Where Do You Do Your Shopping?

Thomas M. Boles, 33, G.C.

I trust you had a wonderfuland special Holiday Season. Our "store" was well stocked, and I wish to thank those who did their "shopping" with us. I know the value of goods received was not only a bargain, but the lifetime return on investments was a really good deal.

Two months ago, I devoted this column to adult children and grandchildren. This month, I would like to refer you to a trust sometimes called a Special Needs Trust. This is frequently used when providing for a disabled child. If you have a child who is physically, mentally or developmentally disabled from birth, illness, injury or drug abuse, he or she may be entitled to government benefits (Supplemental Security Income and/or Medicaid) now or in the future. However, most of these benefits are available only to those with very minimal assets.

Like many parents, you may find yourself faced with a difficult choice. If you leave a substantial inheritance to this child, he or she will be disqualified from receiving the government benefits which may be crucial for his or her care. On the other hand, you may not want to have to disinherit this child in order to preserve these benefits.

There is a third option. With a separate trust (a Special Needs Trust), you can provide for your disabled child without interfering with his or her benefits. This trust can be established at the same time as your Living Trust. This Special Needs Trust should be very specific in stating that its purpose is to supplement government benefits, that is, to provide only benefits above and beyond the benefits the child receives from any local, state, federal, or private agencies.

It is extremely important that the trust not duplicate any government-provided services and that the child not have any resemblance of ownership of the trust assets. Otherwise, it is very possible that the government would attempt to seize the trust assets for repayment of services provided or determine that the child does not qualify for future benefits because he or she has ample assets and income to provide for adequate care.

To make sure the child does not have any implied ownership in the trust assets, the trust should give the trustee complete control over the distribution of the assets and any income they generate; your child should not be able to demand any principal or interest from the trust. You should also instruct the trustee to purchase only goods and services that government benefits do not provide-such as airline tickets to visit relatives, furniture, stereo, etc. The trustee should make the purchase direct, instead of giving the money to the child and letting the child make the purchase. A spendthrift clause is also a good idea for extra protection.

As I have written before, be very careful whom you name as a trustee or trustees, because they must have the time, ability, and desire to take on this responsibility. Also, be aware of a possible conflict of interest, especially if your other children will inherit the trust after your disabled child has died. Inappropriate trustees may be more interested in preserving the trust's assets than in putting the disabled child's needs first.

Also, you may want to leave specific items to certain individuals or organizations, i.e. a favorite piece of jewelry or antique that you want to give to a special friend or relative. These are called Special Gifts or Special Bequests. They can be accomplished very easily by simply preparing a Special Gift List and having it notarized. You don't need a special form to do this. Just write down who will receive a special gift and what you are giving to that person or organization. Then, as you make changes or additions, you won't have to redo the entire list. Remember, you can keep your list at home and add to it or change it at any time. Just make sure you date each list and always have the new list notarized.

Isn't it exciting to be entering a new year, filled with new ideas, new opportunities and, hopefully, without yesteryear's aches and pains? Many of you have not shopped in our "store" before, and I cordially invite you, one and all. We have many items on our shelves that can make your future so happy you won't believe they are true-until you've tried them. Which leaves my "ad" for this month to read:

The Book of Life has opened to a new year.

For a happier tomorrow, fill it with charity.