Florida Estate Planning Lawyer Blog

The following fifteen common assets and applicable beneficiary designations should be reviewed to make sure they will not be paid (or given) directly to the special needs child:

(1) IRA, 401(k) and other retirement benefits.
(2) Life insurance (including employer-provided life insurance) benefits.
(3) Accidental death and travel insurance benefits provided through credit cards when a person purchases a plane ticket, etc. using that credit card.
(4) Annuities.
(5) Savings Bonds.
(6) Any property not subject to the parents’ will or trust.
(7) UGMA or UTMA accounts.
(8) TOD, POD, ITF designations on accounts, savings bonds, or securities.
(9) Inheritances, gifts, or bequests through another person’s will or trust (if not paid to a third-party created and funded SNT).
(10) Deeds.
(11) Joint accounts.
(12) Jointly owned property, including jointly owned real estate.
(13) Final paycheck (including unused vacation and sick pay).
(14) Collectibles, antiques and family heirlooms.
(15) Personal injury and wrongful death proceeds payable to a parent’s estate (in contrast to personal injury and wrongful death proceeds payable, by law, directly to the special needs child).
(16) Homestead laws that give the surviving spouse a life estate and the minor children a vested remainder interest (as does Florida law in certain instances).

An alternative to a stand alone third-party created and funded SNT is to have the parents’ last will and testament or their revocable living trust contain third-party created and funded SNT provisions.

A third-party created and funded SNT can have a trust protector. At a minimum, the trust protector should can have the power to: (i) direct the trustee’s actions; (ii) receive financial-investment statements and accountings; (iii) terminate the trust (and have the assets be distributed to the remainder beneficiaries), (iv) remove and replace a trustee, and (v) direct or approve the reformation or amendment of the trust to reflect changes in the law and in order to comply with the trustmaker’s intent and purpose.

For tax reasons, a trust protector should not be “related or subordinate” to the settlor or the trust beneficiaries, within the meaning of IRC section 672(c).

The thirteen benefits of an inter-vivos stand alone third-party created and funded SNT are:

(1) The trust can be established by the parents (or by any third party, such as the grandparents) for the benefit of the special needs child.

(2) The trust provides for the investment and management of the special needs child’s inheritance by a third party - the trustee.

(3) The persons establishing the trust (such as the parents or grandparents) decide the terms and conditions of the special needs child’s inheritance and who is to receive the balance of the trust funds when the special needs child dies - rather than having to reimburse the government for Medicaid and/or “cost of care” benefits provided to the special needs child. One of the significant differences between a between a third-party created and funded SNT and a first party SNT is that there is no Medicaid payback requirement for a third-party created and funded SNT, and a third-party created and funded SNT should not contain a Medicaid payback provision.

(4) The trust does not have to be for the “sole benefit” of the special needs child; other children of the parents can be current beneficiaries (although it is generally recommended that the special needs child be the preferred beneficiary vis-a-vis the other current beneficiaries).

(5) The persons establishing the trust can name who should serve as the initial trustee and as the successor trustees, thereby avoiding the risk of the probate court appointing a “stranger” as a trustee.

(6) The trust avoids family conflict, since the trust spells out who gets what, when, how, and why.

(7) The trust avoids a probate court guardianship for the special needs child’s inheritance.

(8) The trust (if properly drafted and administered) maintains the special needs child’s eligibility for government benefits (assuming the child is otherwise qualified to receive government benefits).

(9) The trust coordinates government benefits and trust assets to meet the special needs child’s lifetime needs.

(10) The special needs child can be any age (i.e., the trust is not limited to a special needs child under age 65).

(11) The trust can provide for the appointment of an independent advocate for the special needs child, regardless of whether the child has a guardian, as well as a Trust Advisory Committee to advice the trustee concerning distributions for the benefit and well being of the special needs child.

(12) The trust protects the special needs child’s inheritance from being seized by his or her creditors, and avoids the imposition of a Medicaid lien.

(13) The trust can be “simple” or “sophisticated,” depending on the amount and type of assets that are used to fund the trust.

The principal purpose of a third-party created and funded SNT is to provide an inheritance for the special needs child without risking the loss of important government benefits such as SSI, Medicaid, etc. Consequently, it is important that grandparents and other relatives (including the siblings of the special needs child) not leave an inheritance outright to a special needs loved one.

Fortunately a parent’s stand alone inter-vivos third-party created and funded SNT can be structured to receive gifts, bequests, and inheritances from grandparents (and other relatives/friends) for the benefit of the special needs child. This avoids the grandparents (or other relatives/friends) having to prepare a separate third-party created and funded SNT.

There Are Many Ways A Special Needs Child Can Receive An Outright Inheritance and Lose Means-Tested Government Benefits. A special needs child can receive an outright inheritance in indirect ways. For example, if the grandparent’s will leaves his or her estate to “my descendants, by right of representation,” and the parent of the special needs child predeceases the grandparent, actually or presumptively under the requirement for survival (typically 120 hours (or 90 days for GST tax purposes)), a portion of the deceased parent’s share of the grandparent’s estate will pass outright to special needs child, and possibly disqualify the child from receiving certain government benefits.

Another way, that is not so obvious for a special needs child to receive an outright inheritance, is when an unmarried adult sibling dies without children and leaves his or her estate to his or her “heirs” and the decedent’s parents are also deceased. In such instance, the decedent’s special needs sibling (as an heir of the decedent) will receive an inheritance.

The trustee of a third-party created and funded SNT is given complete discretion in making distributions to or for the benefit of the special needs child. Thus, who should serve as the trustee of a third-party created and funded SNT is important.

The selection of the trustee involves many considerations, including the trustee’s ability to understand and respond to the needs of the special needs child; the trustee’s knowledge of government benefit programs and the effect that trust distributions will have on the special needs child’s government benefits; the trustee’s health, integrity, reliability and financial acumen; the trustee’s potential for a conflict of interest if the trustee is a current or remainder beneficiary of the trust; the potential for adverse income and transfer tax consequences if a family member serves as a trustee and is also a current or remainder beneficiary of the trust, etc.

Caution: Due to SSI and Medicaid rules and for various tax reasons, neither the special needs child nor his or her spouse should serve as trustee of either a third-party or first- party SNT.

Tax planning should not be ignored when preparing an estate plan that involves a special needs child.

There is a general (and incorrect) assumption among some estate planners that taxes are of little or no concern to families of special needs children.

Income taxes, estate taxes, gift taxes, and the confiscatory generation-skipping transfer (“GST”) tax should all be considered and dealt with when preparing an estate plan. Equally important are the income and transfer tax consequences of a special needs trust.

Five Essential Estate Planning Documents For A Special Needs Family. At the minimum, a special needs child deserves a parent’s continued stewardship and guidance, even though the parent may be incapacitated or deceased. Therefore, the parents of a special needs child should typically have the following five estate planning documents prepared:

(1) Last will and testament.

(2) General durable power of attorney for financial affairs (“GDPA”). The parent’s GDPA should permit the agent to make discretionary non-support distributions to or for the benefit of the special needs child, and to establish a SNT for the benefit of the special needs child.

(3) Durable medical power of attorney.

(4) Revocable living trust. During a parent’s period of incapacity, the parent’s revocable living trust should contain language that permits the trustee to make discretionary non-support distributions to or for the benefit of the special needs child. Upon the parent’s death, the special needs child’s inheritance should be distributed to a third-party created and funded SNT previously established by the parent.

(5) Third-party created and funded SNT.

Florida Probate costs very based upon they type of probate, type of assets, number of creditors, number of beneficiaries and complexity of the issues involved.

Generally a simple Florida Probate which only involves a homestead is around $1500-$1800 dollars and can take 30 to 90 days on average to complete. This fee is for the legal expenses associated with a Florida Summary Administration where the descendant has been dead for more than 2 years or the assets subject to probate are less than $75,000. A homestead, join accounts, and life insurance are not counted as assets. In addition there will be court costs in the $300-400 range depending on the county and if advertising notice is required or desired.

More complex Florida Probate cases can also be handled on flat fees but many are calculated based upon a percentage of the assets subject to probate + some amount for dealing with the non-probate assets.

If you would like to get a quote on a Jacksonville Probate or a Florida probate you should Contact a Florida Probate lawyer. Only after a summary of what the circumstances are, can an accurate quote be given.

The Florida Bar has released consumer information on Florida Probate where they describe many of the issues related to Probate in Florida. They discuss the following:

1. WHAT IS PROBATE?
2. WHAT ARE PROBATE ASSETS?
3. WHY IS PROBATE NECESSARY?
4. WHAT IS A WILL?
5. WHAT HAPPENS TO PROBATE ASSETS IF THERE IS NO WILL?
6. WHO IS INVOLVED IN THE PROBATE PROCESS?
7. WHERE ARE PROBATE PAPERS FILED?
8. WHO SUPERVISES THE PROBATE ADMINISTRATION?
9. WHAT IS A PERSONAL REPRESENTATIVE, AND WHAT DOES THE PERSONAL REPRESENTATIVE DO?
10. WHO CAN BE A PERSONAL REPRESENTATIVE?
11. WHO HAS PREFERENCE TO BE PERSONAL REPRESENTATIVE?
12. WHY DOES THE PERSONAL REPRESENTATIVE NEED AN ATTORNEY?
13. HOW ARE ESTATE CREDITORS HANDLED?
14. HOW IS THE INTERNAL REVENUE SERVICE ("IRS") INVOLVED?
15. HOW IS THE FLORIDA DEPARTMENT OF REVENUE INVOLVED?
16. WHAT RIGHTS DO THE SURVIVING FAMILY HAVE IN THE PROBATE ESTATE?
17. WHAT RIGHTS DO OTHER POTENTIAL BENEFICIARIES (OTHER THAN THE SURVIVING SPOUSE AND CHILDREN UNDER CERTAIN CIRCUMSTANCES) HAVE IN THE PROBATE ESTATE?
18. HOW LONG DOES PROBATE TAKE?
19. HOW ARE FEES DETERMINED IN PROBATE?
20. WHAT ALTERNATIVES ARE AVAILABLE TO FORMAL ADMINISTRATION?
21. WHAT IF THERE IS A REVOCABLE TRUST?

In Florida a Successor Trustee is the person or institution named in the Revocable Trust agreement or other trust agreement who will assume control of the trust if the original trustee dies, resigns, or becomes unable or unwilling to act. There can be several layers of back-up trustees that take over in the order you designate. This person is like a backup agent for a power of attorney or Living Will

Legally Incapacitated Person: A person who has been determined by a court as not capable of handling his or her personal and financial affairs.

A Florida Durable Power of Attorney, Florida Trust, Florida Guardianship, Florida Designation of Health Care Surrogate all deal with Legally Incapacitated persons.

One may not be the Personal Representative, Agent, or Trustee if they are Legally Incapacitated.

In Florida Estate Planning, Florida Guardianship Proceedings, and Florida Probate cases it is often necessary to setup a full or plenary guardianship.

Guardian: an adult appointed by a surviving parent in his or her will or by a court, who is responsible for a minor child or legally incapacitated person's personal care and nurturing.

A parent is the natural guardian of their minor child. If a child receives over $15,000 from a probate or settlement that requires court approval, a parent will need to create a Florida Guardianship over the Property of the minor child.

Other times Florida Guardianships are used to try to stop individuals from wasting their assets. Although this was permissible in the past in Florida, the new standard does not take into account the actions of the individual only the mental capacity of the individual and by law must impose the least restrictions on an individual when evaluating their mental and physical capacity.

Often, Florida Estate Planning Techniques such as Florida Revocable Living Trusts, Florida Durable Powers of Attorney, and Florida Designation of health Care Surrogates are used to prevent a guardianship from being imposed on an individual at a later date.

Fiduciary: This refers to a person (or entity) that serves in a representative capacity. Personal representatives, trustees, guardians, conservators, and agents under powers of attorney are all fiduciaries. A fiduciary stands in a position of confidence and trust with respect to each heir, devisee, and/or beneficiary. They are subject to a responsibility to act in the best interests of the person that they are serving on behalf of and can be sued if they act improperly.