July 14

Conservatorship is Required if there is no Estate Plan

As a rule, people associate needing an Estate Plan with dying. They think of it as something they need to do in order to close their affairs and to leave something behind. However, Estate Plans can also be of use to the living.

At present we are handling a conservatorship case where the mom was diagnosed with dementia, severe enough that she is legally unable to make financial or health related decisions for herself. At the same time, she requires round the clock supervision.

In an effort to assist mom, both of her adult children had taken time to stay with her. No small task considering both lived, worked, and had family outside of the country. Yet, because they did live outside of the country, the law would not allow either to accept the role of conservator.

What this means is for one or both of them to be conservator, they would need to move back to the United States permanently and stay with mom full time. A solution they both hoped to avoid.

What was needed was a fiduciary (an unbiased third party who could make decisions on behalf of mom, while communicating the necessity of those decisions to the children). That way mom could be relocated to a full time care facility, or a care provider could be brought into the home, offering a much needed break for the children should one continue to reside there.

In our case, the problem was that although the fiduciary was a perfect viable solution, the children resented having someone who wasn’t family making family decisions. Still, the sad fact remained that unless one or both of the children were willing to move back and live permanently in the United States supervising mom full time, the fiduciary was their new reality.

This story doesn’t currently have an ending, happy or otherwise. It does however speak to the importance of having an Estate Plan, and how beneficial a plan is for the living as well as the dead.

Sadly mom didn’t have an Estate Plan, but if she did have one drafted and signed prior to becoming ill, she could have made the choice as to who would make her financial and health care decisions. She could have chosen either child, or appointed someone else entirely, regardless of their address, even if they did reside outside of the country, and there wouldn’t be need for a fiduciary.

Ever the optimists, we hold faith that this case will resolve itself rightly. More so, we appreciate and praise the efforts of the fiduciary, and we assure the reader that everyone involved in this situation has the mom’s best interest in mind. Still, had there been an Estate Plan, the process could have been relatively painless. Tension and stress could have been minimized and the family could have handled family business without outside involvement.

June 26

Make Sure You Say Who You Want to be Guardian Over Your Children

I recently enjoyed dinner with close friends. They were introducing me and their extended families, to the newest addition, a beautiful baby girl – their second.

During a lull in the conversation, the mom began asking me questions about our law firm and expressed a genuine interest in meeting with Attorney Streeter. I assured her that Debbie was as great a person as she is an attorney, but asked what the sudden interest was all about. It became clear the answer was right in front of me – nearby the baby was being held by her uncle; the toddler pulled on dad’s pant leg.

It was during this conversation with the mom that I realized just how important it is for married people, specifically married people with children to have at a bare minimum, a well drafted Will, if not a complete estate plan.

The conversation that we shared was as to whom would be the baby’s godparents or guardians should anything happen to mom and dad. That is when it hit me. The sad fact is that without a Will, we do not get to choose our children’s godparents or guardians. We can bestow the honorary title onto Uncle Chris and make him feel like a million bucks. But should anything ever really happen to mom and dad it will be the state who decides who raises the children. If the grandparents are alive, there is a great chance that Uncle Chris will be denied.

Of course, here is another possible conundrum. For argument sake, let’s say both sets of grandparents are alive and happily married. Whose parent’s would get custody, mine or my wife’s?

And it doesn’t end there. What if both parents had siblings … But I digress. For the purpose of simplicity, let us say both parents have passed away – the grandparents on both sides have also passed. Furthermore, your spouse doesn’t have any siblings. You on the other hand have two. One is responsible, middle class, single, fun to be around and loves your children. The other is irresponsible, upper middle class, married, doesn’t share your values, and hasn’t spoken to you in fifteen years… Now there isn’t a guarantee as to where the children will end up, but isn’t that what we want – a guarantee?

As a parent, the odds are good that either you, your spouse, or the both of you are going to live long enough to see your children blossom into adulthood, but a little insurance never hurt anyone. Besides, if you think being chosen as godparents is going to make Uncle Chris feel like a million bucks, imagine how invaluable he will feel knowing that it is all legal.

June 17

Third Party Special Needs Trust

A Third Party Special Needs Trust serves primarily to protect the use of government benefits for disabled or mentally ill beneficiaries. Because government programs usually have eligibility requirements, an inheritance could disqualify the disabled beneficiary from receiving future benefits such as Medi-cal or Supplemental Security Income (SSI).

Although all Special Needs Trust are designed to protect disabled beneficiaries, there are differences between them. A First Party Special Needs Trust for example, is only offered to beneficiaries under the age of 65. In addition, they contain a payback clause, meaning that the beneficiary’s estate must pay back to the state any monies left over once the beneficiary dies.

Third Party Special Needs Trusts on the other hand, do not contain age restrictions, nor do they require the beneficiary’s estate to pay back any money to the state. As a rule, these Trusts are usually drafted by parents of special needs or disabled children.

Here is a scenario. You have a special needs or disabled child. You worry that for whatever reason, they are unable to make proper monetary decisions. You want to provide for them when you are gone, and to protect or improve their standard of life.

To do this, you utilize your Will or Trust, and have drafted on their behalf, a Third Party Special Needs Trust. Why? Because the surviving child doesn’t have control over the Trust, meaning that the child is unable to revoke the Trust, or to use the assets contained in the Trust for any purpose other than what you intended. Another way of looking at it – is that the child cannot just take the money, which by doing so, would cost them their government benefits.

In addition, the Third Party Special Needs Trust is good for the life of the beneficiary, and if drafted to do so, allows the beneficiary to receive gifts, i.e., a home, handicapped vehicle, funds to be used towards paying utility, repair, and therapy costs (or other such costs not covered by Medi-cal).

The Third Party Special Needs Trust exists to protect those most in need of protection. At the same time, this Trust isn’t good for everyone. If interested in having this or any Trust drafted, always begin by speaking to a qualified estate planning attorney.

June 2

Funding the Smithsonian

The Smithsonian Institution is the largest museum and research complex in the world. It houses a total of nineteen museums and nine research centers. In addition, the Smithsonian Institution works directly with an additional one hundred forty museums around the world.

It is a larger than life Institution with one foot firmly planted in scientific pursuit and advancement, and the other planted in science fiction. Yet, prior to government involvement and legislation, the Smithsonian was merely one man’s beneficiary – as recorded in his Will.

British scientist, James Smithson drew up a Will in 1826, naming his nephew as beneficiary. He added that should the nephew die without heirs, the estate should go to “the United States of America, to fund at Washington, under the name of the Smithsonian Institution, an establishment for the increase and diffusion of knowledge among men.”

Smithson himself died in 1829. His nephew followed without heir in 1835. In 1836, President Andrew Jackson announced the bequest to Congress. Smithson generously donated more than $500,000.

A lot has changed since 1836. The expansion and growth of the Smithsonian is in no small part due to moneys collected as: gifts, grants, trust endowments, funds appropriated by Congress, and revenue created by the Smithsonian Institution itself.

Yet, “the nation’s attic” as it has been affectionately nicknamed, which houses both the Hope Diamond and the Ruby Slippers; and draws an estimated thirty million visitors per year, would not exist if not for the generosity of one man and his very well drafted Will.

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