Q: If one of my beneficiaries becomes disabled, do I need to change my estate plan?
A: Absolutely. When a beneficiary becomes disabled, it may impact how they can access and manage their inheritance. Ensuring your estate plan addresses their new needs is not just legally prudent but morally responsible as well.
Estate planning is an intricate process, designed to offer peace of mind, knowing that loved ones will be taken care of in the manner intended. But what happens if circumstances change? One such situation arises when a beneficiary becomes disabled.
A primary reason for revisiting your estate plan is the potential need for a Supplemental Needs Trust (SNT). If your disabled beneficiary is receiving, or may in the future receive, government benefits, a direct inheritance would jeopardize their eligibility for such benefits.
An SNT allows assets to be set aside for the benefit of the disabled individual without those assets being considered for means-tested government programs. The funds in the SNT can be used for various purposes that improve the beneficiary's quality of life, such as education, therapy, recreation, and certain out-of-pocket medical expenses.
Beyond the logistical considerations, there's a protective aspect. Disabled beneficiaries might be more vulnerable to financial exploitation. It is crucial to structure their inheritance in a way that offers protection from potential predators, scams, or even well-meaning but financially inexperienced family members. So even if they are not receiving government benefits, you may still want to leave their inheritance in trust and name a trustee to manage the assets.
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You may need to update your Health Care Proxy if the person you nominated can no longer take on that role. Likewise, if the beneficiary's disability affects their capacity to make financial decisions, you should update your Power of Attorney if they are the agent. These documents are vital to your well-being as you age.
Life is unpredictable, and the circumstances of our beneficiaries can change. When these shifts occur, it's essential to ensure that your estate plan reflects these changes. By doing so, you're ensuring that your loved ones are protected and can access their inheritance in the most beneficial way. So, if a beneficiary's situation changes, it's always a wise move to revisit your estate plan with your attorney. They can offer guidance tailored to your specific situation and ensure that your intentions and your beneficiary's best interests remain at the heart of your plan.
Melissa Doris, Esq. and Dylan Stevens, Esq. are attorneys at Burner Prudenti Law, P.C. focusing her practice areas on Estate Planning, Elder Law and Trusts and Estates. Burner Prudenti Law, P.C. serves clients from Manhattan to the east end of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan and East Hampton.