May 19, 2024

It’s quite typical for people to create an estate plan that will take care of their family members and loved ones once they die. It is critical to carefully craft this plan in order to meet the needs of the beloved person with a disability (PWD). This is because that person may already be getting disability benefits, but the inheritance may disqualify that person from continuing to receive government assistance. This potential outcome  may sometimes force someone to spent their inherited wealth before they can obtain government support.

Things you must consider when estate planning for a disabled beneficiary

Estate planning for a beneficiary with a disability is difficult because you need have a full grasp of the following:

  • The type of disability your loved one has
  • The disabled beneficiary’s limitations and capabilities
  • The future needs and special care that the beneficiary may need, especially if medical professionals project that the beneficiary’s disability may worsen over time
  • The benefits provided by the government and NGOs and relied upon by the beneficiary

The primary goal of an estate plan for a disabled family member is not to save on taxes or avoid probate, but rather to ensure that they get as much resources as they can so that they can live happy and fulfilling lives. This means that the inheritance must not jeopardize their entitlement to government benefits.   

Discretionary trust: The best way to care for your disabled loved one

Setting up a discretionary trust is the most successful strategy for looking after a disabled loved one after your death. A trust is a flexible estate planning tool that allows assets from the inheritance to be held by a third party called the trustee. According to the terms of the trust, the trustee is legally obligated to use the assets for taking care of the beneficiary at appointed times or when specific conditions are met.

Since the legal title to the inheritance is held in trust by the trustee and not by the PWD, a discretionary trust does not disqualify the PWD from receiving disability benefits most of the time.  There are many ways to structure the discretionary trust so that the beneficiary can use their inheritance to meet their needs.

However, greed or irresponsibility may take over the trustee, so if they fail to fulfill their obligations, the beneficiary can sue the trustee and have the court compel the trustee to do their job. The court may also replace the erring trustee with another person.

Do I have to talk with disability lawyers when estate planning for a PWD?

Caring for a PWD is difficult enough as it is, so estate planning is even more arduous. Here’s where disability lawyers can help you out. They can help you craft a discretionary trust or other tool so that you get to transfer your hard-earned wealth to your loved one. They can also help you avoid estate planning pitfalls and foresee issues that may emerge along the way. They can also ensure that you succinctly express what you wish to achieve and also have the trustee fulfill your dying wishes.

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