Raskin Planning Group

Estate Planning (Part 2): Finding Solutions to Unforeseen Problems

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This is the second in a series of articles about estate and trust planning. Article one defined estate planning and described—in very general terms—how a trust works. Trusts can play a vital role in helping a family meet personal objectives. Every family situation is different and there are a wide variety of problems and solutions. A well constructed estate plan that is coordinated with a family’s overall wealth planning needs may include specific trusts and provisions tailored for the family.

Protecting a mother and her handicapped daughter:

An estate planning attorney referred Joan to Raskin Planning Group ten years ago when she was 65 years old. Joan is a widow with one adult daughter, who has been severely handicapped since birth and is totally dependent upon state assistance. The daughter lives in a state-funded group home and receives state-funded healthcare.

Joan was a public school teacher and receives a sizeable pension. Her husband retired from the military with a pension and Joan receives the survivor benefit. The pensions are more than adequate for Joan. The daughter’s financial needs are moderate and Joan provides the extras (clothing, entertainment, comforts, etc.) not provided by the state.

Joan and her husband were good savers and she had accumulated a sizeable nest-egg.

Joan lives in a retirement community that offers different levels of care. She is currently living independently.

When we first met Joan, she had not implemented an estate plan and was hesitant to do so. She also had a number of different accounts at different brokerage firms and banks. The estate planning attorney felt that Raskin Planning Group might be able to help Joan understand the importance of implementing a plan that met her objectives.

At Joan’s death, her estate valued in excess of $1 million would be transferred to the daughter, disqualifying the daughter from receiving financial assistance from the Commonwealth of Massachusetts. The state would effectively spend the daughter’s assets on her care. This was not Joan’s objective.

Joan’s only living sibling lives out of state, is not trustworthy and has not been involved in the daughter’s care. Moreover, Joan didn’t want this sister involved in Joan’s or the daughter’s financial life. Joan had a couple of family friends that agreed to act as co-guardians for the daughter, but Joan didn’t want these individuals involved with the assets at Joan’s death.

Here is the Solution:

Joan established a revocable trust and transferred her assets into the trust. Joan is the beneficiary and co-trustee along with an independent trust company. At Joan’s death, this trust becomes a “special needs trust” for the benefit of the daughter, with the trust company acting as the sole trustee. The trust will continue to provide the “extras” for the daughter but the state cannot seek reimbursement. At the daughter’s death, assets are distributed to other relatives and to charity.

The trust also provides “privacy” for Joan and her daughter. Joan’s estate will avoid probate and her sister will never know the extent of her financial affairs.

It took about five years for Joan to implement this plan. It is still a work in progress. A few years ago, it was determined that Joan is suffering from dementia and is now unable to handle her affairs, personal or financial. The trust company is paying bills, her good friend is acting as her power of attorney and co-guardian for her daughter. The untrustworthy sister is attempting to influence Joan but the assets are already in trust, making this more difficult.

In this case, the trust was a perfect solution and has been able to meet Joan’s needs despite an unforeseen situation. Fortunately, Joan was able to bring together a team of advisors and trusted friends that are single-minded in their desire to provide for Joan and her daughter.

Please contact us at the Raskin Planning Group and we can guide you through the process.

The content of this material was provided to you by Lincoln Financial Advisors Corp. for its representatives and their clients.Peter Raskin is a Representative with Lincoln Financial Advisors.

Securities and advisory services offered through Lincoln Financial Advisors Corp., a broker/dealer and registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies. 125 Summer Street, Suite 1400, Boston, MA 02110. 617.728.7433. Raskin Planning Group is not an affiliate of Lincoln Financial Advisors. CRN-1470795-041316

Estate Planning: (Part 1): Does a Young Couple Need a Trust?

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