Video Summary

What is a special needs trust? A special needs trust is also known as a qualified disability trust. This is a very specific type of trust that would need to be set up for an individual that has special needs and that would not want to jeopardize their eligibility for public assistance programs, such as Medicaid and Social Security Disability. The reason that these trusts are employed, generally, is in the situation where one may receive a settlement by virtue of a lawsuit, a car accident, or even an inheritance, which receipt of those assets would potentially make that person disqualified from those public benefit programs.

A lot of times I have people that ask me, that say, “Well, if somebody receives an inheritance, let’s say of $100,000, why should that person, even though they have special needs and special medical needs due to those special needs, why does that person still … Should they be entitled to public benefit programs if they can afford to pay for the care?”

Well, the theory behind that is is that because the care is so expensive for somebody that has special needs, that they would need to utilize those funds for other things above and beyond what those government programs entitle that person to. In a hypothetical situation if you were not receiving Medicaid or Social Security Disability because you had that $100,000 that money would be expended very, very quickly. Which would essentially leave that same person in the very same position they were in in a very short amount of time, prior to actually receiving those funds. A special needs trust is a very good vehicle to be able to preserve those assets for somebody in that situation.

Similarly, a special needs trust may be an option in estate planning in the event that the person doing the estate planning, let’s say a mother or father, has an adult child that does have special needs. In that situation a special needs trust can be incorporated into a last will and testament to preserve that eligibility for that adult or minor child once the person, the testator, passes away.

That’s really what a special needs trust is in a nutshell. If you have any other questions about a special needs trust or whether a special needs trust is the right vehicle for you or your loved one, I’d love to be able to help you. Please give me a call here at the law firm of Waller & Mitchell. Our phone number is 727-847-2288. Or you can visit our website at www.rdwaller.com. We do have a portion on our webpage which allows you to email us questions. Thanks so much.

Video Summary

Will you avoid probate with a trust? The answer is if it is properly executed and all of your assets are titled in the name of the trustee, then there will not need to be a probate proceeding and therefore you’ll be avoiding probate. If however you do not transfer or title all of the assets in the name of the trustee of the trust, then your assets would then have to be probated, which is usually under a will that says I leave everything to the trustee. That’s called a pour-over will. Then you have to probate those assets to put them into the trust.

The trust then has to be administered. Depending on the complexity of the trust or whether it’s an outright distribution or you hold the assets for a period of time and pay out income or if it’s a special needs trust, you may need to have an attorney assist you as far as the administration of the trust. Some of the things that a successor trustee would need to do would file a notice of trust with the clerk of the court.

Also there are certain tax ramifications and a that a successor trustee, meaning after the person who set up the trust dies, that’s usually a revocable trust, they need to apply for what they call a Federal Identification number so that the taxes would be reported in their fiduciary or as a trustee rather than under their individual Social Security number. They may need some guidance so it won’t have to go through probate. The biggest problem with probate is having to pay the attorneys a fee. You may need to engage the services of an attorney in order to assist you as far as the administration of a trust.

An answer to your question is is if the trust has all the assets of the decedent and the trustee can distribute everything out and there’s no income, then you can avoid probate by setting up a trust. You can also look at various alternatives doing estate planning on how to retitle assets and possibly avoid the necessity of spending quite a bit of money to establish a trust.

If you wish to do some estate planning and try and figure out how to avoid probate the most economical way, give me a call at 727-847-2288.

Video Summary

What is a trustee, and who should be a trustee? A trustee is the person who is in charge of a trust. As the word trust means, you are in – you’re trusting somebody with your assets, and the person that you’re trusting with your assets is called a trustee. And so they’re the ones that have certain powers – usually to invest the money – and they are given directions under the trust instrument to decide or given direction as to how they should spend the money or use the money. Sometimes a trust provide for discretionary disbursement, so the trustee uses their own judgment as to how much money should be distributed out to a beneficiary, such as a minor child, for their care or for their education.

So that’s – and the trustee can be anybody. A trustee can be a bank, which – financial institutions. They really go out and look for that – trust departments – however, your estate needs to be sizable in order for them to serve and to take charge of your estate. I believe that they start at about $500,000.00. Smaller estates usually have individuals who are concerned.

So, well, who should you designate as the trustee? Well, many times, whenever we do estate planning documents, you start by naming yourself, which is a little hard to explain whenever you’re trusting yourself with the trust – with your own assets, but that’s really what the trust instrument says. You direct yourself as the trustees to use the money for your benefit, and you’re the one who established the trust as the settlor or the grantor of the trust. However, it’s usually an estate planning tool, and then you designate what you want done with your assets when you pass away.

Course, when the trustee passes away, there needs to be a successor trustee. Well, who should you name? Well, usually, in the estate planning scheme of things, or whenever you prepare a trust for estate planning purposes, customarily you name a family member. Sometimes you might name a professional, such as your attorney, your accountant, or financial advisor – they have some restrictions as far as doing that – but many times it’s a family member who you believe has good business sense and will follow your directions.

A lot has to do with whether or not the term – under the terms of the trust you just want make distribution immediately upon your death rather than having it held for an extended period of time over, let’s say, a minor’s time until they reach age 25. Well, if they’re gonna pay out money, well, then you want someone that’s sort of sensitive to raising a child and understanding how, whenever you’re 18 years old or younger, that you’d like to have a brand-new Corvette or some other high-performance automobile. So you would want the trustee to think like you would do and say, “Well, a Toyota Camry – a used Toyota Camry with about 60,000 miles will do just fine to get you to and from school, and be dependable transportation.”

But you sorta understand you need to look at what the circumstances are as to who you appoint as your trustee. You can name multiple trustees and have one be responsible for the financial investments. There’s any number of people who you can name, and why you would name them, but I usually see where a family member is designated. And sometimes. in the absence of a family member, they may ask their attorney or accountant to serve. If they ask the attorney to sign, then a disclosure must be initialed at the time the document’s signed advising you that there can be additional charges to serve as a fiduciary – whether it be a trustee or personal representative – by the attorney, that you’ve been explained that you can designate anybody you want, including a bank or family member.

It’s very hard to say, well, who should serve as trustee. It depends on your individual circumstances and what family members or persons you know that are available to be able to do what you would like done after you pass away.

So if you’d like to set up a trust, or have some questions about a trust, give me a call at (727) 847-2288.

Video Summary

Do you need a lawyer to administer a trust?

This usually comes up whenever we have a person who sets up a revocable trust for the purposes of avoiding probate, and when they pass away, they designate someone as the successor trustee. So, the successor trustee then becomes the owner of the, or entitled to the property that’s held in the trust, and they can take care of distributing the assets to the various beneficiaries. Whether or not the person needs or should have an attorney depends on the complexity of the trust.

A trust, once the person who set it up passes away, is supposed to obtain a federal identification number, because it then becomes a separate tax-paying entity. And so that, whenever any income comes in, it’s not taxed to the successor taxee under their individual social security number. There can be, also, questions, if this is an ongoing trust, as far as what duties you owe to the various beneficiaries.

Under the Florida statute, a successor trustee is to send or notify the beneficiaries of the trust, and that they are beneficiaries. They also should serve upon them an inventory, letting them know what assets are in the trust. And, further, if it’s an ongoing trust, or takes some time to administer, they should send out an annual accounting, giving the beneficiaries notice that if they have any complaints about how the trustee is handling the finances of the trust, they have six months in which to object.

One of the most often asked questions of the successor trustee _____ is, “What do I have to do as far as paying the creditors of the deceased settler, or the person who set up the trust?” This is somewhat problematic, in that there may not be a probate proceeding, and the trustee would be responsible for paying those bills. A notice of trust should be filed with the clerk of the court.

The question is, “Well, should I make distribution of all these assets? And then, what happens if a bill comes in?” Well, that is a real problem, as far as giving the successor trustee a definitive answer, in that the creditors can file claims or sue the estate and trust up to two years after the person’s death. So, it’s important to understand who the creditors are, and do a reasonable search to determine the ascertainable creditors.

The other issue is filing a fiduciary tax return – that is, a tax return by the trustee that reports whatever income has come in, and then sending out the notice to the beneficiaries of how much they must pay in taxes. So all of these are matters that need to be addressed, whenever you become a successor trustee, and it’s usually sometimes not within the successor trustee’s expertise, if they are not a professional trustee, in order to do that.

So, it may be wise to consult with an attorney, and discuss with them whatever trust that you may be the successor trustee, to determine just exactly what you need to do, and whether or not you need to engage the services of the attorney. As far as the administration of the trust, so you do not become personally liable for any of the debts, and be protected as far as the beneficiaries are concerned.

If you’d like some advice, or set up an appointment to discuss administration of a trust, well, give me a call, at 727-847-2288.