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Setting up Family Trusts
MaineLonghorn
42247 replies2278 threads Super Moderator
in Parent Cafe
Has anyone done this? Any suggestions? It seems confusing.
It seems like a good idea to also set up a Realty Trust, because we have a second home. The attorney explained that you get an exemption for your primary home when you're trying to get into a nursing home under Medicaid, but there is no exemption for the second home.
We need to set up a trust because of our disabled son. If he just inherited money directly from us, he would lose his eligibility for Social Security and Medicaid. If we would put money in his ABLE account, he can keep it for now but it would go to the state once he passes away.
The attorney said we should also consider what would happen if I pass away before my parents. My share of my dad's estate would pass on to my three kids, and that would also impact my son's eligibility for SS.
Sigh. So much to think about. We met with the lawyer yesterday, and he said, "You should plan as if you were going to pass away tomorrow." And then we went home and saw all the Facebook memes about the 3,000 people on 9/10 not realizing it was their last day on earth.
25 replies It seems like a good idea to also set up a Realty Trust, because we have a second home. The attorney explained that you get an exemption for your primary home when you're trying to get into a nursing home under Medicaid, but there is no exemption for the second home.
We need to set up a trust because of our disabled son. If he just inherited money directly from us, he would lose his eligibility for Social Security and Medicaid. If we would put money in his ABLE account, he can keep it for now but it would go to the state once he passes away.
The attorney said we should also consider what would happen if I pass away before my parents. My share of my dad's estate would pass on to my three kids, and that would also impact my son's eligibility for SS.
Sigh. So much to think about. We met with the lawyer yesterday, and he said, "You should plan as if you were going to pass away tomorrow." And then we went home and saw all the Facebook memes about the 3,000 people on 9/10 not realizing it was their last day on earth.
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Replies to: Setting up Family Trusts
It sounds like your situation is complicated though so I would maybe suggest getting a second legal opinion for the best way to provide for your son.
Then I'd get a second opinion from a lawyer experienced in dealing with the disabled.
It is uncomfortable to think about but I think the piece of mind in the end outweighs the grimness of the discussion. It is better to have a well thought plan that honors your wishes than leave your kids and/or their guardians scrambling. Good luck to you!
All I can say is that my Mom's trust was a wonderful wonderful gift from her to us for cleaning up the messes she had made while demented and for managing assets whil she lived. It has been two years since she passed away and we are still cleaning up and selling property, but management with the trust makes it much easier.
This attorney comes highly recommended, and the fact that he knew all about ABLE accounts for the disabled was encouraging.
Our estate plan has trusts for H and I. Multiple items in each. Our plan also divides our assets equally between S1, D1, D2. S2 will be funded by his trust (recommended by lawyer) so no share for him. Because there are 12 years between S1 and D2, we have set it up for each child to receive 1/3 at 25, 28, 31. If D2 is not 25, she has some money available before the splits to cover post HS schooling, wedding, living expenses until 25. S1 is the executor.
It’s all pretty complicated, but I think the plan will greatly help our kids when we are gone. My parents did the same, and it made my job very easy, though time-consuming, when they both had passed away.
We used a lawyer who specializes in estate planning. She’s part of a large firm and they have financial advisors/consultants as part of their group.
People use trusts to deal with a whole variety of different issues, and they really aren't one-size-fits-all. Some are for tax planning, some for avoiding probate issues, some for protecting loved ones from their own profligacy, some are for protecting assets from vicious creditors (like an evil son- or daughter-in-law who is just waiting for you to pass away to file for divorce). Or all of the above.
There are trusts designed to ensure that the trust's grantor will qualify for government benefits without depriving her children of an inheritance, and trusts designed to ensure that the beneficiary will continue to qualify for government benefits without the government taking the trust assets as reimbursement. That last is a so-called third-party Special Needs Trust. It's a great tool in some situations, but not so great in others. It depends on your child's capacity and needs, and also on the resources you can make available.
The sad part is that my friend so resented her money being out of her immediate control, that my joint POA ended up distancing herself from the relationship. Doing the right thing does not always make the path smoother.
Also, she was very concerned that her ex would leave something to my sister upon his death. She spoke with him many times but he wouldn't acknowledge her concern. He passed a couple years ago and, fortunately, he did not. Hopefully you can work with your father to see if he can change his documents to protect against your son from the pass through.
It does sound like you have options and an attorney with some good advice. Good luck figuring out what's best for you and your family.
That would require a great deal of (deserved) trust. Your sister is so lucky that her siblings are willing and up to the task. I and my brother would do the same-one of my sisters could not be counted on. This kind of thing always reminds me of the opening scenes of Jane Austen's Sense and Sensibility. The son makes a deathbed promise to his father that he will take very good care of his sisters/stepmother. Then as time goes by (and with the constant harping of his devious wife), the definition of "very well" evolves and evolves, not in the direction the father had intended.
Please make sure you understand what is required in your state to replace the trustee. I've just been through the process in California, with a trustee who didn't want to let go. Feet were dragged to the bitter end, over 8 months after the resignation/retirement notification letter was sent to us. (The last 3 week's or so were waiting for a $25 check to clear.)
We had a lot of other issues with our trustee that got us to that point, but very much still worth being crystal clear in your understanding. It's been such a weight off my shoulders to have a (new) trustee who will communicate with me (and my siblings).
One day we had a meeting set up to finalize- everything was done EXCEPT for the guardianship. Our lawyer was in court- so we met with one of the other attorneys in the practice who we'd heard good things about but had never met. He asked why I was vacillating on the guardian- and I told him that my key concern was that this person was guardian for a special needs nephew, trustee for a sibling with a substance issue, had taken on a foster kid who was not a relation but had nowhere else to go, etc. (and those were the only situations I knew about). The lawyer looked me in the eye and said "Do you want someone who steps up to the plate, or someone who is going to try and figure out how to weasel out of it, or do a third rate job raising your kids?"
He was right, we finished the wills, and that was that. Such clarity. There are certain people in the world who step up to the plate, do the right thing, carry the load.... and other people who grimace and phone it in.
Hugs to you. This must be very challenging for you to try and predict the future AND do right by all your kids....