Jarndyce v. Jarndyce.  Fans of Charles Dickens understand well this legal case.  The Jarndyce will contest lawsuit continued for years in the background of Dickens’ novel Bleak House.  It was only after the Jarndyce estate was drained of all of its money in order to pay the lawyers did it come to an end.  Every character associated with the Jarndyce case suffered an ill fate.

As usual, Dickens accurately portrayed another societal ill through Jarndyce.  Litigation is costly and sometimes only the lawyers win.  Legal challenges to wills or trusts are not simply costly, they also forever alter family dynamics and eviscerate even the hope for family harmony. Proper estate planning anticipates legal challenges to wills or trusts in order to preserve assets and better ensure that your wishes are honored.

But who might challenge your will or trust and why?  A family member, friend, or complete outsider could initiate such a lawsuit because they feel wronged by the amount or absence of inheritance; they believe the will or trust does not reflect your wishes; or the will or trust fails to meet necessary legal standards.

Proper estate planning would incorporate a Contest Clause.  If anyone challenges the document, the Contest Clause directs that the challenging party is to receive nothing from the estate even if the lawsuit succeeds.  Other tools exist for the estate planner to protect your wishes.  Detailed Statements of Intent can explain the “why” behind a gift or absence of inheritance.  Expressly disinheriting some or leaving a nominal amount could signal true feelings.   Such measures may assist those left behind as well as a judge who is called upon to interpret your intent.

Avoid the fate of Jarndyce v. Jarndyce and avoid will contests.  Contact Michael Geiger at Geiger Law for assistance with these matters and all your estate planning needs.

So many people think of a Last Will & Testament when they hear “Estate Plan”.  However, a good Estate Plan includes so much more and actually addresses potential needs arising during your life.  Unfortunately, the ongoing pandemic reminds us all that we need to prepare for when we can no longer address our own affairs.

First, do you need an Estate Plan?  Do you fit into any of the following groups:

If so, you need an Estate Plan.  Make certain that your Estate Plan includes the following:

We can assist with your Estate Planning needs.  Contact Michael Geiger at Geiger Law.  Michael’s direct line is (901) 219-5549.

Pooled Trusts in the Special Needs Planning arena serve a critical need.  Pooled Trusts offer professional administrative services and the benefits of investments of combined, or pooled, assets.  In the Special Needs area, Pooled Trusts bring expertise in managing and protecting assets of the disabled person to best ensure that government benefits will not be compromised through trust administration.  

Assets which fund a Pooled Trust are combined with assets of other Pooled Trust participants, yet each beneficiary retains their own designated account for their asset contributions (the participant’s “Sub-Account”).  The Trustee manages the assets on behalf of the disabled person.  The Trust is non-profit.  The Trustee typically performs necessary administrative functions such as preparing tax documents such as the K-1 Tax form, as well as retaining necessary professionals such as attorneys and accountants.

The Pooled Trust Trustee further provides services directed for the care of the disabled person.  The Trustee may develop an individualized care plan for the beneficiary.  The Trustee will research the availability of government assistance programs for the beneficiary and then apply on the beneficiary’s behalf.  The Trustee shall ensure that distributions will not adversely impact these government benefits.  In sum, the Pooled Trust Trustee is a professional Trustee in managing the special needs of disabled persons.

To join a Pooled Trust, a medical payback requirement must be included in the Pooled Trust.  Assets remaining in a participant’s Sub-Account at death must first be used to pay back benefits received from government programs.  Pooled Trusts also include both set up and annual fees.  With these fees comes the professional and dedicated Trustee and knowledgeable staff in working with and representing disabled persons.  That expertise cannot readily be replicated.  

For assistance with these Special Needs Planning issues, including consideration of Pooled Trusts, contact Michael Geiger at Geiger Law.

Part I in this series identified and explained the types of Special Needs Trusts, or SNTs.  Whether a First Party SNT, Supplemental Needs Trust or Pooled Trust, a basic goal remains to protect the government program benefits for the disabled beneficiary.  The trust assets cannot become an “available resource” for the beneficiary to best ensure that the beneficiary continues to qualify for benefits.

In crafting SNTs, care must be taken in selecting a distribution standard under the trust.  The Trustee provides for the beneficiary, but cannot do so in allowing assets to be deemed “available resources” for the beneficiary.  The clearest standard to protect both the beneficiary and Trustee is a pure supplemental trust standard.  A supplemental trust standard precludes any trust assets from supplementing or replacing public assistance benefits in any manner on any issue or need.  A distribution can be made only if it would not reduce any needs-based benefit.  There can be no SNT distribution for food or shelter.

The pure supplemental trust standard is the most protective for the beneficiary’s government benefits programs and perhaps easiest to administer for the Trustee.  Yet, it is also the most restrictive and could act to deny the beneficiary critically needed assets.

The alternative is to use a discretionary trust standard in a SNT.  Under a discretionary trust standard, the Trustee is directed to consider known income or resources available to the beneficiary, including public benefits and services in kind, but may make any distribution determined to be in the beneficiary’s best interest.  This standard discourages, but still permits, distributions which could cause a reduction or elimination of public benefits (including payments for food or shelter).  

The discretionary trust standard provides flexibility under a balancing test.  It may prove in the beneficiary’s best interest to forego certain benefits and use trust assets (e.g., costs of housing).  With this discretion comes a need to carefully administer the trust.  A Trustee well-versed in these matters may prove essential to carefully evaluate potential trade-offs in benefit programs with proper care for the beneficiary.  

To carefully consider your family’s own Special Needs Planning, contact Michael Geiger at Geiger Law.

A Special Needs Trust, or SNT, is a type of trust established for the benefit of a person with a physical or intellectual disability.  A trust itself is simply a contract between the Grantor (who makes the trust) and the Trustee (the one designated to administer the trust).  Once funded, SNT assets will be dedicated in a specific manner to provide for the disabled beneficiary.

One fundamental goal of a SNT is to protect and preserve public benefits which the beneficiary receives or may receive in the future.  SNTs accomplish this objective by best ensuring that trust assets should not be considered “available resources” in determining a disabled person’s eligibility for needs based benefits.  

SNTs will be either First Party, Third Party, or Pooled trusts.  First Party SNTs hold assets of the disabled beneficiary which are transferred to the trust.  The beneficiary, parent, grandparent, legal guardian or court can establish a First Party SNT.  The beneficiary must be below age 65 and disabled when the trust is created.  First Party SNTs are irrevocable and the terms cannot be changed.  First Party SNTs sometimes are referred to as “Self-Settled”, “Medicaid Payback”, or “(d)(4)(A)” trusts.  Importantly, First Party SNTs must include a medical payback provision requiring that proper medical liens and costs are paid back from the estate of the beneficiary following the death of the beneficiary.

Third Party SNTs, most commonly referred to as Supplemental Needs Trusts, are established by someone other than the disabled beneficiary utilizing assets belonging to third parties (not assets owned or controlled by the beneficiary).  Supplemental Needs Trusts may be revocable or irrevocable.  Typically, Supplemental Needs Trusts are revocable until the death of the Grantor(s), then becoming irrevocable.

The assets in a Supplemental Needs Trust do exactly as the name suggests: they supplement or are beyond the government benefit programs.  If established properly, Supplemental Needs Trusts have no payback obligations.  Assets remaining in the trust after the beneficiary passes can be distributed according to the terms of the Supplemental Needs Trust.  Because there is no medical payback, Social Security carefully scrutinizes Supplemental Needs Trusts to determine whether the beneficiary in any manner funded or controlled the assets in a Supplemental Needs Trust.

Pooled trusts and other aspects of SNTs will be addressed in additional articles relating to Special Needs Planning.  For assistance with these Special Needs Planning issues, contact Michael Geiger at Geiger Law.

The most important item in estate planning for parents of minor children remains “Who will take care of our kids if something happens to us?”  Many considerations properly go into who to select as the legal Guardian for minors.  Parents, biological and adoptive, may decide who shall serve as Guardians of their minor children if the parents die.  Virtually every state requires that Guardians be nominated by the parents through a written, signed instrument.  A Will is the most-often utilized document for this purpose.  In the absence of proper Guardian nomination, a judge (and not your family) decides who will raise your children.

Nominate Guardians you trust to provide love and care for your children.  Also consider the ability and willingness of the Guardian to follow instructions or guidance left behind.  Guardians need not be family members if others may be better suited.  If you nominate a couple as Guardians, define what happens in the event of divorce.  If your Guardian does not live local, who will relocate?  A non-US citizen can be a Guardian, but plan carefully as many, many issues become implicated with that choice.  

Providing financially for your minor children’s well-being should also be spelled out clearly for the Guardians.  You could leave a lump sum amount to the Guardians to raise your children (really bad idea!).  Or, funds could be placed in a Uniform Transfers to Minors Act (UTMA) account.  UTMA accounts are relatively simple and have few transaction costs.  UTMA accounts need a Custodian, but not a Trustee.  However, UTMA accounts “age out” meaning that all assets become the property of child at a certain age (usually 18 or 21).  Or, funds could be placed in a Trust.  You can set the terms of the Trust; define life events (e.g., graduation) or ages for distributions; provide extended creditor or asset protection; and allow for Trust modification if things change.

If you have minor children, properly name and plan for a Guardian in your estate documents.  If you have not done so, contact Michael Geiger at Geiger Law for assistance with Guardians as well as all your estate planning needs.

We have been trained to regularly address aspects in our lives.  Each year we change the batteries in smoke detectors.  Every 3,000 miles we change the oil.  Every six months we (should) visit the dentist for a checkup.  We know that all parts of our lives need to be addressed and maintained.

What about our estate plans?  You spent all that time and energy to carefully craft that plan to address your wishes if you become incapacitated as well as after you pass.  It’s done.  Place it on the shelf and forget about it, right?  Your life is not static and neither should be your estate plan.  These vital documents need to be reviewed and maintained like everything else in your life.

What could possibly impact your completed estate plan?  Here are some gems:

Changes in the Law.  On January 1, 2020, a new federal law dramatically changed how inherited qualified retirement plan and 401(k) money would be treated for tax purposes.  Those changes impact the perceived benefits built into many estate plans drafted prior to that date.  Congress keeps changing the rules and your estate plan needs to keep up.

Your Family Has Grown.  Perhaps your family has grown with new children or grandchildren.  Perhaps your family doubled in size when you became a blended family.  Do your estate plan documents address these new additions?

Your Family Has Shrunk.  Divorce happens.  Do you still want your ex-spouse as your designated Health Care Agent to make life and death medical decisions if you are incapacitated?  Update those records!

Do not let your estate plan to become outdated.  Contact Michael Geiger at Geiger Law for assistance with all your estate planning needs, including review of your established plan documents.