The 7 P’s of Estate Planning #7 – Peace of Mind

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The 7 P’s of Estate Planning #6 – Plan

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Understanding Special Needs Trusts Video

An Understanding of special needs trusts is important for those people in your life that need protection. Special needs trusts help protect special people.

Hi, I’m Gary DeWitt, Estate Planning Attorney in Northwest Arkansas.

 

Understanding Special Needs Trusts: Major Types

Special needs trusts come in many different types that fulfill different purposes.

For your understanding, you need to know that special needs trusts come in 2 major types.

Understanding Special Needs Trusts: First Person Trust

The first is the “first person” special needs trust.  This is a trust setup for a person’s own money.  For example, if somebody that is on benefits got hurt in a car accident and received a large lump sum settlement, a “first person” special needs trust would be used.  This type of trust has one major drawback; Medicaid gets the first opportunity to get paid out of the trust at the person’s death.  You may sometimes hear these referred to as the pooled trust or a d(4)(a) trust.

Understanding Special Needs Trusts: Third Person Trust

The second is the “third person” special needs trust.  This type of trust holds money that never belongs to the person with special needs. So, if mom and dad have life insurance, they can have it paid into a third party special needs trust.  Because the money is only used for the person’s benefit, but doesn’t ever belong to them, the person putting the money into can leave further instructions.

More Information

 

Feel free to call with your questions or to get my free book, “Secrets of Excellent Estate Planning”. The book is also available on my website. 

I will show you how to protect what you have today, and what you leave your kids tomorrow.  You’ll be able to take advantage of my estate planning legal strategies without you or your loved ones having to deal with Probate Courts, long delays, and death tax.

 

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The 7 P’s of Estate Planning #5 – Protection

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What is the Difference Between Trustee and Guardian?

The difference between trustee and guardian is immense.  It is like comparing apples and zebras.

Guardian

A guardian, in this context, is a person appointed by a court and Judge in a guardianship proceeding to make another person’s (the ward) legal, financial, and healthcare decisions.

The guardian is then responsible for managing the ward’s financial, healthcare, and legal affairs. The guardian is responsible to the Judge in the case. The guardian must report to the Judge annually on the social, emotional, and physical status of the ward. The guardian must also prepare and present an account of the ward’s estate annually. This account is published, typically in a newspaper, and must be approved by the Judge. A guardian may also be required to have a bond (insurance) in order to serve. Guardianship is expensive and can be embarrassing for the ward.

Trustee

A trustee is the person in charge of managing the assets in a trust for the benefit of the beneficiaries. A trustee has no legal authority to manage the legal, financial, or healthcare affairs for the person who created the trust.

A trust is an agreement between two people for the benefit of a third person. Those two people are the grantor (the person creating the trust and putting property into the trust) and the trustee. The trustee has actual legal ownership of the assets but manages them for the benefit of a third person – the beneficiary.

Summary

In summary, a guardian is appointed by a Judge to manage all the ward’s affairs under court supervision. A trustee manages the assets in the trust, but has no control of the affairs of the person.

As you can see the difference between a trustee and guardian is immense and is like comparing oranges to horses. They are completely different and have different purposes.

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Estate Planning Client Profile #142 – Married Couple With Minor Children

They are a couple with minor children. They want to provide for their children and make sure they provide their nominations for guardians if something should happen to them while their children are still minors.

We created a trust based plan that included the following:

• Trust
• Pour Over Wills
• Financial and Legal Affairs Durable Powers of Attorney
• Healthcare Powers of Attorney
• Living Wills
• Quit Claim Deed

The Trust enables their property to avoid probate and to be managed for their children’s benefit.

The Wills name the people they want as their personal representative of their final estate and give the personal representative the authority to transfer assets to the trust if the couple missed anything during their lifetime.

The Durable Powers of Attorney name the people the couple wants to manage their financial and legal affairs during their lifetime if they can’t.

The Healthcare Powers of Attorney name the people to manage their healthcare if they can’t.

The Living Will (Advance Directive) includes the treatments they want or don’t want if they terminally ill or permanently unconscious.

The quit claim deeds move their real estate into the Trust so it avoids Probate.

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The 7 P’s of Estate Planning #4 – Probate

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7 P’s of Estate Planning #3 – Privacy

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