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Giving beneficiaries a voice in estate planning decisions

It's been a few months since we last addressed how disability issues can affect estate planning decisions.

In our July 31 post, we wrote about how special needs trusts can be one way to provide for people with disabilities. As we noted in that post, it is also important to keep in mind how benefits from the Social Security disability system may be involved.

In this post, let's look at a specific case in which a disability suffered by one of his sons affected the estate planning process for a business owner.

The business owner had two sons and wanted to put in place a process to transfer his company to them after his death. Both sons worked for the business.

One son had a disability; from the chest on down, he was paralyzed due to an accident suffered years before. As a result of the disability, the partially-paralyzed son required expensive ongoing medical care.

Medicaid paid for the bulk of this care. But under the eligibility standards for Medicaid, the disabled son would not be able to inherit a sizable share of his father’s business. This is because the eligibility standards for Medicare do not allow recipients to own assets of sizable worth.

Obviously a situation like this presents an estate planning challenge. The business owner responded by creating a special needs trust, with his disabled son as beneficiary, in order to preserve the son’s eligibility for Medicaid.

But the business owner didn’t stop there. Upon the advice of an estate management company, he also agreed to a face-to-face meeting at which the two brothers could clearly articulate what each was looking for from the father’s estate.

Source: The Wall Street Journal, "Estate Plan Preserves a Disabled Son's Benefits," Alex Coppola, Dec. 2, 2013

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