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Janet Colleton
When planning your estate, you will rarely have difficulty naming the initial beneficiary or beneficiaries of your will, IRA account, or life insurance. This observation is almost certainly true when it comes to dating your spouse if you are in a committed, long-term relationship. Also, when it comes to naming potential successors or beneficiaries in a situation where you have children, they are also commonly named as the next in line to succeed you and your spouse’s property. Most often, children inherit equally although this is not required and is not always the case.
To avoid conflict, parents often decide to name children equally even when they would prefer a larger share to go to one or more of their children or when they see a greater need. This is a matter of individual preference.
However, after these observations, as you continue to name the successors who will inherit, you can run into unexpected obstacles.
First, consider the difficulty you may have in naming a disabled beneficiary. This can relate to children, grandchildren, distant relatives and friends, and even spouses if your spouse receives Medicaid or some other need-based benefit. It may be necessary to determine whether an inheritance intended to help that person could cause problems if it is determined to be “excess resources” for a federal, state, or charitable benefit. Here, professional advice and a full knowledge and understanding of the benefits that this individual receives can be very important in determining whether that person can receive an inheritance of the desired kind.
In some cases, trusting complementary needs may help. In other cases, smart advance planning with the help of a professional can make a difference. Note that if a disabled person’s only benefit is Social Security disability (not Supplemental Security income or some other income), the person is free to inherit without guardianship and it will not affect benefits. Social Security disability recipients, in addition to being identified as disabled, simply cannot work in a “big gainful business.” Protected workshops could be acceptable, and some work limited to a certain dollar amount might be acceptable, but an inheritance would not affect his or her Social Security benefits.
Another problem that can arise when naming potential successors and beneficiaries is the choice of the trustee or administrator to handle funds when the beneficiary, either because of a minority or disability, is unable to receive the inheritance directly. Sometimes a grandfather can hesitate to name his son-in-law or daughter-in-law as guardian of minors if their daughter or son dies and the inheritance is intended for minor or disabled grandchildren. This may have to do with experience as to how money is used or whether the person has shown good judgment in financial matters.
The same concern can relate to whether a son or daughter will use good judgment. Note that some criteria may be stated in a will or in a grandchildren’s trust regarding the use of funds. Also, if a supplemental needs trust is being created, it is important that the trustee understands what he can and cannot do. I’ve written a lot about letters of intent describing some of the things that can be done with the additional needs trust. Sometimes people unaccustomed to these responsibilities may be overly conservative or overly generous in their use of funds. Career advice can be important here and there are some experienced professional organizations that can help.
Finally, individuals who draft their wills can run out of beneficiaries, quite literally. Some of the friends and family they were going to name had passed before them. Sometimes a person simply cannot think of anyone who needs the inheritance. In such cases, he may assign wills to more distant acquaintances, relatives, or friends. He may also become vulnerable to scams or newly acquired but not necessarily real friends from whom he needs protection. We hope they have real family and real friends to support and help them in this situation.
One avenue not explored here is to contribute to charities. Bequest gifts to deserving charities can continue to benefit those causes that are important to the testator/testate throughout life and make a real difference to the lives of others.
Janet Colleton Esq. She is a CELA-certified senior law attorney (CELA) by the National Geriatric Law Foundation and practices exclusively in senior citizen, retirement, life care, special needs, guardianship, estate planning and administration with offices at 790 East Market St. 250, West Chester, 610-436-6674, Colliton@collitonlaw.com. She is a member of the National Academy of Seniors Law Attorneys and the Pennsylvania Association of Seniors Law Attorneys, and with Jeffrey Jones, CSA, is the co-founder of Life Transition Services LLC, a service for families with long-term care needs.
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