Part 2 of a 2-Part Series about Estate Planning amid COVID-19
Last week, we started a two-week series about Special Beneficiaries. To read part one, click here.
Write Down Your Instructions
In addition to creating an SNT, writing a letter or memorandum of intent can provide excellent instructions to the trustee you choose about what is to happen after you have passed. Although this document is not legally binding, it can give your trustee insight into your true intentions. Include instructions regarding the types of things you want heirs to use the money for. These apply if allowable under the various government rules). Also, note milestones the beneficiary should achieve. Lastly, note the standard of living the beneficiary would have.
Consider Life Insurance to Provide the Necessary Funds
Supporting a special needs child or grandchild can be expensive. While you are working or have a stream of income, you can allocate money as you see fit. However, not everyone has enough of a nest egg to continue covering these expenses for their special needs child or grandchild once they have passed away. By purchasing life insurance and naming the SNT as the beneficiary, you can guarantee that there will be sufficient money at the trustee’s disposal to care for your child or grandchild. Life insurance makes an attractive option because courts pay it as a lump sum. Also, it need not match the same income tax liabilities as retirement accounts.
Review Your Retirement Accounts
With the passage of the SECURE Act, most beneficiaries lost the ability to stretch distributions from an inherited IRA over their life expectancies. However, Congress created a new class of beneficiaries called “eligible designated beneficiaries,” which includes disabled beneficiaries. These beneficiaries They retain the ability to receive distributions over their lifetime. They include amount of income tax due after distributions. Congress also passed additional rules allowing the disabled beneficiary’s life expectancy to be used for certain types of trusts. If you have a large retirement account, it is very important that we meet to discuss ways this money can be distributed after your death to maximize its benefits to all of your beneficiaries.
Give Us a Call
Ensuring that your special needs child or grandchild is cared for after you are gone is likely a top priority for you. Our priority is to assist you in crafting a plan that will ensure continued support and prosperity for your loved ones. Call us today to schedule your appointment.
About Skvarna Law in Glendora & Upland, California
Skvarna Law Firm operates offices in Glendora and Upland, California. We provide legal services for individuals living in San Bernardino, Los Angeles, Orange and Riverside Counties. This includes several cities — Upland, Ontario, Rancho Cucamonga, Fontana, Colton, Rialto, Chino, Chino Hills, Glendora, Claremont, Pomona, La Verne, Montclair, San Dimas, Azusa, Covina, West Covina, Diamond Bar, Walnut, La Puente, Corona, Norco & Mira Loma. Visit SkvarnaLaw.com to learn more.
