.
For example, your adult child with autism may receive SSI benefits, but you may want to grant them additional funds now or at the time of your death to meet their current living expenses. If this is done incorrectly or without proper professional guidance from your special needs trust lawyer, any extra income you provide could disqualify or vastly reduce your child’s government benefits.
Additionally, if you leave your special needs child a considerable inheritance when you die, they may no longer qualify for SSI or Medicaid benefits. However, if you put their inheritance into a special needs trust, they will likely be able to keep their benefits and still receive your inheritance for the remainder of their life.
A special needs trust is a valuable legal estate planning tool that your experienced Montgomery County or Philadelphia estate planning lawyer will use to ensure your special needs loved one is cared for in the best possible manner.
Is It Difficult To Form a Special Needs Trust?
When working with a knowledgeable Blue Bell estate planning lawyer, the decisions you must make to form an SNT is always a reasonably straightforward process.
Some of the legal steps commonly involved in setting up your special needs trust are:
- Determining your exact goals for your loved one – This is the most critical step, as it usually will determine how all funds will be distributed.
- Choosing a trustee is also vital, as your trustee will help manage, invest, and disburse funds for your loved one’s use. So, this is another critical choice that needs to be made wisely and with rational professional legal guidance.
- Working closely with your Philadelphia or Bucks County estate planning lawyer, you’ll be able to draft and create a well-drafted special needs trust that meets the financial goals you wish to maintain.
- Funding the SNT based on your estate planning lawyer’s advice and guidance.
- Investing your funds conservatively and competently so that the trust will be available for as long as possible for the beneficiary .
Following the professional advice of your Blue Bell estate planning lawyer will ensure your special needs trust accurately accomplishes what you want for your loved ones’ future and that your specific wishes are executed diligently.
Are There Different Types of Special Needs Trusts?
Every estate differs in complexity and details, and there are two types of special needs trusts to cover most contingencies. These are:
The Self-Settled Special Needs Trust –
- The assets of the beneficiary fund this type of SNT.
- Usually, it is established by the beneficiary’s parent, grandparent, guardian, or by a court of law.
- It’s commonly given directly to the beneficiary under the age of 65.
- Upon your death (as the beneficiary), this trust may have to reimburse Medicaid for benefits provided to the beneficiary during their life.
The Third-Party Special Needs Trust –
- This trust is funded and established by a third party.
- There is no age requirement for the beneficiary.
- This trust does not usually require Medicaid reimbursement.
It’s common knowledge that nothing in the law is ever straightforward, and deciding which type of special needs trust you need depends entirely on your unique situation. So, to ensure your wishes are carried out correctly, getting professional guidance from your Blue Bell special needs trust lawyer is mandatory.
A self settled or third-party special needs trust can also be set up as a Pooled Trust. A Pooled Trust is a type of special needs trust that is managed by a nonprofit company, and it is used for the benefit of an individual with special needs. A Pooled Trust can provide additional funds for the basic support that a special needs person receives from Medicaid and SSI.
The assets in a Pooled Trust are used for the sole benefit of an individual with a disability to improve his or her quality of life. The assets of all the beneficiaries in a Pooled Trust are combined (or “pooled”) for investment purposes so a trustee can have greater investment options. The trustee still separately accounts for each individual’s interest in the Pooled Trust.
The individual with a disability, their parent, grandparent, or guardian, as well as the court, can create an account in a Pooled Trust to benefit the individual with a disability.
How Do I Know If My Loved One Qualifies For A Special Needs Trust?
A special needs trust can be formed for people who receive government assistance from SSI and Medicaid programs throughout their lives. These government benefits provide support to individuals with a permanent or severe disability.
A special needs trust is a good option for an individual with a disability who has too many assets to remain eligible for government benefits. It is also a good option for an individual who has to “spend down” assets for unnecessary items just to preserve eligibility for essential supports and services.
Without a special needs trust in place your disabled child or loved one could miss out on benefits they may be entitled to or even lose benefits they are receiving. Don’t let that happen; ensure you get the professional estate planning advice you need.
I Need To Investigate A Special Needs Trust; How Should I Proceed?
Taking care of a relative or loved one with a disability is always challenging and can be difficult at times. Most family members, though, lovingly and happily take this responsibility on their shoulders.
However, if you are no longer here or able to manage this task; your prime concern should be for your loved one to receive the best care possible.
It’s important to consult with an estate planning lawyer to help you sort through your planning options. Consulting with your empathetic, professional, and successful Blue Bell estate planning lawyer about drafting an SNT will ensure that your loved one receives all the care they need and are entitled to. Consult with your estate planning lawyer today so that nothing is left to chance.
Why Should I See an Estate Planning Attorney?
Wills and trusts are key components of any estate plan, but they need to be properly written in order to work the way you intended. While there are many online resources offering templates to help, you write a last will or even put together a trust, taking the do-it-yourself approach is often risky because those off-the-shelf options are not customized to meet your unique needs.
Whether you just want to have a well-written last will or need more complex estate planning tools and strategies, speaking to an estate planning attorney as early as possible will only work in your favor. At the Piles Law Firm, PLLC, Attorney E. Nego Pile has been helping countless clients and their families in Blue Bell, PA, to create and update their wills, trusts, and estate plans. If you want to take the right steps to safeguard your legacy, contact our office at 610-718-6368 and schedule a free case evaluation to see how we can help.