Some people are very meticulous about the way they go about things, because they want the outcome to be perfect. This can apply to different aspects of life, and financial decision-making would be a good example.
A lot of folks that always cross all their t’s and dot their i’s do not pay the same attention to detail when they are considering the estate planning process. This is a mistake, because there are focused approaches that can be taken.
The right way to provide for one loved one may not be appropriate for the next. We are not referring to the amount that you give; we are talking about the asset transfer method that is used.
With this in mind, let’s look at some of the pointed solutions that can be used to satisfy certain objectives.
Special Needs Planning
People with disabilities usually rely on government benefits like Medi-Cal and Supplemental Security Income. An improvement in financial status can cause a loss of eligibility for these need-based programs.
You would not want to leave someone that is in this position a direct inheritance through the terms of a last will. As an alternative, you can establish and fund a supplemental needs trust.
The trustee would be able to use assets in the trust to improve the beneficiary’s quality of life in innumerable ways. Ongoing eligibility for these benefits would not be impacted as long as everything is done correctly.
A direct, lump sum inheritance can be squandered quickly by someone that is not good with money. This can be a source of concern when you are planning your estate.
To protect the inheritance that you want to leave to someone with these proclivities, you could create a revocable living trust with a spendthrift provision.
While you are living, you could act as the beneficiary and the trustee, so there would be no loss of control.
Your loved one would be the final beneficiary, and you would name a successor trustee to assume the role after you are gone.
Through the inclusion of a spendthrift provision, the principal would be untouchable if creditors file actions against the beneficiary. When it comes to the distributions, you can instruct the trustee to distribute a certain amount each month, or make some other measured arrangement.
Another estate planning tool that can be quite useful under certain circumstances is the incentive trust. As the name would indicate, you include incentives the must be met by the beneficiary. If they meet the requirements, they receive monetary distributions.
For example, you can stipulate that the beneficiary must remain in college until they graduate. Another possibility would be an incentive to stay away from destructive behavior like substance abuse.
Download Our Estate Planning Worksheet
Our firm has prepared a worksheet that you can use to gain a more complete understanding of the estate planning process. This resource is free, so there’s no reason to turn away from this opportunity to build on your knowledge.
To get your copy, visit our worksheet page and follow the simple instructions.
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