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Planning for Children With Special Needs

07 May

Almost 20 million American families include a special needs child, and planning for that child’s needs throughout his or her life can be daunting. Most parents approach estate planning for a special needs child with a desire to leave as much money as possible for their care, but doing it in a way that doesn’t disqualify them from governmental benefits is important.

Here are some recommendations on establishing a plan for special needs children:

Letter of Intent – while not legally binding, a letter of intent that spells out all the information you would want a court or trustee to have about your special needs child can be of great benefit. Include medical history, your choice of a guardian and your preference for your child’s care and living arrangements after you’re gone.

Special Care Planner – special needs planning is a complex process, and there are professionals that can help you navigate this process, working in conjunction with your estate planning attorney and financial planner.

Supplement Special Needs (SSN) Trust – this trust allows parents or grandparents to earmark funds for the care of a special needs child without disqualifying him or her from government benefits.

Will Provisions – you want to be sure your will is written in a way that leaves assets for your special needs child to the SSN Trust you have created, and not to the child directly.

Legal Guardianship – once your special needs child becomes an adult, you will need to file for legal guardianship.

The Dorcey Law Firm, PLC is a Florida Estate Planning, Asset Protection and Business Planning law firm with offices in Fort Myers, Florida and Naples, Florida. Our firm is dedicated to its clients, the rule of law and the betterment of the Southwest Florida community.

It is our goal to provide our clients with the highest level of legal services in the areas of Last Will and Testaments, Probate and Estate Administration, Living Trust, Irrevocable Trusts, Estate Planning, Asset Protection, and complete Business Planning. If you or someone you know needs information on Florida estate planning, please contact us today to schedule your free consultation.

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Posted in Florida Trusts, Fort Myers Estate Planning

The Benefits of Establishing a Trust

30 Apr

In addition to making efficient asset distributions, trusts are often established as a tax-saving strategy. In recent years, the federal estate tax exemption has fluctuated dramatically; before 2010, it was set at $1 million. The current Federal tax exemption is $5.25 million for individuals and $10.50 million for married couples.

A higher federal tax exemption usually leads people to question whether a trust is really a useful estate planning instrument. What you should know is that trusts are beneficial for more than just avoiding unfavorable estate tax consequences.

A trust can be drafted to provide income for family members’ daily living expenses in addition to providing benefit to future generations. If the trust assets are sufficiently significant, interest and dividends from the trust assets may be a source of significant income.

The trust principal can remain untouched in the trust for future generations or it can be sold and reinvested for greater short or long term growth. Your individual goals for establishing a trust will dictate how the trust principal will be managed over time.

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Posted in Florida Trusts, Fort Myers Estate Planning

How and Why to Establish a Special Needs Trust

19 Apr

Many people embark on an estate planning quest in order to help them support the people in their lives with special needs. Special needs can include a variety of medical conditions or situations. Leaving an inheritance outright can jeopardize a beneficiary’s financial assistance, so the best way to leave money to a loved one with special needs is through a special needs trust.

A special needs trust can help by paying for things to improve quality of life that governmental agencies will not usually pay for but that add to a person with special needs’ quality of life: cultural events, travel, education, computer and media equipment.

While a special needs trust must be established by a parent or grandparent, it is not limited to just minor children. It can be established for an adult of any age, and anyone can contribute to the trust.

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Posted in Florida Trusts, Fort Myers Estate Planning

Protect the Beneficiaries of Your IRA with an IRA Trust

16 Apr

If you have more than $200,000 in assets in your IRA, you might want to consider setting up an IRA Trust as beneficiary to ensure your heirs aren’t faced with a big tax bill and enjoy the benefits of the assets as long as possible.

If you leave your IRA directly to beneficiaries, studies show that it is more than likely they will cash out the IRA, which will be counted as taxable income. However, if you create an IRA Trust and pass on assets through that trust, you will be able to specify when and how much your heirs can withdraw, enabling them to take advantage of the “stretch” – required minimum distributions that are stretched out over the lifetime of a beneficiary to preserve assets.

If you have children from a previous marriage and want your current spouse to have access to your IRA but want what’s left to go to those children, an IRA Trust can help you do that as well.

An IRA Trust also helps protect heirs’ assets from creditors, legal judgments and divorce. And since it is a revocable trust, it can be changed at any time before you die.

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Posted in Florida Trusts, Fort Myers Estate Planning

Creating a Charitable Trust Benefits Both Donor and Charity

15 Apr

Creating a charitable trust provides substantial benefits to both the trust creator and the charity, and is fairy easy to establish with the help of a qualified Florida estate planning attorney.

The charity you choose to benefit from your charitable trust must be on the IRS’ list of tax-exempt charitable organizations. Once the trust is established, you will need to transfer the assets you are donating into the trust. The charity is named as trustee of your charitable trust, and invests the assets in the trust to provide income – a fixed annuity or percentage (minimum of five percent) of the trust assets — for you or your heirs. When you die, the trust assets go to the charity – and since the trust assets are not a part of your estate, there are no estate taxes due on those assets.

IRS rules allow you to take an income tax deduction over a five-year period for the entire value of the assets you donated, less the income you receive from those assets. If you fund your charitable trust with property or investment instruments, the charity will sell those to acquire income-producing assets for you, with all the proceeds from that sale reverting to the trust since charities are exempt from capital gains tax.

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Posted in Florida Estate Planning, Florida Trusts

Differences Between Irrevocable and Revocable Trusts

09 Apr

When it comes to Florida estate planning, there are a number of different types of trusts that can be used to reduce estate taxes and protect assets. And while the exact kind of trust that may be most beneficial to your individual circumstances may vary, all trusts are either revocable or irrevocable.

An Irrevocable Trust is a trust that cannot be changed in any way. Before deciding on an irrevocable trust, you should be certain that you could abide by the terms of the trust forever. You should also be aware than an irrevocable trust can never, under any circumstance, be terminated.

A Revocable Trust is a trust that can be changed, at the full discretion of the grantor. Any desired changes must, however, be made through the trustee. A revocable trust can also be terminated at any time by the grantor, for any reason. This provides more flexibility for those who foresee changes that may become necessary to their trusts.

Both irrevocable and revocable trusts have their own unique advantages, so your best bet is to consult with a Florida estate planning attorney for guidance.

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Posted in Florida Estate Planning, Florida Trusts, Fort Myers Estate Planning

Take Precautions When Planning for Loved Ones with Special Needs

27 Mar

If you are the parent or guardian of someone with special needs and are concerned about their future after you are gone, proper estate planning is critical.

By establishing a special needs trust, a parent or guardian can make it possible for a disabled beneficiary to receive assets without threatening their eligibility for government programs or benefits.

If a disabled person receives a direct inheritance of more than $2,000, federal law prohibits them from receiving needs-based assistance. If a special needs trust is established, assets are held in trust for the disabled individual without disqualifying them for essential programs like Medicaid, since the trust is the owner of the assets, not the disabled individual.

Florida special needs trusts are established to provide vital support like education, additional medical care and even recreation. For a loved one with special needs, special needs trusts supplement the basic necessities to improve their quality of life.

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Posted in Florida Estate Planning, Florida Trusts, Fort Myers Estate Planning, Special Needs Trust

Why You Should Consider Entrusting Your Retirement Accounts to a Trust

04 Feb

Most people who do a good job of saving for retirement in tax-deferred retirement accounts usually wind up leaving a good portion of these assets to heirs. And while you may wish that your heirs would protect these assets as long as possible, the fact is that a majority of beneficiaries cash out their inheritances within the first year.

If heirs are to benefit over the long-term from what remains in tax-deferred retirement accounts, they would be wise to leave the money where it is and take advantage of what is known as the “stretch” – where distributions are made over time, according to an heir’s age at inheritance and life expectancy. If a young child inherits, this could result in a significant accumulation of assets growing tax-deferred.

To make this happen, you can create a trust that will allow for the accumulation of the distributions and pay them out over time. The benefits of establishing this kind of trust include:

If the heir is a minor child, a guardian will not be needed to manage the assets, since the trust is the beneficiary,
You assure tax-deferred growth of assets since cashing out is not an option;
The trusts protects the assets against an heir’s potential creditors, divorce settlement, or other financial problems;
You are able to name successor beneficiaries so assets pass as you wish;
The trust can protect an heir with special needs by not compromising their qualification for federal benefits.

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Posted in Florida Estate Planning, Florida Trusts, Fort Myers Estate Planning

5 Benefits to Creating a Trust

28 Jan

Trusts are vital estate planning tools, yet many people wonder what the benefits are to creating a trust. Here are the five key benefits of creating a trust:

To control assets. You can use a trust to keep control over the assets you place in that trust for a specified period of time, or even for years after you die.

To protect assets. You can use a trust to place assets in the hands of a trusted advisor (known as a trustee) for proper management. If you have heirs who are unqualified to manage these assets, this can be a big plus.

To eliminate taxes. If you are married, you can use a trust to eliminate the estate taxes upon the death of the first spouse. If you have children, you can create a by-pass Trust to hold property for children, while still providing for your surviving spouse.

To avoid probate. Upon death, the trustee assumes management of the estate and distributes the assets of the trust to your heirs without having to go to court.

To avoid a conservatorship. If you become disabled or incapacitated, your successor trustee can take over management of the trust without having to go to court to appoint a conservator.

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Posted in Florida Estate Planning, Florida Trusts, Fort Myers Estate Planning

Benefits of a Domestic Asset Protection Trust

22 Jan

A domestic asset protection trust provides a number of different methods to protect different categories of assets – all of which are designed to protect your assets from creditor attack.

Generally, a domestic asset protection trust is used:

To protect the confidentiality of asset ownership;
To deter litigation;
To protect what may be otherwise unprotectable assets;
In place of a pre-nuptial agreement;
As a tool for diversifying investments.

Prior to 1997, the protections offered by a domestic asset protection trust could only have been secured via an offshore trust. However, 15 U.S. states now offer domestic asset protection trusts: Alaska, Colorado, Delaware, Hawaii, Missouri, Nevada, New Hampshire, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Virginia and Wyoming.

Each state has its own statutory structure, so you should consult with a Fort Myers estate planning attorney to discover the best place for your domestic asset protection trust.

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Posted in Florida Estate Planning, Florida Trusts, Fort Myers Estate Planning

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