“Ghost”: Estate Planning Case Study

Situation:

Couple in late twenties or early thirties have recently purchased a New York City loft and done extensive renovations. One partner is a money manager, the other is a potter.  Most of the income is likely provided by the money manager, who is murdered and dies on the spot.

Issues:

Unmarried, substantial assets, surviving partner without resources to purchase or maintain partner’s assets on her own.

In the supremely romantic movie “Ghost,” Sam Wheat and Molly Jensen are a visibly loving couple who have just moved into a New York City loft in a not-yet-gentrified area.  We can surmise that they have purchased it, rather than rented, based on the extensive interior renovations they are doing themselves. Because we know that Sam works in a money management or investment firm handling exceptionally large amounts of money, and that Molly is a potter who is currently spending the bulk of her time working on their new loft, we can guess that Sam makes a fair amount of money and is either the sole or primary income for the couple. Since they have purchased and are working on the loft together, we can guess that they intend to be permanent partners, despite not having married.

Marriage gives each partner to the union certain legal rights to property held or acquired during the marriage. This protects partners whose cash earning, or cash resources are unequal, so that they can continue to have a means to provide for their needs until adjustments to being single can be made.

But when partners are unmarried, even if they intend to share their economic resources as well as their lives, the law does not recognize that partnership without other documents that acknowledge and create it.  This means things like a will, or joint title to property, or payable on death and beneficiary designations on accounts are essential.

Here’s what would have happened if Sam and Molly did not do any sort of planning: If the loft was titled in Sam’s name alone because it was purchased with Sam’s money or based on his income, and he left no will, then the loft would legally pass to either his parents, any children he had with a previous partner, or his siblings.  Molly would lose her home.  Even if Sam had put Molly’s name on the deed as a joint owner with right of survivorship, if he failed to leave her any of his cash accounts in a will or with beneficiary designations, then she would have had to sell the loft for lack of money to pay the mortgage, taxes, and insurance.

Similarly, if Sam and Molly were both on the title to the loft and both owners of the cash accounts, unless the form of ownership specifically included a right of survivorship, then Molly would likely only own one half of everything after Sam’s death with his half going, again, to the parents, kids, or siblings.

Imagine Molly’s state when she realized Sam is present and wants to inhabit Oda Mae’s body so he can feel her again – instead of the iconic, bittersweet, love scene we all swoon over, most probably Molly would have been whipping his sorry ass for leaving her homeless and without immediate means to take care of herself. That would have been a very different movie.

Planning matters. When you are ready, give us a call at 833-Red-Boot (833-733-2668), email legal@parkercounsel.com , or make an appointment here to talk about your needs.

Harry Potter and the Great Estate Planning Fiasco

A lot of families find it helpful to hear what other families have done in their estate planning, and they get ideas from what others have done.  It’s most helpful, I think, when you know something about the family itself, so let’s talk about Harry Potter. (We have previously discussed Batman here)

Who will care for the orphan?

Harry was famously orphaned as an infant when his parents were murdered by Voldemort. At the time, though, it was believed that Sirius Black had either killed them or was involved in their killing.  Because Harry’s parents, James and Lily, had named Sirius as Harry’s godfather, under wizarding law that would mean he was the designated guardian for Harry in the event something happened to the parents, which of course, it did.  But because it was believed that Sirius was involved in the killing, Dumbledore stepped in and took Harry to be raised by his relatives, the Dursleys, which in hindsight was a very bad deal for Harry.

[If you’re interested in more case studies and discussion about how the wizarding world handles it orphans, like Tom Riddle and Teddy Lupin, you might want to check out this chatboard. ]

In the muggle world, if a family had named a designated guardian for the child who was determined to have killed the parents, a court, much like Dumbledore, would likely determine that person not to be a suitable guardian, and refuse to appoint them, even though the parent’s had named that person.  A judge will always look to see if the named person is otherwise suitable at the time the appointment comes along, thus protecting the child much as Dumbledore attempted to do.

While James and Lily could not have predicted that Sirius would be alleged to have been involved in their murder, they could have predicted that for a variety of reasons Sirius might not be able to serve as guardian when the time arose, and their best course of action would have been to name backup guardians.  With an apparently large number of close friends in the wizarding world, naming a backup to Sirius would have allowed Dumbledore to consider other people as guardian before turning to the Dursley’s, and Harry might have been spared the closet and abuse he endured as a young child.

How to handle the money

Lily and James also would have needed to create a plan for the property and money they had, and how that would be left to Harry.  Kids who inherit from their parents while still minors are never handed the keys to the bank account, but they generally do get full access and control of the property and money as soon as they turn either 18 or 21, depending on the state. In the wizarding world the age is 17, so Harry would have gotten full control of everything in the Gringott’s Vault as soon as he turned 17, which is a scary thought for most parents. Butter Beer for all!

The better way for the Potters to have done this would have been to appoint a trusted person – and some back up people since Sirius would likely have been their first choice – to act as trustee for the property until Harry reached an age that they felt he would be able to appropriately handle the money.   Until that time, the trustee would make decisions about spending for Harry’s benefit.  The actual age chosen by each set of parents depends on what they know about their child, their own philosophy of money and adulthood, and the amount of money likely to be available. The scenes where Harry heads to the Gringott’s vault at the beginning of each school year and grabs a bunch of money, with no supervision and no thought about budgeting or accounting, should make every parent cringe.  Setting up your estate plan to avoid that is easily accomplished.

If you’re ready to avoid your own estate planning fiasco, call or email us for a quick consultation on how we might be able to help. legal@parkercounsel.com or 833-RED-BOOT (833-733-2668)

You’re Forgetting Someone Important

Special needs planning when your child has siblings

(This guest post was written by Cassidy Parker Knight, the adult daughter of one of our attorneys. )

If you’re a parent of a child with special needs, you’ve probably spent some time wondering about what your child’s future will look like once you’re not around to take care of them anymore – maybe a lot of time, and maybe more worrying than wondering. Where will they live? What money will support them? Who will take care of them?

“the reason you’re worried is because you won’t be around, but the reason your other kids worry is because they will be around.” 

Cassidy and her big brother Dylan

            You may not realize it, but if you have other kids who aren’t disabled, they’ve thought about it too. Of course, the reason you’re worried is because you won’t be around, but the reason your other kids worry is because they will be around. They may worry that you plan on your disabled child living with them and they don’t want that, or they may worry that any financial burden will fall to them, and wonder what happens if they can’t afford it. If they’re older, they may worry that there is no plan, and that it will be all on them to figure out after you’re gone.

            I think I was in middle school the first time the thought occurred to me that someday, my parents would be gone and it would just be me left to care for my brothers. It’s overwhelming, at just 12, to start worrying not only about your parents dying someday, but all the lifelong responsibilities that will come with those deaths. And the older your kids get, the more aware they’ll become of what those responsibilities entail. I’ve spoken to siblings who made decisions about college, their profession, where they live, and whether they start families all based on their future responsibilities for their siblings.

            For a parent, it must be overwhelming to think about planning a future for your child that you won’t be a part of. It can be easy to think that you’re shielding your other kids from that worry, but in reality, the opposite is true. Your disabled child’s adult siblings are your biggest allies, and filling them in on any estate planning you’ve done or wishes for the future you have will also be a kindness to them. It can also help you both to spot problems with the plan while you still have a chance to make your voice heard—for instance, if you want your child with special needs to live with your abled child and you learn that your abled child doesn’t want that, it’s probably important to you that you have a say in the alternative.

            In all the conversations I’ve had with other siblings though, the most common worry I hear about the future is not about the responsibility or having to take care of their sibling—it’s about the uncertainty. If you have the estate planning under control, fill your child in, especially if they’re not really a child anymore. Let them know what roles they should and shouldn’t expect to play, and give them an opportunity to tell you whether that fits the role they want to play. Most importantly though, there should be a plan. If that part hasn’t been done yet, starting that process would really be the greatest kindness you could do all of your children.

How should Batman’s parents have done their estate plan?

One of our best known vigilante crime fighters, Batman, was orphaned at the age of 8 when his parents were murdered.  He swore to dedicate his life to fighting crimes like that which killed his parents, and by the time we see him in adulthood he has spent millions of his billion dollar fortune designing and building crime fighting gadgets galore and an elaborate secret cave for operations headquarters. Let’s see how that might have come about.

What issues do the Waynes have?

They own businesses, so they need succession planning to make sure the company can continue running.

They have a minor son, so they need to plan for his care until he grows up and for how and when they will give him the money he will inherit.

What did they own?

We don’t actually know if the elder Waynes left a will or any other estate planning, but I would guess it was incomplete, at best, as I’ll explain below.  We know that they had enormous wealth in the form of a number of profitable companies falling under the umbrella of Wayne Industries. There was money and potentially company ownership from Mrs. Wayne in addition to Wayne Industries, but it is less clear how that was owned and managed. This means that in addition to planning for the distribution of their personal wealth, Bruce’s parents also had to prepare succession planning for their businesses and business interests. 

And of course, the most important piece of their planning, and where I suspect they failed, was in the management and distribution of their wealth and businesses to their son.

Businesses

The Waynes appear to have had at least some succession planning in place for their businesses, as we know that the companies weathered the immediate period after their death and that they were thriving many years later when Bruce was flying about the town on his bat wings.  This meant that the companies must have had either a corporate structure or a well written set of bylaws or partnership agreement for an LLC or partnership structure. In a corporation, the company itself has the ability to replace leadership, adjust to circumstances and operate independently of whether their officers or any of their shareholders died unexpectedly. The passing of shares is generally controlled by specifically created and adopted company policies, or controlled by state law. 

In the case of an LLC or partnership, where there are typically fewer people involved in the running of the company, a plan setting out who owns shares versus who has the ability to run the company is important to prevent infighting or take over by inexperienced leaders. The Waynes do appear to have prevented the demise of their companies through advance planning of some sort. While Bruce, as their only heir (if they did not have a will), would have inherited their interests in the companies, as an 8 year old he would have been unable to run them, requiring the parents to prepare for the possibility of their early death by having other adults ready to step into company leadership roles. Written plans, along with properly adopted bylaws and policies within the company, would have allowed for this.

Bruce

We know that Bruce inherited all or the majority of his parents’ estates due to the seemingly bottomless pit of money he has access to in later life.  Most people do leave all or most of their estate to any children they have before considering gifts to other relatives or friends, and the Waynes seem to have followed this pattern. If they had no will at all, then in most states everything they owned would go to their child.  But as an 8 year old, Bruce would not have been able to exercise control of any money or property at that time. The best way to provide for minor children is through the creation of a trust that will hold their inheritance until they are older and allow an appropriate person or trust company to manage the inheritance until the child can take over.  If the Waynes did not have a will that created a trust for Bruce, a court would have  created one for him.  In that situation, when Bruce reached the age of majority, which today is usually age 18 but may have been 21 if we are talking about the Golden Age Batman, he would have been give all the fortune outright, having complete control over management and spending of the money as soon as he turned either 18 or 21.

If the Waynes had created a trust in advance, they would have been able to delay Bruce’s access to the entire sum of money, and they would have been able to allow time for him to learn how to handle such a large sum responsibly.  Some parents direct the trustee to pay for higher education or down payment on a home or even a sum toward starting a business, but access to full control by the child is delayed until an older age or a life milestone, such as obtaining a college degree.  If the amount of the inheritance is very large, it may be released to the child in stages, so that some money comes under their control while the rest stays in trust and protected from the missteps of youth.

Basically, you can set the trust up to do what you expect you would do for your child if you’d been alive and they asked for money. 

I suspect that Bruce’s parents did not have a trust set up for him because it is hard to imagine that the ways in which he used his money would have been green lighted for loans or gifts by his parents.  “Hey Mom and Dad, I want to spend a big chunk of your hard earned money to dig a giant hole under our tower (I’ll pay an engineer to make sure it doesn’t fall down) and then try to invent super high tech comic book toys so I can confront highly dangerous and violent criminals all alone.  Is that ok?”  

I like to think Mom and Dad would, at the very least, have required Bruce to provide a proof of concept and marketability study before backing this particular hobby.  Which is why I’m pretty sure young Bruce had sole control over his money at about the same age many young men buy their first car and then roll it into a ditch.

If you want to keep your young super heroes safe and solvent and protected from their own passions, a trust for minor’s is definitely the way to go.

More than existing

One of the reasons parents fight so hard for their children who have special needs is that they want more for their child than simply being alive. If happiness was only about not being dead, then you’d expect the human race to be a lot happier, on average, than they are. If successfully taking care of our children with severe developmental disabilities meant making sure they were fed, clothed, and had enough medicine to not die, then our jobs as parents would be a lot simpler.

But a good life is more than that. One of the wonderful things about being human is that we get to define what a good life looks like to us, and people have defined that in vastly different ways. Those ways range from the person who wants to change the world, to the person who wants to honor the creator, whether Mother Nature, God, or some other divine entity, in everything they do, to those who strive to impact those around them in small but meaningful ways, and to those who simply enjoy their existence for as long as they have it.

Parents fight for their children to have medical care, therapeutic care, education, vocational support, and life supports so that their children can have the opportunity to reach a life that is more than mere existence. Community connection, loving and being loved, enjoying their life in whatever way that looks like for them, are the goals that parents have for their children.

Parker Counsel Legal Services provides guidance and representation to families in Texas, New Jersey, New Hampshire, and Massachusetts. Our lawyers will help you plan and prepare for guardianships and other supports for your children with special needs, and prepare special needs trusts to provide support for your child until the end of their life. Call or email us for a short phone consult to see how we can help you.

833-RED-BOOT (833-733-2668) or legal@parkercounsel.com

Pandemic stimulus payments for SSI recipients

UPDATE: On April 15 the Treasury department finally announced that it would not require SSI recipients to take extra steps to receive the $1200 stimulus payment. If you have NOT already filed a return or submitted the short form reference in the post below, you should not have to do anything at this point to receive the $1200 stimulus payment for any SSI recipient. It appears that although the payments will be coming from the IRS, not the SSA, they will be made in whatever manner SSI benefits are received – direct deposit, DirectExpress benefits card, or paper check. Right now they are expected to go out in early May.

Most adults who receive SSI benefits are entitled to the $1200 stimulus payments passed by the US Congress. But there are some details you need to know.

Adults (anyone age 18 or older) who receive SSI benefits and are NOT claimed as a dependent on anyone else’s tax return are entitled to the $1200 payment.

The payment will NOT be counted as income to the recipient, and so will NOT affect the monthly benefit.

The payment will NOT be counted as an asset for 12 months, so if your SSI recipient has some money saved and this payment would put them over the $2000 asset limit, you will have 12 months to spend the money before it affects the monthly benefit.

SSI recipients will NOT get these payments automatically. Because of a glitch in the way the legislation was written, and despite urging by disability groups and many legislators for the Treasury Department to fix this oversight, anyone who gets SSI and did not file a tax return in either 2018 or 2019 – which is almost all SSI recipients – will need to file a simplified information form with the IRS in order to get their payment.

If you have already filed a 2019 tax return for your adult child, you do not need to take this additional step.

If you have SSI payments direct deposited to a bank account, the stimulus payment can be sent to the same account. You can also direct the payment into any other bank account that is in the name of the SSI recipient.

If you receive paper checks, you can receive the stimulus payment by paper check.

Unfortunately, if SSI payments are made to a benefits debit card, there is currently no information on how the stimulus payment can be made to that card account. You will have to ask for a paper check if there is no other bank account in the SSI recipient’s name. This obviously will present a problem on how to get that check cashed. One option would be to go ahead and open an ABLE account if that is something you have been considering but haven’t gotten around to yet.

Another option would be to do a third party endorsement of the check to yourself (a parent or other responsible adult) and deposit it into your own account. You do this by having the check endorsed as thus: “Pay to the order of (parent or other), signature of payee (person the check is made out to).” Then when you deposit it into your own account you sign as you would normally endorse a check. But BE ADVISED that some banks will not accept third party endorsements, so check with your bank before you try this.

The IRS registration form is here.

Stay safe. Stay sane.

What do school closings mean for special education?

Even the dog may be called on to teach

If your kids are at home and you’re scrambling to find a way to keep some type of learning going, you are also probably wondering what happens to the carefully worked out IEP your child has?

Clearly we are in uncharted waters. As the health crisis deepens and normal life takes a sharp turn, it is impossible to know exactly what life will look like when we are finally able to shake hands again. This means that there are many questions we cannot answer in detail, but we do have some general information to start from.

If you have a child still in school who has been sent home, the general rule is that if services are being offered by the school district to children in the regular program, then services must also be offered to children in special education. For almost all children, the IEP cannot and will not be followed exactly, but where it can be followed, it should be. The main thing to know is that special education programs cannot simply be abandoned during this period unless the entire school program is temporarily suspended.

The second important thing to know is that the legal mandate for compensatory services will, in most cases, likely mean that schools will have to provide extra services for children in special education in order to make up for missed learning and services during the shut down. The schools will, of course, be overwhelmed with the need for additional services when they re-open, so there’s no way to know exactly what this will end up looking like, but the law as it currently stands does require schools to provide additional special education services when needed services have not been provided.

All of our students are missing learning opportunities at this time, but the law says that our students in special education should NOT take the brunt of the loss if there are limited resources.

As outlined in this factsheet, there is very little room for schools to make exceptions to the special education rules.

Stay safe out there.

Parker Counsel Legal Services serves families in Texas, Massachusetts, New Hampshire, and New Jersey. Call us at 833-RED-BOOT (833-733-2668) or legal@parkercounsel.com

Top 5 Mistakes People Make In their Wills

If you’re the average person living your life, and you’re one of the slightly less than 50% of the adult population who decides to actually write a will, for real, this time, then there’s a good chance you will make one of the following mistakes.  So to help you do the best job you can do with this important task (how important?  Just ask someone who had a parent or spouse die without a will) we’ve compiled the most common mistakes people make when writing their wills.

  1. Not finishing.  You’d be surprised how many people try to DIY their will but never actually finish signing them.  You have to sign in a very specific way, which varies depending on which state you live in but always involves some combination of you, witnesses, and a notary public.  Usually all these people have to be present at the same time and sign together, which makes it easy to put off and a lot of people never get around to it.  A will without the proper signatures is not a will. 
  2. Not updating.  A will should be reviewed and updated as your life changes.  Sometimes the problem is that what you own has changed significantly and the way you distributed it no longer makes the best sense.  More often, people you named as executor or other fiduciaries have died, become unreliable, or moved far away and can no longer serve. 
  3. Thinking that a will is all you need.  Not all of your property is disposed of by your will – if you have life insurance, or retirement accounts, and sometimes even your investment or ordinary bank accounts, have beneficiary designations.  This means that when you open the account, you are asked who you want to get the account at your death.  Anything you own that has a beneficiary designation will not be affected by your will.  This means you have to think about everything together and review (and change if needed) the beneficiary designations you have made at the same time you are preparing your will.  If you intend to give everything to your friend Bob, but you forgot that you named your friend Fred on your retirement account, then your intent will not be carried out. Also, there are other useful documents you may need to prepare in addition to a will, even though we tend to think about “writing a will” rather than “writing a HIPAA release,” there are a number of documents that typically are prepared when someone sits down to “do their will.”  These include a power of attorney, a medical power of attorney, a HIPAA release (that lets the people you name have access to otherwise private medical information), and a few others.  These documents will be needed in the event you become incapacitated, either temporarily or permanently.  If you are in a serious accident and spend months in a hospital or rehabilitation center, you will need other people to help handle your finances, your insurance claims, and other similar things, which they will not be able to do easily unless you have prepared these additional documents.
  4. Not letting people know about your will.  Once you have a will, and, hopefully, your other documents (see #3), you need to make sure people know they exist and where to find them when needed. 
  5. Thinking you can do it all yourself.  I know, this one sounds very self-important, but a lawyer really is useful when you want to write a will. If you want to make sure you do what you intend to do, hiring a lawyer is definitely the way to go.

Parker Counsel Legal Services consults with special needs families in Austin Texas, Dallas Texas, Western Mass, the New Hampshire Seacoast, and Northern New Jersey. Special needs trusts, guardianship, and more. Give us a call and tell us about your family situation for some guidance on how best to plan a safe, secure future for your child. 833-RED-BOOT (833-733-2668)

Turning Fire Drills into a Game

Every year 2400 fires occur in homes where a person with a physical or mental disability lives. Fire drills at home are probably even more important than school fire drills for families who have a member with a disability, as there may be fewer people to assist with evacuation and homes are less likely to be fully accessible and may have fewer exits than public buildings. On top of that, at least half our time at home is during sleep hours, when no one will be thinking clearly if a fire wakes them out of a slumber. The US Fire Administration has more information and safety tips here Fire Administration

At least one company has set out to help families teach their children with special needs how to safely get out of their house in the case of a fire. Fire Guide has developed an app that lets you guide your child with your own voice, and then give feedback and refine the instructions specifically for your own home and your own child’s abilities.

Planning and drills can mean the difference between safety and tragedy. Turn fire drills into play time and give your family a better chance in case of fire.

Parker Counsel Legal Services consults with special needs families in Austin Texas, Dallas Texas, Western Mass, the New Hampshire Seacoast, and Northern New Jersey. Special needs trusts, guardianship, and more. Give us a call and tell us about your family situation for some guidance on how best to plan a safe, secure future for your child. 833-RED-BOOT (833-733-2668)