The bereaved are often concerned about immediate duties after the passing of a loved one and before their appointment with an attorney.  Here are a few items that the personal representative can start work on:

  • Complete and pay for funeral arrangements (If a person other than the deceased pays for this expense they are allowed to be reimbursement later in probate, but only if there are enough funds to pay other senior creditors first.)
  • Secure the home
  • Check on valuables
  • See to the well-being of any pets
  • If personal property is taken by others after the deceased dies, the personal representative should obtain a receipt from the person holding the property and make sure to let them know that it is not legally their property until authorized in probate proceeding.
  • Exercise due diligence but remember probate takes time, be kind to yourself.

Probate: Where to Start?

Probate does not begin until paperwork is filed and accepted by the appropriate court.  The paperwork is typically filed by the person named as personal representative.  If there is no will, then the paperwork is typically filed by the person seeking appointment as personal representative*.  The type of paperwork filed, depends upon the value of the assets being probated.  If the value is small, then a Small Estate Affidavit may be used.  If the value is average or above, then a formal Petition is filed.  (See my upcoming blogs for more information on the differences).  A Small Estate Affidavit is intended to be prepared without an attorney, though I often find that legal counsel is needed. A formal probate petition is normally prepared by an attorney.

This paperwork is then filed in the county where the deceased person lived, owned property, or had assets at the time of death.  A formal Petition requests that the court ‘open probate’ or start the probate process and appoint a personal representative.  Once the personal representative is appointed or the Affidavit is accepted, authority is established for the Personal Representative or Affiant to begin the process of dealing with the deceased’s assets and debts.

*(Note: that the term “personal representative” and “executor” are used interchangeably).

Fall Mini-Series Introduction: What is Probate Anyway?!

Many of my clients come to me with deep concerns about probate.  They wish to either avoid probate having heard many a horror story or they now find themselves enmeshed in probate as the result of a loved one’s passing.  But what they all have in common is the need to understand what probate is so that they can make informed decisions.

In response to this concern, I will be publishing a mini-series of short, easy to read blog posts for the non-lawyer on probate.  For a more in-depth look at probate, please join me for my annual Legal Savvy Seminars offered at the Corvallis Senior Center through Parks and Rec.  The first class will start November 3, 2016 at 12:15. To register or see more class details please go to:

What is Probate?

Probate is itself a legal process with a number of different and sometimes complex steps.  However, a short-cut to understanding probate is to recognize that the goal of probate is to change title on assets from the name of the deceased into the names of the beneficiaries.  In order to achieve this goal, a court provides authority to the personal representative (formally called the executor or executrix) to manage and distribute the deceased person’s property. This is where probate begins.


With the recent news its hard not to wonder how some one so famous could have neglected something so important. But really, its easy to understand, do you have a will? Do your parents? The inherit pessimism involved in estate planning seems to create its own form of optimism that estate planning can be put off for tomorrow. But as we all know there are two certainties in life- and although we know the due date for taxes we don’t know the due date for death.

In my Blog I have previously detailed a number of reasons to create an estate plan but still, its hard for people to start the process. So, I will tell you a secret- a will is easy to write. In my office we have one free consult, then the next appointment is to review and often sign your documents. A will is also relatively inexpensive at $150-$175 per person for most of our clients.

Of course there are lots of other planning tools you can use,(which I will tell you about during our appointment) but if you can’t quite make it over that hurdle, at least make a will.  Although most of us will not experience the drama and litigation that is likely to unfold over Prince’s estate, most of us value the estate we have worked to save. Make sure your money is not wasted and your family is protected by taking the next step – make a plan.
(See; 10 Reasons to Create an Estate Plan Now. Posted on March 6, 2015 by Kara Daley, On Planning for Minor Children, Posted on March 27, 2015 by Kara Daley, Why Do I Need a Stand Alone IRA Trust?, Posted on February 18, 2016 by Kara Daley)

Why Do I Need a Stand Alone IRA Trust?

“I already have an revocable living trust, why do I want yet another trust? ” This is a common response I hear from clients and professionals at mention of these trusts. However, there are two very good reasons for this trust: Protection and Stretch-out.

PROTECTION: Clients may be unaware that although an IRA is a protected asset when the client is the owner, those protections evaporate once the IRA passes to a child or other individual beneficiary and can also be eroded upon inheritance by a spouse. The lack of protection leaves the IRA vulnerable to a child’s spouse in a divorce, makes the IRA available to be taken by a child’s creditors or bankruptcy court, allows the child themselves to cash in the IRA for their immediate (and often unwise) use, and can create eligibility issues for disabled or elderly beneficiaries who rely on government benefits such as Medicaid or Social Security.

STRETCH-OUT: An IRA trust ensures that the asset will be stretched out and payments made in the proper time ensuring allowing the IRA to continue to accumulate interest and grow in value. Many of today’s IRA are only one facet of a clients current retirement plan but in the future often become a child’s only source of retirement funds making it more important than ever to conserve the growth potential.

For more information on these trusts, please view the detailed description set out under our estate planning page.

Tricks for Tracking Down Benefits

When a special needs planner meets with the family of a person with special needs, the planner will often ask the family what federal disability benefit their loved one receives.  In many cases, the family will tell the planner that their relative receives some kind of cash benefit, but they frequently don’t know if that benefit is a Supplemental Security Income (SSI) benefit or a Social Security Disability Insurance (SSDI) benefit.  In some cases, even the person receiving the benefit might not know what type of benefit it is.  But there are a couple of tricks for determining the type of disability benefit, short of finding the disability award letter or contacting the Social Security Administration directly.

First, the amount of the benefit is a clue.  The federal SSI benefit is capped at $733 per month (in 2016), with some states supplementing this with an additional smaller payment.  So if the beneficiary is receiving a monthly distribution of $1,000 or more, you know for sure that the beneficiary is receiving SSDI, which can have higher cash payments, not SSI.

Often, the beneficiary’s cash award is not higher than the maximum SSI benefit, so this first method won’t work.  In this case, the family needs to look at the date of the benefit payment in order to determine the type of benefit being received.  If the benefit is deposited on the first of the month (or on the banking day before the first of the month if the first of the month falls on a Saturday, Sunday or holiday), then the beneficiary is receiving SSI.  If the benefit is deposited on the third day of the month, then the beneficiary is receiving SSI and SSDI.  Finally, if the benefit is deposited on the second, third or fourth Wednesday of the month, then the beneficiary is receiving SSDI.

Although these tricks will help your special needs planner with an initial evaluation of your family member’s needs, please keep in mind they do not define the benefits with certainty.  It is always important to get your hands on the Social Security Administration’s actual award letter in order to give the planner an accurate picture of how the disability benefit is calculated.

When Your Disabled Child Turns 18: Financial Support

When a child turns 18, a family should establish the foundation for the child’s support and well-being through solid financial and legal planning. If parents make the wrong decisions during this transition, the effects of those errors could affect the child far into the future, often when the parents are no longer there to care for the child. Therefore, it is essential that parents take extra care when planning for this crucial juncture.

1.  SSI.  Most special needs planning begins with a look into whether a child needs and qualifies for Supplemental Security Income (SSI) for support. SSI is a means-based program for people with disabilities and provides a limited monthly cash benefit of up to about $733 a month. SSI eligibility also comes with a much more important benefit — access to Medicaid. For this reason alone many families, especially those with children who have major medical expenses, pursue SSI benefits despite the program’s severe income and asset limits. SSI can also be the ticket into vocational training and group housing services.

2.  SSI Standards.  Once a child reaches age 18, s/he qualifies for SSI based on his/her own income and assets. In order to receive benefits, the child must meet the government’s disability standard, have less than $2,000 in assets and receive minimal income. Each dollar of unearned income (including any direct payments of cash to a beneficiary, along with additional reductions for in-kind payment for food and shelter) and every two dollars of earned income reduces a beneficiary’s base SSI award by one dollar. If the SSI benefit reaches zero because of this reduction, SSI coverage ends. Despite these restrictions, an SSI beneficiary needs only a $1 award in order to retain her Medicaid benefits, so careful planning in this realm carries great rewards.

3.  SSDI.  A child who became disabled before reaching 22 years of age can also collect Social Security Disability Insurance (SSDI) based on a parent’s work record if either of his/her parents has worked enough quarters to collect Social Security and is already receiving Social Security benefits or has died. Under SSDI, the “adult disabled child” of the Social Security beneficiary receives a monthly benefit check, as long as he doesn’t perform substantial work, defined as earning more than $1,090 a month. After receiving SSDI for two years, the adult disabled child also begins to receive Medicare, a substantial benefit.

Often, adults who became disabled as children receive SSI benefits until their parents retire, at which point they transition to SSDI, which is usually preferred both because it may offer a higher monthly benefit and because the beneficiary no longer needs to be concerned about SSI’s strict rules on other sources of income and savings. On the other hand, the switch to SSDI can be problematic if it means that the adult child loses eligibility for Medicaid or other programs.

4.  Using a SNT to Qualify for SSI/SSDI.  If a child has more than $2,000 in assets when s/he reaches age 18, rendering the child ineligible for SSI, a parent, grandparent or court has the power to create a special trust, known as a “(d)(4)(A) ” or “first-party supplemental needs” or “under 65 disability trust” trust to hold his savings. Any assets held by the trust do not count against the $2,000 asset limit for SSI, allowing him to qualify. One requirement of such trusts is that when the beneficiary dies, any funds remaining in the trust must be used to reimburse the state for medical care the trust beneficiary received during his life. Because of this payback provision, planners often encourage trustees to pay for a child’s supplemental needs from a (d)(4)(A) trust before using other assets, in order to limit the state’s collection later on.

5.  Future Planning.  Finally, many families create trusts known as “third-party” supplemental needs trusts in addition to (d)(4)(A) trusts.  As long as families fund these trusts with their own assets (never with their child’s funds) and give the trustee complete discretion to distribute the funds for a beneficiary’s care, the funds held in the trust will not count as the child’s assets. Furthermore, these trusts do not have to contain a payback provision, allowing families to place significant amounts of money into the trust without worrying that the government will receive a large portion later on. The trusts can then provide a child with special needs with services and care s/he may not receive from other sources throughout his/her life.  A Third-Party SNT can be created within the parents own estate plan or as a separate stand-alone trust which allows for contributions and gifting from other family members.

Coming soon: When Your Disabled Child Turns 18: Services and Supervision

Starting a New Job? Consider These Tips!

When you start a new job you may be offered a range of employee benefits, from retirement accounts to life insurance. If you are the parent of a minor child or child with special needs, the decisions you make about these benefits could have dramatic future consequences. Here are a few issues to consider when it comes time to make those important employee benefit elections. (Of course, if you made different choices, there is always time to change your plan.)

Don’t name a child with special needs as a direct beneficiary of a retirement account

When you first set up an IRA or 401(k), you have to name primary and contingent beneficiaries to receive the funds in the account. Your first thought may be to name your spouse or partner as the primary beneficiary and your children as the contingent beneficiaries. If one of your children has special needs, this decision could be disastrous for several reasons. First, if your child is receiving government benefits, a sudden influx of income from an inherited retirement account could disqualify your child from those benefits. Second, retirement accounts will eventually pay out a set amount of money per year to the designated beneficiaries – this amount may be more than a person with special needs can or should handle on his own. One resolution to this dilemma is to set up a special needs trust to hold and distribute the retirement funds.

Evaluate how much life insurance you may need and designate the appropriate beneficiary

Many companies offer basic life insurance coverage with the option to purchase additional insurance at a discount. As discussed above, naming a child with special needs as the beneficiary of a large life insurance policy could create havoc for the child later on. However, life insurance does provide a great planning opportunity for parents of children who may require significant care because the death benefit can be used to fund a special needs trust with a significant amount of money. If your company offers additional insurance, it may be prudent to purchase it and name a special needs trust as the beneficiary. If you are concerned about being “fair” to your children without special needs when it comes to inheritance, you may opt to balance their inheritance by leave them a different asset such as your retirement accounts while using a life insurance policy to take care of your child with special needs.

Long-term disability insurance may be worth it

When you have a family to care for, you always need to give serious consideration to what your family’s financial position would be if you lost your job due to disability. Many companies allow employees to purchase long-term disability insurance and some offer it for free. If you are the primary wage earner and you don’t have substantial savings to care for your family, then it may make sense to sign up for disability insurance so that your family will be protected.

Whether you are staring a new job or you have employee benefits package in place, it may be helpful to go over your benefits with your attorney.  With careful planning you may ensure a more secure future for your family.

How Can A Special Needs Trust Pay for Utilities?

The answer depends on whether the trust allows disbursements for utilities. If it does, you may be allowed to make the payment but you need to consider the disbursement’s impact on the beneficiary’s government benefits such as SSI, Medicaid, or Section 8 housing. For example, if the beneficiary receives SSI , the payment of utilities can reduce his/her SSI benefit by a maximum of $264.33 in 2015.  However, there are times when the loss of $264.33 is easily compensated by the trust’s payment of a larger bill.  Furthermore, some things that we consider utilities (such as phone service or cable tv) may not be counted as utilities by the government.  Therefore, its important to discuss the matter with a qualified special needs attorney.

On Planning for Minor Children

In addition to the general concerns of estate planning, families with minor children have additional reasons for creating a formal estate plan.

First, parents want their children to be cared for by designated family members or close friends and need to make the court aware of their wishes.  Because children are not property, parents cannot designate a person to inherit their minor children, rather they must nominate a suitable guardian who in the event of the death of both parents will need to petition the court for guardianship.  This nomination is commonly made in the parent’s will.

Second, the parents should plan how assets inherited by the children will be properly safeguarded.  Assets can include: real estate, vehicles, cash and investments accounts as well as the commonly overlooked proceeds from life insurance policies.  While children are minors (under 18) funds over $12,000 cannot be legally distributed to them or even to an informal custodian to hold for them until they reach the age of majority.  Rather, a legal conservatorship authorized by the court would need to be established.  This can be costly, time consuming and limiting.  Conservatorship funds are often locked by the court so that no distribution can be made without the court’s explicit permission.  However, when the child turns 18, he or she can immediately take control of the funds and spend them in any manner the child wishes.

Instead, a parent may opt to create a testamentary trust.  This is a trust created in a will that come into effect only if the parent(s) pass away.  The trust can hold a child’s funds until any age set by the parents.  Parents will often choose to have the funds held until the child is past the age of majority and is likely to have completed college or graduate school.  However, the trustee (appointed by the parents) has access to the trust assets and can pay for whatever the parents deem appropriate which often includes: health, education, maintenance, and distribution of funds to pay for a wedding, establish a business, buy a house or even to the guardian to offset the cost of care.  The parents control the rules of the trust and determine how their child’s future will be managed.

A will can be a relatively easy document to create.  For a free estate planning consultation with attorney, Kara Daley, please call: (541) 738-2445.