What Is a Special Needs Trust?

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What Is A Special Needs Trust? | NOVAEstateLawyers.com

If you are the parent of a child with special needs, you may need to set up some special protections in your estate plan to ensure he or she will be properly cared for when you pass away, especially when your child reaches adulthood. The most common way to do this is by establishing a special needs trust.

A special needs trust (SNT) can be used to protect the assets you or your family wish to leave to your child. The SNT involves a donor, trustee, and beneficiary. The donor supplies the funds for the trust, while the trustee holds and administers the funds as the donor intends. An SNT when drafted properly allows the beneficiary (the individual receiving the benefits) receive supplemental support above and beyond (and totally separate from) the government benefits received by them – without those supplemental assets being counted against them for purposes of qualifying for or receiving federal benefits.

Here’s what you need to know about special needs trusts and the advantages of establishing one.

Types of special needs trusts

There are three main types of special needs trusts: first-party, third-party, and pooled. Each trust has its own terms and benefits.

1. First-party special needs trust

A first-party SNT is commonly used when a child with special needs who, unfortunately, directly and personally inherits money or property because there was no third-party SNT planning done by the individual from whom the child is now inheriting.  This type of SNT is also used when an individually receives a personal injury or other large settlement.  The use of the SNT is made in order to permit the individually the ability to still qualify for government aid, such as Medicaid.

With a first-party SNT, any portion of the assets which remain unused by the beneficiary will become the property of the government, reverting to Medicaid as a pay-back mechanism.

2. Third-party special needs trust

A third-party SNT is created by a parent, grandparent, or other third party who wishes to leave assets (commonly life insurance) for the benefit of a special needs child without fear that doing so will disqualify that child from qualifying for other federal government benefits such as Medicaid.   The Trustee of such an SNT (similar to the First-party SNT) has absolute discretion over the use of the assets in this Trust, and they must familiarize themselves with the applicable POMS rules to ensure that distributions they make for the benefit of the child (never directly to the child) do not disqualify the child from his or her federal benefits nor result in a reduction in the amount of such benefit.

With a third-party SNT, unlike a first-party SNT, any unused assets which remain in the SNT can be re-directed to another family member or even the descendants (if any) of the special needs child.

It is generally best to prepare an SNT as a separate, stand-alone document when preparing your estate plan, so that any third party family member, sibling of your special needs child, or other family friend can name that SNT as a beneficiary if they desire to benefit your child without risking your special needs child losing his or her government benefits and allowing other family members or friends to be named as alternate or successor beneficiaries should your special needs child fail to exhaust all of his or her SNT assets prior to his or her death.

3. Pooled special needs trust

Pooled SNTs are unique because they are established and administered by nonprofit associations, often subject to government oversight to prevent mishandling and abuse. This type of SNT is used when a child’s family or a child do not have sufficient personal assets to justify the creation and funding of a separate SNT solely for the child’s benefit.  Instead, whatever assets are there for the child are pooled with the assets of many hundreds or thousands of other similarly situated special needs children, and all are then able to draw from this pool of assets in order to supplement their needs where their government benefits are insufficient to support or pay all their needs.  At the death of a participating special needs child, any unused assets from that child’s original contribution is retained by the pool and used for other surviving, participating special needs children drawing from those pooled funds.

Is a special needs trust right for your family?

There are many reasons why you might consider establishing a special needs trust:

  • Protecting necessary assets: If you want to ensure your child’s inheritance is protected from unscrupulous individuals or creditors, naming a trusted individual or bank to serve as manager and gate-keeping during your child’s lifetime, an SNT is something you want to consider.
  • Preserving family wealth: When you establish a Third-Party SNT for your child, you can provide a mechanism that ensures any portion of the assets transferred to the SNT after your death that are not used by the death of your child pass onto other siblings or family members, or a charity designated as a “legacy gift” by you.
  • Ensuring government aid: Naming the special needs child as a direct beneficiary will hinder the amount of support (medical or otherwise) he or she may receive from the government. Using an SNT provides a mechanism by which a child’s needs can be supplemented by what you leave them while avoiding the risk of costing them valuable government assistance.
  • Appointing a trustee: Depending on the duration of the SNT, it may be prudent to select a corporate trustee (often a bank or a dedicated trust management organization) rather than just an individual trustee to provide ongoing management of the trust assets for your special needs child. An SNT can provide for a Trust Advisory Committee that includes siblings, a nurse, CPA, Certified Financial Planner, or others to serve as a kind-of Trust protector and as a hands-on caretaker to your child, even while having the assets of the SNT managed by a corporate trustee.

You can learn more about trust funds and how to establish them in our blog post.

Contact an experienced estate planning attorney for help

If you need help establishing a special needs trust for your child, the Law Office of Patricia E. Tichenor can help. We’ll work with you on your estate plans to ensure your child’s rights and needs are protected for throughout their lifetime.

Estate Planning Resolutions to Make for 2020

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2020 Estate Planning Resolutions | NOVAEstateLawyers.com

You may have already made some 2020 New Year’s resolutions about your health or your career. However, the start of the year (and in this case, the decade) is a great time to make some estate planning resolutions, too.

While estate planning can feel overwhelming at times, it’s essential to devote time to it if you want to secure your family’s future or ensure that the individuals you want to inherit from you do so in the most efficient, least costly way possible. Here are five important estate planning tasks to address this year.

1. Draft a will if you don’t already have one.

A valid will is a document that tells a probate court how to distribute your property and financial assets when you die. Without one, there is no legal way to ensure that your final wishes are carried out. In your will, you should name a trusted executor (such as an attorney, family member, or friend), who will be responsible for overseeing the management of your assets after your death.

2. Create a revocable living trust.

A revocable living trust is another estate planning tool that aids in the transfer of property. A revocable living trust can be adjusted at any time during your life and preserve certain assets for specific reasons important to you, such as keeping the family home for your children to continue to be raised in if both you and your spouse die. It’s especially important to create a revocable living trust together if you have children under the age of 18, so you can designate how their inheritance and finances will be managed until they reach an age or ages where you feel most comfortable having them control their inheritance.

3. Update your powers of attorney, executor, and/or beneficiaries if any family circumstances have changed.

Ideally, the person(s) you name as attorney-in-fact under your powers of attorney and executor in your will is someone you trust to keep your best interests at heart. Unfortunately, your initial choices for these roles may not always remain the same.

A designated attorney-in-fact or executor should be changed in your estate plans if the chosen individual passes away before you, or if other recent circumstances (divorce, bankruptcy, a falling out, etc.) make you feel that they should not be involved in carrying out your final wishes. Be mindful not to appoint someone who could abuse this privilege for selfish reasons.

Similarly, you may want to review your list of beneficiaries to ensure that your selections reflect your current circumstances. For instance, if you are recently divorced, you should review your will and change anything that may be associated with your ex-spouse and their family.

4. Make sure you’ve appointed a legal guardian for any minor children you may have.

No parent wants to think what would happen if they pass away while their child is still a minor. However, this is precisely why naming a legal guardian in your will is so important.

Typically, if you die before the child turns 18, your child’s other parent becomes the legal guardian and assumes responsibility for that child’s care and well-being. If you both pass away (or if the other parent is not involved in your child’s life), having an appointed legal guardian or guardians ensures that important decisions about your child’s future are not left to a court or Department of Social Services.

5. Review your entire estate plan and consider whether you need to make any changes.

Your life circumstances can change a lot in a few short years, so be sure to review your entire estate plan and consider whether you need to make any changes, especially if you have not done so recently. When making these updates, ensure that all your retirement accounts, joint properties, life insurance, and beneficiary designations are recent.

Get help keeping your estate planning resolutions.

The best way to keep your 2020 estate planning resolutions is to work with a knowledgeable estate planning attorney. The Law Office of Patricia E. Tichenor, P.L.L.C. has almost 20 years of experience serving the needs of Virginia families. Contact us today for help with creating or updating your estate plans.

Estate Planning in the Digital Age: What You Need to Know

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Estate Planning in the Digital Age | NOVAEstateLawyers.com

Estate planning is usually focused on designating who will inherit your personal physical assets and belongings when you die. However, in the modern age, digital estate planning has become an important consideration for many individuals.

If you currently have digital assets, including social media accounts, email accounts, online financial accounts, apps, websites and blogs, and software subscriptions, you may want to include these in your estate plans. By doing so, you can designate who will be responsible for managing, distributing, and/or deactivating those digital assets after you’re gone.

Below is an overview of what to consider when creating a digital estate plan.

Why does digital estate planning matter?

Today, it’s extremely common for people to manage the majority of their finances, business and personal lives online, but few people have their digital accounts organized or centralized for easy access in the event of their death. 

With a proper plan for the post-mortem management of your digital assets, you can make it easier for your future executor to settle your affairs. For instance, if your executor receives the login credentials for all of your financial accounts and creditors when you die, that person can instantly get an idea of what you might owe and how much money you have to distribute to your beneficiaries – without having to call up each bank and submit a death certificate to receive copies of your final statements.

From a more personal perspective, your executor would also be able to log in to your email and social media accounts to inform your digital connections of your passing. From there, they can take action to either “memorialize” your profile (as Facebook allows you to do), or deactivate your account to protect your digital memories.

Steps for creating a digital estate plan

Like traditional estate planning, digital estate planning is the process of cataloging, organizing, and planning for the disposition of your digital assets after you pass.

There are several steps you can take to prepare your digital assets to be properly transferred before your death.

1. Record all digital assets, their respective passwords, and storage locations.

The first thing to do to prepare your digital estate plan is to keep a complete list of your digital assets. If your digital assets include social media accounts, such as Facebook or Instagram, or email accounts, be sure to review the terms of service for instructions for any asset transfer restrictions.

2. Decide what you want to happen to your accounts when you die.

Do you want everything on your computer deleted when you die? Would you want certain files to be saved and distributed among your loved ones? Whatever your desire, leave specific instructions in your will for what should happen to each of your digital assets. Typically, this becomes the responsibility of your executor, but if you wish to have someone else handle the digital portion of your estate, you should spell this out as well.

3. Save files on your computer(s) to an external drive.

Once you have your accounts in order, save all assets stored on your computer onto something tangible, such as an external hard drive, and store the hard drive in a safe place. You may also wish to back up your files to a cloud-based storage solution, in case the hard drive is lost or damaged. This is a good practice to follow throughout your lifetime to ensure you never lose access to your most important files.

4. Update your list of digital assets whenever necessary.

While compiling your initial list is a good first step, keeping your list of digital assets up-to-date is also important. Be sure to let your closest family members know what’s on your list of assets, so they can be as prepared as possible when they review your estate plans after your death.

5. Have an attorney prepare an updated Power of Attorney, Will, or Trust.

Lastly, many states, including Virginia, have adopted official statutes addressing digital assets. Make sure to have an attorney update your existing estate planning documents to empower your attorney-in-fact, executor, or trustee to act on your behalf  and on behalf of your estate during a period of disability or after your death.

Contact an experienced estate planning attorney for help

If you need some guidance, an experienced attorney can help you create or update your will, powers of attorney, trusts, and other appropriate estate planning documents.

The Law Office of Patricia E. Tichenor has been serving the estate planning needs of Virginia residents for nearly 20 years. Contact us to discuss your circumstances and how we might be able to help you plan for your family’s future.

How to Identify and Prevent Estate Planning Fraud

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How to Identify Estate Planning Fraud | NOVAEstateLawyers.com

When you make estate plans during your lifetime, your goal is to make the probate process as stress-free as possible for your surviving loved ones when you die. Usually, a valid will and other estate planning documents mitigate a lot of potential questions and controversy in probate court. However, estate planning fraud and probate fraud do happen, and they can leave your family devastated.

Estate planning fraud can be easy to spot and prevent if you know what to look for and take the steps to be more secure. Below we outline the different types of fraud and how you can avert it to save your family from a harrowing process.

What makes an estate planning document fraudulent? 

Your will is a legal document that states your plan for the distribution of any assets where you have not already named a beneficiary to receive them (e.g., you might name a spouse or adult child as a payable or transfer on death beneficiary on your retirement account or life insurance).  Assets where there is no named beneficiary or assets like your personal belongings which can’t be designated prior to your death to someone pass through your Will and under the supervision of a probate court. These decisions are yours and yours alone to make, and even if you ask others for their opinion, what is represented in the will should be a reflection of your true wishes.

Of course, it’s easy to see why a relative might be unhappy with a loved one’s estate planning decisions, especially if they feel they deserve a larger share of the estate. This is what often leads to fraud attempts, both during the estate planning process and during the probate process after someone has died.

A fraudulently-executed will is considered invalid during the probate process. These circumstances can lead to a lengthy litigation in order to determine the validity of the will.

There are a few things that can classify a will as fraudulent: 

  • Forged signatures – One way for a will to be fraudulently executed is if it was signed by anyone other than the person who writes the will, known as the testator. The testator can be assisted with making “their mark” or “signature” on the Will by someone else but only at the testator’s direction and in the presence of two witnesses and a notary. In Virginia and other states, wills are required to be signed in the presence of two witnesses. Ideally, a notary should also be present. If the will’s validity comes into question, the witnesses can be questioned and testify about its execution and determine any fraud.  If a testator cannot physical sign without assistance, it may also be prudent to consider making a video record of the signing to establish capacity and overcome later challenges to the Will’s validity. 
  • Undue influence – Undue influence is when the testator is persuaded by another person to change their will and their actions are no longer of their own of their free will. Often this happens within the elderly population and amongst the wealthy. Signs that a testator may be a victim of undue influence are sudden cut offs in communication to the family and spending quality time with a new person who is then added as a beneficiary to their will. 
  • Lack of capacity – When signing a will, the testator must be of sound mind. They need to have the mental capacity in order to sign and understand the purpose and implications of the document. If a person is not of sound mind when they sign the will, it can be considered invalid. The level of capacity to sign a will is relatively low, however, and it can be difficult to prove that there was a lack of capacity to the court.

After you’ve passed: Examples of probate fraud

While you may be able to prevent estate planning fraud during your lifetime, someone may still try to commit probate fraud after you’ve died. This is when someone tries to submit an improper, invalid, or forged estate planning document to the probate court for their own benefit.

Below are some examples:

  • Will contest: A party may try to challenge an entire will’s validity.
  • Executor fraud: The estate executor makes false claims about the content of the document or has overcharged the estate. A probate attorney can obtain the right to seek evidence to prove the crime.
  • Former will submission: Someone attempts to enter a previous version of a will to receive property that is not designated for them in the most up-to-date version.
  • False codicil: A codicil is a document that makes a change to an executed will. A false codicil may be brought forward to give someone a substantial inheritance that is not rightfully theirs, according the valid version of a will.

Can I prevent estate planning fraud? 

The best way to prevent probate and estate planning fraud – or at least reduce the likelihood of it occurring – is to have transparent, honest conversations about your wishes. While planning and writing your will, be sure to openly share your plans with your named executor, your family members, and anyone else who may be included in your will.

You should also update your loved ones every time a significant change is made. That way, everyone can be on the same page regarding your plans, and they’ll be better able to detect if someone is trying to commit fraud during the estate planning or probate process.  With the ability to create a digital image of your estate planning documents, it is easier than ever to share an updated Will or other estate planning document by means of a thumb drive or a secured link using an email.

Contact an experienced estate planning attorney for help.

The Law Office of Patricia E. Tichenor has helped Virginia residents for nearly two decades to understand how to avoid fraud issues and contests in addition to preparing wills, living trusts, powers of attorney, and other critical estate planning documents. Contact us if you need assistance with your estate planning needs.  We can meet you for a home consultation if needed, and all our initial phone consultations are free of charge.

Does Your Teenage Social Media Influencer Need an Estate Plan?

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Estate Planning for Teen Influencers | NOVAEstateLawyers.com

With the rise of social media influencers like the Kardashian sisters and popular YouTubers, some pre-teens and teenagers are acquiring fame — and money — at an early age. Take it from 8-year-old Ryan Kaji, who earned $22 million in revenue in 2018 from his YouTube toy reviews.

If your child has begun accumulating their own wealth before age 18, you might want to consider creating an estate plan together. While no one wants to consider the possibility of death, especially so young, there are many important conversations to have regarding their assets.

Here are some tips for how to approach estate planning for your teenage social media influencer.

Estate planning for influencers: What to consider

Create a list of your child’s digital assets and their approximate value.

Influencers become successful through social platforms, such as YouTube or Instagram. It’s important to determine what might happen to these accounts, as well as the content that lives on them, if the influencer is no longer around to manage them.

Additionally, you’ll want to understand how much your teen is worth in relation to industry standards. First, make a list of all their digital assets. This includes all of their social accounts, images and videos, textual content and other intellectual property.

From there, you can calculate their value by considering their follower count, engagement rates, demographics and more. Then, speak with your teen about who they want to handle their digital assets if they were to pass away.

Consider a will and medical directives in case of incapacity

In 2017, Alec Sutton, an 18-year-old who suffered a head trauma in a car accident, was taken off life support in a local hospital, despite his loved ones’ pleading for more time and second opinions. While this was a tragic incident to say the least, the hospital’s decision was entirely legal. Because Sutton, a legal adult, lacked a medical power of attorney and a living will, his parents and relatives did not possess an absolute right to make decisions regarding life support.

When your child turns 18, you’ll want to prepare the right documents for such a situation, as failing to do so can be detrimental. One crucial form is a Durable Medical Power of Attorney. This includes HIPAA release form, which enables an adult child’s healthcare providers to disclose medical records with selected individuals (including parents), as well as living will provisions.

Without a Durable Medical Power of Attorney, parents of an adult child who becomes incapacitated might not be able to obtain a copy of their child’s medical record to get a second opinion or make other important decisions based on having that information.

Some decisions involved in these advance directives include emergency treatments, such as:

  • CPR
  • Ventilator use
  • Artificial nutrition (tube feeding)
  • Artificial hydration (IV, or intravenous, fluids)
  • Other life-prolonging treatments
  • Comfort care

Take time to discuss these decisions with your teen, as physical or mental incapacity can happen to anyone at any time. When your teen decides to appoint a proxy to make these medical decisions for them, ensure they sit down with that individual and has an open conversation about their preferences.

Decide who is responsible for financial assets if your child is under 18

Another consideration is your teen’s financial assets. The top-earning influencers often bring in thousands (or tens of thousands) of dollars per post, which adds up to a lot over the course of a year. Even if your teen hasn’t reached this level of income, it’s important that they dictate what will happen to their earnings in the case of incapacity or death.

Similar to choosing a medical proxy, your child should designate someone to assume responsibility of any financial decisions via a financial power of attorney. Make sure you sit down with your child and discuss this arrangement in great detail. You’ll want to respect their wishes while offering your support and insight from a parental standpoint.

Depending on your child’s earnings and income streams, you may also need to consult with a business planning attorney to set up a corporate entity can hold their assets until they turn 18 and can actively participate as a CEO or CFO.

Since many influencers are still young and financially inexperienced, they might not understand or even want to consider the implications of estate planning. Remind your child that you aren’t trying to control their lives, but that this simply a part of growing up and transitioning into adulthood.

Contact an experienced estate planning attorney for help

Whether it’s for yourself or your child, estate planning is not something you want to do alone. That’s why we recommend working with an experienced estate planning attorney.

If you’re looking for professional guidance with your Virginia estate planning needs, contact the Law Office of Patricia E. Tichenor.

The Law Office of Patricia E. Tichenor, P.L.L.C.
Professional Legal Services or Legal Representation
(703) 669-6700


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