Bountiful, UT Estate Planning Attorney
“Estate planning” can be defined as the preparation of a plan for administering one’s legal affairs during life, including both financial matters and emergency medical care, and the disposition of one’s estate upon death.
Last Will and Testament
A Last Will and Testament is the foundation of any estate plan. In a will, a person can nominate a personal representative to handle their financial matters upon their death, including payment of any debts and taxes that may be due. Instructions can be provided as to disposition of tangible personal property.
Learn about Transfer on Death (TOD) Accounts.
Guardianship & Conservatorship
In a will, a parent can nominate a guardian and/or conservator to care for any minor children, and both minor and adult children with disabilities. A guardian controls where the child (known as the “ward”) resides, and can consent to and approve medical care to be provided to the ward. Generally speaking, a guardian has all of the powers, rights and duties that a parent has for his or her own minor child. A conservator is a fiduciary generally responsible for the ward’s financial matters. Given the importance of these issues, parents will want to consider carefully who they nominate to provide such important care to their minor children and adult children with disabilities.
Powers of Attorney and Healthcare Directives
Second, individuals should also have financial powers of attorney and healthcare directives in place. In a financial power of attorney, an individual can appoint agents to handle their financial affairs in the event they are unable to do so themselves. A spouse is typically the first agent appointed, with trusted parents or siblings usually serving if the spouse is unable to do so. In the new Utah Advanced Healthcare Directive, individuals can select agents to make decisions regarding medical care and treatment to be provided to them, and set forth their personal directives regarding end of life issues.
Third, parents often struggle over how best to leave an inheritance to minor children or to children with disabilities. In many cases, if the child has not yet reached age 18, he or she may be unable to inherit directly. In other cases, parents want to involve third parties (like other children or family members, and perhaps financial advisors) to assist a child with disabilities to properly manage, invest and apply funds for their benefit.
Often times, it is not advisable to leave a bequest or inheritance directly to an adult or minor child with disabilities. The child may not be able to manage, invest and apply the funds in a judicious manner, and such a bequest or inheritance may interfere with, or disqualify a child with disabilities from receiving certain government and other assistance. Nor is it advisable to leave the child’s share of the estate in care of another child, intending that child to use the funds to provide for the care of a child with disabilities. While such planning may have the best of intentions, the recipient of the funds may misuse or squander the funds, or may suffer financial difficulties that jeopardize the availability of the funds to your child with disabilities. Moreover, in the event the “caretaker” child should pass away (perhaps with a spouse and children), there can be confusion over the proper ownership of the funds. For these and other reasons, lawyers prefer to clearly describe an appropriate estate plan in writing, rather than relying on others to carry out the terms of your estate plan based on your discussions with them.
Trusts are often particularly appropriate estate planning devices in these circumstances. A trust is simply a written set of instructions whereby the person creating the trust (known as the grantor or trustor) drafts a set of instructions and directives for a trustee to carry out for the benefit of one or more beneficiaries.
Trusts are commonly used in estate planning situations. When properly funded, a trust can assist a person in managing and administering their financial affairs, even if they become incapacitated. For individuals with significant wealth, trusts can assist in avoiding the possible imposition of estate taxes. Again, when properly funded, trusts can also help individuals minimize or avoid the need for probate.
Special Needs Trusts
When children with disabilities are involved, trusts serve an additional important purpose. This can best be explained with some background. Generally speaking, neither adult nor minor children have an absolute right to inherit from a parent. Accordingly, if a parent conditions a bequest or inheritance to a child in a particular manner, the child is generally bound by and subject to those conditions. And if a child has no absolute right to demand funds from an estate or trust, generally government programs (such as SSI and Medicaid) cannot deem such funds to be available to the child, nor make a demand on the child’s behalf, as these programs have no greater right than the child has.
Accordingly, if a parent leaves a sum of money in trust for a child with disabilities, providing, for example, that the Trustee is to utilize the funds in the Trustee’s discretion to provide for the “supplemental needs” or “special needs” of a child with disabilities, the child has no absolute right to demand an outright distribution of the funds, and government benefit programs cannot deem such funds to be available for the child’s use or benefit.
With these principles in mind, a parent may for example provide for the direct distribution of funds to children without disabilities upon the parent’s death, while utilizing a “special needs trust” to provide ongoing benefits for a child with disabilities. In such a trust, the parent can describe the terms and conditions for which funds should be applied to benefit the child with disabilities, and provide the trustee with suitable discretion to apply funds to meet future needs. If drafted properly, such a trust can be an indispensable benefit to a child with disabilities.
The trust provisions described above can be incorporated in a will, known as a “testamentary trust.” Drafting a will with special needs provisions is often less expensive than other alternatives, and is not effective until the parent dies. A testamentary trust will generally require probate to be created. Alternatively, special needs provisions for a child with disabilities can also be included in an individual’s revocable or living trust, which can be created and funded during the lifetime of the parent. Finally, a separate or “stand alone” special needs trust can be created for the benefit of a child with disabilities. Such a trust can be created now with its own bank or credit union account, and other individuals, such as your siblings or parents, may contribute funds to the trust, either during their lives or at death.
While many attorneys can draft trusts, special needs trusts require particular thought and care. Calvin Curtis has 22 years of experience drafting and administering special needs trusts, and is the exclusive Utah member of the prestigious Special Needs Alliance. Cal has been selected for inclusion in The Best Lawyers in America © (2009 and 2010), Mountain States Superlawyers © (2008), and has consistently been named as one of “Utah’s Legal Elite” by Utah Business magazine.