Protect Your Disabled Loved One With A Special Needs Trust

As you get older, you may be aware that your adult child who is disabled or unable to work and receives SSI or Medicaid benefits, may never be able to take care of him/herself. A concerned parent should be aware that there are ways to protect that disabled child for his/her lifetime and not endanger the child's government benefits. The best way is to create a SPECIAL NEEDS TRUST.

A Special Needs Trust (SNT) can be created from the child's own money - such as an inheritance, an insurance payout, or a personal injury settlement -- or the money of a third party. This trust created from the individual's own funds is more expensive because it must be approved by the court. The easiest and least expensive SNT to make is when a parent or grandparent or other third party pays for the trust and contributes a sum of money for the benefit of the disabled person, who is known as the beneficiary.

One of my clients had a brother who, at 45, was unable to hold a job due to severe COPD. The brother received SSI and Medi-Cal but had very little money for anything beyond basic necessities. The sister wanted to contribute $100,000 for her brother's lifetime special needs. She paid for the trust and named her other brother as trustee. The trustee set up a bank account in the name of the trust and used the funds to pay for disabled brother's needs, above and beyond his room and board, which are the only things covered by government benefits.

WHAT ARE THE ADVANTAGES OF A SPECIAL NEEDS TRUST?

· An SNT ensures that a disabled person with assets over $2000 will still qualify to receive SSI, Medi-Cal and other government assistance necessary for their health and well-being.

· An SNT gives peace of mind to parents that their disabled child will be taken care of when they are no longer physically able to provide the care.

WHAT ARE THE DISADVANTAGES OF A SPECIAL NEEDS TRUST?

· A diligent trustee must be appointed who must handle all the money in the trust. The trustee's job and could last a long time - for the entire lifetime of the disabled person.

· The beneficiary may never receive cash from the trust - only items for his/her special needs, such as medical and dental expenses, medical equipment, training and education, insurance, transportation, entertainment, even vacations, automobiles, real property, modifications to accommodate the disability and other items to improve the quality of life. The trustee pays for everything and the beneficiary receives what the trust has paid for.

· Most disabled persons want to handle their own money and must be convinced that this would disqualify them from receiving government benefits.

· Special care must be taken about distributions if the beneficiary is on Section 8 housing.

I f you have a child who will need outside assistance for the rest of his or her life, see an attorney sooner rather than later to discuss the possibilities of setting up a Special Needs Trust. You'll sleep a lot better once the action has been taken.

DERRYL H. MOLINA is an Estate Planning and Elder Law Attorney, as well as a mediator, in San Jose, California, who helps clients to execute, reform and administer trusts and offers assistance with conflict-resolution, Elder Law and Medi-Cal Planning. In her office, your needs about contracts, Probate, Conservatorships and Guardianships are also handled. She can serve as your Full Life Care Planning Attorney. You can contact Derryl H. Molina at 408.244.4992 or at her email: attderryl@comcast.net.

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Understanding Trust Administration

It is not uncommon for people to be confused about the legal definition of a trust and how it works within the legal system. A trust refers to property given to a trustee to manage for the benefit of another person, who is disclosed within the documents of the official legal papers. In most cases the beneficiary receives interest and dividends on the trust assets for a predetermined amount of time, and this is usually for a number of years. Under the conditions of a trust, an agreement is made where one person transfers the title they hold to a specific property to another person who agrees to manage it for a third party. This is a beneficial process as the party who has transferred the title (the beneficiary) stands to greatly benefit from having another person oversee it for them.

An individual may control the distribution of their property by establishing terms and conditions within a written trust. This can then be used while they are living or after their death. There are many different types of trusts, which have different purposes and functions. A trust may be intended for the benefit of the person who created the trust, or it can be for their surviving spouse or minor children, or for a charity. However, any trusts that are created with the intention of evading creditors or other lawful obligations will be voided by the courts. In general, trusts are created during a person's life in anticipation of their death. This can be done early on in life or later in life, and modifications can be made as time proceeds as long as a qualified real estate lawyer in involved to help. Trusts are the perfect way to ensure that the plans you have for your assets - money, property, etc. - are successfully carried out once you have passed and can no longer see to it that they are followed through in the way you originally desired.

The individual who creates a trust is the settlor, whereas the person who manages the property for another person's benefit is called the trustee. It is the beneficiary who benefits from the trust, not the trustee. A trustee has a duty to act in good faith with strict honesty in regards to administering the trust and serving the interests of the beneficiaries of the trust. A breach of the trustee's duty, known as a fiduciary duty, can result in negative ramifications including a court action and even criminal charges. Therefore, it is very important that a legal professional is involved in the process in order to ensure that no unintentional breaches are made which could wreak havoc down the line.

When you have agreed to be a trustee, you are assuming a large responsibility that you must carry out in full accordance with the law. An attorney can help you in more ways than one by ensuring that you follow all proper protocol so you adhere to the law. Furthermore, if you do encounter an IRS investigation, or if you are taken to court by any of the beneficiaries, an attorney can protect your rights in a lawsuit. As a trustee you have many duties that include: keeping all funds in a separate trust account, you must avoid conflicts of interest, you must manage the funds by making sure they get some kind of financial return while avoiding high-risk investments, you must maintain excellent records, you are required to pay the taxes on any trust income, and you are required to take very good care of the beneficiaries and not violate the trust instructions in regard to them.

Whenever you are assuming a great legal responsibility, it is in your best interests to consult with an attorney. This is especially true when it comes to matters of estate planning and trust administration. In these instances, you will be expected to oversee the assets that are held within a trust, and as such, you will essentially be taking on the same responsibilities as a legal property owner. In fact, this is a type of ownership, either of personal property or real estate property; the difference is that it is an ownership that is being split between the trustee and the person who entrusted their belongings to them. It is therefore up to the trust administrator to oversee the trust, including the distribution of assets, etc. as directed by the creator of the original trust. Because this is a complicated process and one that is highly personal in nature, it is one that must be handled with the utmost care and attention. Therefore, taking measure to ensure that you act under the legal guidance of a professional real estate attorney could make a world of difference in how your case plays out. An Orange County estate planning attorney can provide you with invaluable counsel into your legal obligation and responsibilities pertaining to trust administration. They can also tell you what steps you can take to avoid making any costly legal mistakes during your appointment as a trustee.

Watkins, Blakely & Torgerson, LLP is an Orange County, California estate planning and probate law firm. The firm has dedicated itself to helping the residents of Orange County since 1967 and they have earned a reputation in the legal community for having outstanding commitment and dedication to their client's estate and probate needs. The firm offers a wide variety of services including: estate planning, probate, trusts, wills, IRS investigations, general taxation, business and corporate law, as well as copyrights, trademarks and service marks. If you need assistance with trust administration, they invite you to contact an Orange County estate planning lawyer from the firm by calling (714) 908-4230.

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Due Diligence: Because Trust Isn't Enough

Due diligence research is all about finding a balance between speed and opportunity. After all, someone once rightly said, "If you want to make a living, find a job. If you want to become rich, start a business." And there aren't many moments as exciting as the chance to get in on the ground floor of a business opportunity. There's a rush of adrenaline flowing through your veins, and the more credible the pitch seems, the more your imagination seems to fill in the blanks.

But your first major failure in business will quickly disabuse you of the notion of predictable, easy money. There are so many factors that go into a quality business that a polished, emotionally driven sales meeting can't possibly account for. Frankly, relying on a prospective partner to fully inform you in these modern times is foolish. 8 out of 10 new businesses fail every year - starting up a business is an incredibly stressful experience. So even if they have the best of intentions, when your money is at stake, you need to know your partner better than he knows himself.

That's where a skilled private investigator comes into play.

The Due Diligence Process

What's the number one factor in the success of a new business? Well, things like the overall economic climate and the specific industry in question can play a role, but the biggest factor is always the people involved, and specifically the leadership. That's why individual background checks can be so useful. A potential employee or partner with:
Domestic issuesPast history of shaky finances or bankruptcyHistory of criminal activityA low level of education

Can all potentially be red flags. There's no need to buy into the myth of the self-made genius college dropout, either. According to a Duke University study, the education level of a founder directly correlates to the rate of business profits, sales and employment. It's important to remember that genius doesn't create profit alone - commitment plays a massive role. It's important to be thorough - checking public records, speaking directly to past associates, and conducting thorough interviews with the subject.

Checking the Books

Due diligence is also done for many financial functions, most common of which includes:
Sale, purchase or starting a businessInvesting in real estateInvesting in companies' stockLending out capital

Research shouldn't begin and end with a background check. When you're buying into an existing business, you absolutely have to make sure that all the items and assets are as stated, and of the value quoted by the partner. Assessing the financial condition of a business is known as "financial due diligence," and if you aren't doing it right, you're doing yourself wrong.

The process of financial due diligence might look straight forward, but it isn't simple, and when a chunk of change is on the line, you need a professional's guiding hand. You can't possibly get a good assessment of a business by looking at an income statement, a balance sheet, and a cash flow statement. That stuff is a siren song to the misinformed.

Financial statements can be manipulated to show an ailing business to be a thriving one, and cost the buyer way more than the actual worth of business. Other than the financial statements, you need to check out tax returns - and you need to know what you're looking for. For starters, you'll need 3-5 years tax returns to get a fair idea about the sales of the business. It'll also help you see if there are any pending taxes to be paid that aren't incorporated in the financial statements.

An asset list should give you a clearer summary of what assets you will be acquiring at what value, outside of the complicated stated balance sheet, and you can get those values assessed by a third party. Apart from that, you should also assess intangibles such as employees, future contracts, any lawsuits, the stability of the top 20% of customers and the marketing material used in the company. A skilled professional will present all that information and more in an easy to digest due diligence report.

Inside The Margins

Operational due diligence is important too: it deals with elements like business continuity and disaster recovery planning, fraud and other irregularities, liquidity mechanisms, security of assets, and a legal review.

Operational research means looking into the mechanisms of a business, and those mechanisms aren't always on a spreadsheet. The right investigator will talk to every link in the supply line, from employees that directly interact with customers to the guys that bring the boxes in. We ask smart questions - and then we verify everything we've been told. This kind of thoroughness isn't just about scepticism or finding ways to bow out of exciting ventures - it's about spotting problems before they get unmanageable and making sure things run as smoothly as possible.

The Ultimate Goal

The ultimate goal of a due diligence operation is - making sure that a client is fully informed and comfortable when it comes to buying into a person or a company. How long does that take, and how long does a due diligence report need to be? As long as it takes.

A report that is too shallow can lose important details that could impact the bottom line. But as any businessman knows, taking too long to strike brings dangers of its own. The right balance will ensure a successful due diligence operation.

At Huntting PI, we work with a client and find out how quickly we need to act to maximize depth of information and speed of investment for all of our due diligence operations.

It's a situation that's unique for each industry and each client. The smartest and simplest way to get the right answers is to get a consultation, and we're more than ready to give you an overview. Visit our website at http://www.privateinvestigatorservices.org/, and we'll give you a no-cost, no-pressure consultation.

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Ten Families That Really Need A Minnesota Trust

Late night talk show host David Letterman gives his Top Ten list every show. I'd like to suggest to you my own Top Ten list, about ten families who need to set up a trust to protect their assets in the case of disability or death of one of their family members. A trust can be a wonderful device for your family even if your family has just one or two of these circumstances.

10. Family number ten is the family that owns real estate in another state. When the family's owner of that property dies, you will usually be looking at a probate proceeding both in that state (such as Florida, Arizona or North Dakota) as well as a probate in Minnesota. A family trust can avoid a probate proceeding in both states.

9. Family number nine are the families who have a family member that is physically or mentally disabled. A trust can provide care for that family member long after Mom or Dad has passed away. What's more, if the disabled person is receiving public assistance, a special needs trust can provide financial help to the disabled person without jeopardizing his or her public assistance benefits.

8. Family number eight is the family that has one or more spouses who are not financially sophisticated. If Dad or Mom was making most of the financial decisions while they are both alive, it's important that the survivor between the two of them will be able to continue to live in the family home in the lifestyle that they are used to. A trust can help make this a reality.

7. Family number seven is the family where a member is not married to his or her significant other. Many people that have experienced a divorce are reluctant to formally tie the knot. If they buy a house, have children or accumulate other assets with their significant other, a trust for them or the family may be a good idea.

6. Family number six is the family with a child or grandchild who can't control his spending. We've all seen a young person (or even an older person) who is always short of money and often engages in unwise spending. Sometimes the spending is on drugs or gambling. A trust can provide what we call "spendthrift" provisions that can help protect the imprudent child from himself and his reckless spending habits.

5. Family number five is the family with a member who is gay or lesbian. The Minnesota Law of wills and intestates is slanted in favor of straight persons. A gay or lesbian person needs a trust and other estate planning to protect himself or herself and their partner that will level the playing field. A trust can help provide disability instructions and inheritance provisions that assure that the planning wishes of the gay person are carried out.

4. Family number four is the family where Mom or Dad might not die at the same time. What this means is that the surviving parent may remarry after the other spouse dies. The new stepfather or stepmother may take the inheritance to which the children of Mom or Dad would otherwise be entitled. A well-drafted trust can deal with this very common situation.

3. Family number three is the family who has assets over $200,000. The size of the estate is not always a guide to whether or not to have a trust. However, when the assets are sizeable, the temptations for even upright or religious families can be intense. Possible financial abuse of the parent or the estate becomes more likely. A good trust will reduce the temptations and provide a sensible roadway for handling the assets. A trust can thus promote family harmony.

2. Family number two is the family where either spouse has children by a prior marriage. Remember Cinderella? Her Father married her stepmother who hated Cinderella. The Grimm Brothers told that tale because from the beginning of time, there has almost always been hostility between children of a first marriage and their stepmother or stepfather. A trust can address these tensions and provide a roadmap that clarifies the inheritance between children and their step-parent.

1. The most common family circumstance is the family that wants to avoid probate proceedings after the death of the parent. Probate can be expensive, stressful and uncertain. What's more, probate proceedings reveal private family information. A trust can avoid probate and all the loss of time, peace of mind, expense and privacy.

There you have the ten families that need a trust. Does one or more of them describe your family's situation?

Bill Peterson is a Minnesota Estate Planning Attorney with over 40 years of experience as a lawyer. He can help you plan for the future by creating a Minnesota Estate Plan. For more information, please visit http://www.mnestateplan.com/ or call toll free at 1-888-910-5297.

The contents of this article are for information only and is not to be interpreted as legal advice. For personal legal advice you should consult with an attorney who is experienced in probate law or estate planning.

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