Special Needs

Common Mistakes with Beneficiary Designations

Questions about beneficiary designations are among the most common we hear from new clients in our law practice.  This is a topic that should be among those discussed by an estate planning attorney during your first meeting.

Many people don’t understand that their will doesn’t control who inherits all of their assets when they pass away. Some of a person’s assets pass by beneficiary designation. That’s accomplished by completing a form with the company that holds the asset and naming who will inherit the asset, upon your death.

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Assets with a beneficiary designation will not be distributed according to your will.

Kiplinger’s recent article, “Beneficiary Designations: 5 Critical Mistakes to Avoid,” explains that assets including life insurance, annuities and retirement accounts (think 401(k)s, IRAs, 403bs and similar accounts) all pass by beneficiary designation. Many financial companies also let you name beneficiaries on non-retirement accounts, known as TOD (transfer on death) or POD (pay on death) accounts.

Naming a beneficiary can be a good way to make certain your family will get assets directly. However, these beneficiary designations can also cause a host of problems. Make sure that your beneficiary designations are properly completed and given to the financial company, because mistakes can be costly. The article looks at five critical mistakes to avoid when dealing with your beneficiary designations:

  1. Failing to name a beneficiary. Many people never name a beneficiary for their retirement accounts. If you don’t name a beneficiary for retirement accounts, the financial company has it owns rules about where the assets will go after you die. For retirement benefits, if you’re married, your spouse will most likely get the assets. If you’re single, the retirement account will likely be paid to your estate, which has negative tax ramifications and may need to be handled through the costly and time-consuming probate courts. When an estate is the beneficiary of a retirement account, the assets must be paid out of the retirement account within five years of death. This means an acceleration of the deferred income tax—which must be paid earlier, than would have otherwise been necessary.
  2. Failing to consider special circumstances. Not every person should receive an asset directly. These are people like minors, those with specials needs, or people who can’t manage assets or who have creditor issues. Minor children aren’t legally competent, so they can’t claim the assets. A court-appointed conservator will claim and manage the money, until the minor turns 18. Those with special needs who get assets directly, will lose government benefits because once they receive the inheritance directly, they’ll own too many assets to qualify. People with financial issues or creditor problems can lose the asset through mismanagement or debts. Ask your estate planning attorney about creating a trust to be named as the beneficiary.
  3. Designating the wrong beneficiary. Sometimes a person will complete beneficiary designation forms incorrectly. For example, there can be multiple people in a family with similar names, and the beneficiary designation form may not be specific. People also change their names in marriage or divorce. Assets owners can also assume a person’s legal name that can later be incorrect. These mistakes can result in delays in payouts, and in a worst-case scenario of two people with similar names, can mean litigation.
  4. Failing to update your beneficiaries. Since there are life changes (like marriage and divorce for example), make sure your beneficiary designations are updated on a regular basis.
  5. Failing to review beneficiary designations with your estate planning attorney. Beneficiary designations are part of your overall financial and estate plan. Speak with your estate planning attorney to determine the best approach for your specific situation.

Beneficiary designations are designed to make certain that you have the final say over who will get your assets when you die. Take the time to carefully and correctly choose your beneficiaries and periodically review those choices and make the necessary updates to stay in control of your money.

Reference: Kiplinger (April 5, 2019) “Beneficiary Designations: 5 Critical Mistakes to Avoid”

Why Did a Georgia Woman Try to Trick a Judge Concerning Her Son’s Special Needs Trust?

A Georgia woman surrendered to the Gwinnett County Detention Center recently and remains behind bars without bond on charges of perjury, forgery, identity theft, theft by deception, criminal solicitation and exploitation of an at-risk adult.

Yvonne Longmire’s son, 20-year-old Lee Earnest Longmire, is still missing. He has been declared a ward of the state but his guardian at the Georgia Division of Family and Children Services has not seen him or cared for him.

11alive.com’s recent report, “Mother accused of trying to swindle special needs son out of trust fund turns herself in,” says that Yvonne Longmire and her attorney informed the police that Lee is “okay” but haven’t divulged his whereabouts or cooperated in turning him over to DFCS, as ordered by the state. The attorney told police that a doctor signed off on Lee’s recovery, stating he had become higher functioning. The man has special needs and has not been seen in years. His mother is accused of attempting to scam him out of his trust fund.

“Obviously, there are different interpretations of what OK is. We need to make sure that he’s OK to the standards set forth by the state,” Gwinnett Police spokesperson Wilbert Rundles said.

Yvonne Longmire is accused of hiring another man, 23-year-old Maurice Ford from Atlanta, to take her son’s place in court to convince a judge that he no longer needed a conservator over his trust fund, which is valued at $200,000. However, before the funds could be withdrawn and given to Yvonne, the former conservatory attorney and his paralegal became suspicious and called the police.

According to the police report, Yvonne provided a driver’s license to the attorney, who acted as Lee’s conservator, but he said the picture didn’t look like Lee. The paralegal found a photo of Lee on Facebook, and the two confirmed it wasn’t the same person.

But one of Lee’s old teachers also saw the driver’s license and said it was him, according to the police report.

Maurice Ford was arrested in Phoenix, Arizona and is currently awaiting extradition to face charges in Georgia. In the meantime, the search continues for Lee.

“Our primary focus is his safety,” Rundles said. “We care about his well-being, we care about his safety and we want the people that are going to be able to take care of him to provide him care or put him in a long-term care facility, where he can be cared for by someone who does have his best interests at heart.”

Reference: 11alive.com (March 5, 2019) “Mother accused of trying to swindle special needs son out of trust fund turns herself in”

Should I Use an Online Will Service?

More than 50% of Americans don’t have a will, according to a 2017 survey by Caring.com. Spelling out how your assets should be divided, is an essential start to estate planning that can be easily overlooked.

A U.S. News & World Report’s article asks “Should You Make a Free Will Online?” According to the article, before writing your will or using an online service, you need to know the legal requirements in your area. In many instances, this is best left to a legal professional in your state.

There are plenty of online tools that will help you create a will. However, before clicking on a website’s promise, you need to evaluate the available options. There are three main ways to write a will:

  1. Do it yourself;
  2. Use a do-it-yourself program; or
  3. Get help from a qualified estate planning attorney.

If you draft a will on your own, you’ll need to be absolutely certain you understand all of the applicable probate, tax and property laws in your state.

If you use an online service, you’ll have access to software that walks you through the process. In this case, you’ll need to be sure that the software company has all the applicable laws covered, as required for your state. You also want a program that lets you make updates later, if your situation changes.

However, if you engage the assistance of an experienced estate planning attorney, you’ll have the opportunity to have an expert help you think through the details. The result will be a well-drafted will. Yes, it will cost a bit more, but for many situations—like those with blended families, families with minor children, complex investments, or property in several states—it’s worth it.

Remember that the probate laws can vary widely from state to state. For example, the basic form requirements may allow a handwritten will in some states, but in other states the will must be typewritten. Some states require only two witnesses, and others require that the will be witnessed, notarized and typed.

If you have a larger estate or heirs with medical conditions, it may be wise to work with an attorney who can counsel you on the best solutions for your situation. For example, if you have a child with special needs receiving government benefits, you should have an attorney create a trust so their inheritance doesn’t negatively impact their benefits.

You should also use an attorney if you want to reduce your exposure to probate fees. Some people transfer their assets into a revocable living trust, so they are not subject to probate fees. An online service can’t give you this type of attention or personalized service.

If you have a complex situation, you may end up paying less by using an attorney. An experienced estate planning attorney has helped numerous families. He or she can offer insight into setting up guardians for minor children or appointing an individual to be in charge of the distribution of the estate. There are frequently estate and gift tax considerations about which the average person doesn’t know or monitor.

Reference: U.S. News & World Report (January 9, 2019) “Should You Make a Free Will Online?”

When Special Needs Children Become Legal Adults

The saying “little children, little problems, big children, big problems,” is particularly appropriate

The saying “little children, little problems, big children, big problems,” is particularly appropriate for parents of special needs children. Preparing for the next phase takes time, so it’s best to begin the process, once they celebrate their 17thbirthday.

MP900302913One of the many decisions that parents need to make before a special needs child becomes a legal adult, is whether or not the child needs a guardian, or if the parents need a power of attorney, as detailed in a helpful article from Effingham (IL) Daily News,“Teaching parents about guardianship of disabled children.”

Once a child is age 18, the parent is no longer the child's legal guardian.

You should identify the support required for your child and ask what other support they need, while they’re transitioning. Work with a special needs attorney and ask about guardianship. Guardianship is a way to protect an individual who can’t take care of herself, make informed decisions or handle financial assets. An experienced attorney will explain guardianship and alternatives that may be chosen, if the child is capable of making some, but not all, decisions on her own. There are different kinds of guardianships and different kinds of powers of attorney (POA) for estate and health care requirements.

A person can be disabled in some ways, but still be competent to execute the powers of attorney. If the person understands who their family is, who she is, if she’s oriented to time, and she knows who they trust to handle their business or health care decisions, then she can probably sign powers of attorney.

A POA is written authorization to represent a person and make specific decisions on her behalf. The child may have a POA over her health care or estate management. A guardianship of the child’s health care or estate management is appointed by a judge, after reviewing physician statements about the disabled person's needs.

Remember that having power of attorney over their child's financial matters, doesn't give parents power over everything. Things not covered in the POA document are things over which the agent doesn't have the authority. A POA can be revoked, when the person assigning it is competent. However, in a guardianship appointed by the court, you have a duty to act, until the court determines otherwise.

You’ll need a physician’s report that clearly states that the allegedly disabled person needs to have a guardian, and the report should include very specific reasons. Guardianship needs to be a narrow as possible. A special needs attorney can guide you through this process to protect your loved one.

Reference: Effingham (IL) Daily News(April 15, 2018) “Teaching parents about guardianship of disabled children”

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