When you envision the process of inheritance planning, you may logically think about preparing assets for distribution to your loved ones. You execute certain legal documents, and you slice up your assets like pieces of a pie.
This is one way to look at it, but there is another aspect to consider. The giving is only part of the equation; you also want to consider the life situation of each respective recipient. There are different ways to transfer assets, and the ideal way to get assets into the hands of one loved one may not be appropriate for the next.
For example, if you want to guide a loved one toward positive behavior, or away from negative behavior, you could make this family member the beneficiary of an incentive trust. In the trust agreement, you name a trustee, and you include stipulations that must be met before distributions can be made.
It is also possible to create a spendthrift trust for the benefit of a loved one who is not a good money manager. The trustee that you name would handle the assets in the trust, and they would be protected from the beneficiary’s creditors.
Special Needs Planning
There is also the matter of special needs planning. Many people with disabilities are enrolled in the Medicaid program. This is a need-based health insurance program that is administered by the federal government along with each state government.
Supplemental Security Income is another program that people with disabilities often rely upon. As the name would indicate, SSI provides ongoing financial support if you qualify, but it is only available to disabled people with very limited financial resources.
If someone who was enrolled in these programs was to experience an improvement in his or her financial status, benefit eligibility could be lost. This is something to consider if you have a loved one with special needs on your inheritance list.
To react to the situation, you could create a special needs trust. These trusts are alternately called supplemental needs trusts.
The government benefits certainly help, but they do not provide comprehensive comfort. If the trustee acts within the program guidelines, assets that have been conveyed into the trust can be utilized to enhance the beneficiary’s life in certain ways without impacting ongoing benefit eligibility.
Personalized Planning Is Key
We have provided some basic food for thought in this brief blog post. As you can see, there are many things to take into consideration when you are engaged in your inheritance planning efforts.
Personalized planning is the key to a well constructed estate plan. If you take the right steps, you can provide for each person that you love in the ideal manner.
Our firm can help if you would like to discuss your unique family situation with a licensed legal professional. To set up a no obligation consultation, send us a message through this page: Indianapolis IN Inheritance Planning Attorneys.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.