San Diego Estate Planning Blog: Creating Legacies

From the desk of San Diego (Carmel Valley) Living Trust Attorney, Kristina R. Haymes:

Serving San Diego County Families with their Estate Planning…

I.  Special Needs Trust (or Supplemental Needs Trust) – There are two types of special needs trusts, those created by third parties (e.g. parents or grandparents) and those created by oneself for oneself (self-settled special needs trusts).  This post discusses third party special needs trusts.  It is important to note that self-settled special needs trusts have a lot of restrictions and often may require court approval.

Third party special or supplemental needs trust are set up by a third party – a parent, grandparent, court, or relative.  John and Julie have a special needs daughter and they are concerned about their daughter’s ability to be self-sufficient and survive on her own when they are no longer here.

They were relieved when their daughter qualified for supplemental social security (SSI) and other governmental benefits but they know that this may not last forever.  In addition, they have accumulated a home, real estate investments, and other assets over the years and they want to make sure that their daughter can have access to her inheritance if she needs it for her supplemental needs but that she does not receive the inheritance in such a way that she would be disqualified from receiving governmental benefits.

Thus, John and Julie want to set up a special needs trust for their daughter who also lives in San Diego, California.   John and Julie and other relatives can fund the special needs trust with annual gifts during their lifetime, and can direct their daughter’s portion of her inheritance to the special needs trust through their own revocable living trust, so she will have the assets should she need them for her supplemental needs after they are gone. 

A well-drafted special needs trust provides that the trust funds are only available to the beneficiary for supplemental needs so that the beneficiary can qualify for governmental assistance.  If at some point in the future the beneficiary no longer qualified for governmental assistance or no longer has special needs, then, the trust can also provide that the funds can be made available to the beneficiary if certain circumstances occur.

The special needs trust would also have provisions for any left over trust assets once the daughter passes away. 

In sum, a special needs trust is a useful estate planning vehicle to hold assets for individuals with disabilities or special needs such that they can still qualify for governmental assistance.  The trustee of the special needs trust, would have discretion to make distribution only for supplemental needs of the beneficiary.  The special needs trust can also provide for coordination with a care manager and indicate what type of living arrangements and care the creators of the trust desire for the beneficiary.  It is a great way for parents to have peace of mind that their special needs son or daughter will be cared for when they are no longer here.

If you have a son or daughter with special needs in California and would like the peace of mind knowing they will be cared for when you are no longer here, call our office today.  We serve San Diego families and can provide assistance throughout California.  Call 858-794-1426 or e-mail admin@krhess.com and we can tell you how you can also pass on more than material wealth to future generations.

Create Legacies today,

Kristina Haymes

San Diego Trust and Estate Attorney, Living Trusts, Will, Guardianship, Special Needs Trusts located in Del Mar, Carmel Valley

From the desk of Del Mar/Carmel Valley Trust and Estate Attorney, Kristina R. Haymes

San Diego Estate Planning for Your Family:

What do you do when your adult child has special needs?  In the fictitious story about Sam and Sally Smith in my previous post, we discussed a situation where their adult son was considered developmentally disabled.  The son was currently receiving social security benefits and when Sam died the issue arose, what to do now that this adult child has inherited the family cabin?

Sam and Sally had thought about creating a Special Needs Trust for their son but never got around to doing it.

Now, that Sam died and left property to their son, Sally needed to get a limited conservatorship or become a conservator over aspects of her son’s estate, in order to help him handle the property that he just inherited.

A limited conservatorship, like the name implies, is more limited than a general conservatorship in California.  However, it still involves filing a petition with the Probate Court, a hearing and other legal hurdles.

Because developmentally disabled adults can usually do many things on their own, the judge will only give the limited conservator power to do things the conservatee cannot do without help.   In Sally’s situation, she will need to apply for a limited conservatorship of the estate of her son and ask for power to handle the inheritance on his behalf. 

The petitioner (the person who applies for the conservatorship) will need to show that the proposed conservatee (in this situation, Sally’s son) is unable to manage his own financial affairs and that he would be susceptible to fraud or undue influence. 

A conservatorship is also available for elderly relatives who lose the ability to manage their own affairs.  In this situation, it is better to be proactive and have your parents do durable financial powers of attorney and advance health care directives (appointing a health care agent).  If these planning documents are in place, usually a conservatorship proceeding can be avoided.

However, in Sally’s situation, her developmentally disabled son is an adult and does not have the capacity to execute these estate planning documents, so she must go the limited conservator route.

If you have a son or daughter with special needs, and you need to manage an inheritance or other assets for them, or maybe you  need a Special (supplemental) Needs Trust, contact our office and we can assist you.

Caring for your San Diego Family and assisting with all your Estate Planning Needs,

Kristina Haymes

From the Desk of San Diego Trust Attorney (located in Carmel Valley/Del Mar 92130), Kristina R. Haymes:

I write this post with a little bit of a heavy heart…

Sometimes it is too late to fix things that are not right or how you want them to be…

At Haymes Law Group, we review all of our clients estate plans, trusts, irrevocable trusts, wills, financial powers of attorney, children guardianship and medical powers every three years.  This is the minimum amount of time that should go by.  For our clients on our VIP membership program, we will review and update their plan once per year.

Here’s why… (all names and details have been changed to protect privacy and confidentiality, this is a fictitious example based upon various real life events)

Sam and Sally Smith of Rancho Santa Fe, California have been married for 25 years and have two children together John and Mary.  Sam and Sally had an estate plan prepared over 15 years ago when their children were young and living in their home in Del Mar.

However, in the last 15 years a lot of things have changed for the San Diego Smith Family.

First, Sam and Sally moved.  When they moved, they did not execute a new deed, so their new million plus dollar home was not owned by their Living Trust.

Second, Sam was suddenly diagnosed with an advanced form of cancer and passed away within 4 short months of his diagnosis.

Third, Sam and Sally’s son, John, has autism.  While the couple had always hoped that John would improve, his condition has actually deteriorated and John has special needs and is considered a developmentally disabled adult.

After Sam passed away, Sally came to see their local Personal Lawyer and San Diego Trust and Estate Attorney at Haymes Law Group (me – Kristina).  However, this was our first meeting and we had not drafted their previous estate planning documents, nor were the Smiths previous clients of the firm. 

Accordingly, the Smith Estate Plan had not been reviewed or updated in the last 15 years.!  The problem is that Sally could not even recall how she and Sam had decided to divide their estate or provide for her or her children.  In her state of grief, Sally barely recalled they had a Trust.  Somehow she managed to find an estate planning binder from her prior trust attorney located in San Diego.

She brought the binder in to our initial meeting and she was shocked to discover that the family winter home in Lake Tahoe (which Sam had inherited from his grandparents) was deemed Sam’s separate property and Sam left the entire property to John, their special needs son!

Not only that, now Sally had to deal with the fact that her current home was not owned by their Joint Revocable Living Trust and she would have to go through Probate Court regarding her husband’s 50% ownership in their home.

There were other suprises too, but at the end of the day, not only was Sally grief-stricken having lost her dear husband, now she had to deal with a mess.

The worst part about it is that had she worked with a personal lawyer like me, we would have reviewed her plan, she would have known her current home was not “funded” to her trust (and we would have taken care of it), she would have known that her husband left the vacation home to their disabled son, and she would have made sure she had a special needs trust established for her son to receive any inheritance, and she likely would have worked with her husband to change who received what, when.

Ah, yes, hindsight is 20/20.  But the biggest thing I see are 1) California estate plans that are not up to date (your life has changed, the law has changed, your assets have changed…), your distribution of assets might not be what you wanted 15 years ago, maybe your child you thought would be ok, needs a special supplemental needs trust to make sure that he or she qualifies for governmental assistance. 

2) Your Trust isn’t fully funded… You moved and bought a new home, is it owned by your trust?  What about your beneficiary designations on your retirement accounts and life insurance?

3) Sally’s life insurance policy went to their other child, and Sally was left without the resources she needed to administer the estate.

It breaks my heart, particularly when these things happen to women.  Maybe your husband was the CEO of your family and managed the finances.  But statistically speaking the wives live longer than the husbands.  So, it is important that you know the details of your estate plan, have it reviewed periodically, and are taken care of when your spouse is no longer around.

Ah, the messes that can be avoided with a little forethought and prior planning.  You see, once someone dies, that portion of the trust (as it relates to his or her half of community property and any separate property) becomes irrevocable!  So, it is very difficult (and sometimes impossible) to make changes once someone dies.

Don’t put it off, have your estate plan reviewed today.  Normally, I charge $950 to do an estate plan review, but this month, in honor of all the Sally and Sam’s out there, I am offering 2 complimentary mini reviews!  So call our office today (858)794-1426 and ask for Sarah, the client services director at Haymes Law Group.

I would love to review your plan, make sure it’s up to date, and make sure that you and your loved ones will be cared for and no one is left with a mess that needs cleaned up!

Create Legacies (not messes) that Last,

Kristina Haymes

San Diego Living Trust attorney

Living Trusts, Wills, estates, probate, conservatorship — all your Estate Planning Needs.  Our law office is conveniently located in Carmel Valley (Del Mar) off  High Bluff Drive.