Benefits of a Trust

A trust is a contract, or a relationship, between the person who makes the trust (Grantor) and the person who manages the trust (Trustee).  These are often the same person, initially.  I make a trust (Grantor), and I manage the trust while I’m alive and competent (Trustee).  The Trustee manages the assets that are in the trust for the benefit of the beneficiaries, who are people the Grantor chooses to receive assets that are in the trust.  (I, as Trustee, manage assets in the trust such as investments, insurance, real property, etc., for the benefit of my children who are my chosen beneficiaries.)

Why have a trust?

The premier reason for a trust, in my opinion, is to maintain control from the grave.  For example, if you have assets such as a house and retirement plan, and if you have a minor-age child when you die, your child will inherit everything–value of your house, retirement, assets—when he or she turns 18.  It is likely that an 18 year-old person will mismanage (likely deplete) that amount of money.  If you had died with a trust, however, the trust could have reserved money for college, would distribute money at certain staggered intervals (my clients typically choose a portion distributed to the child at 25, then 30 and then 35).

Benefits of a trust

Beyond “control from the grave” for the benefit of children, however, are other important benefits to a trust.

  1. Trusts do not have airtight privacy control but, as private contracts, are typically private.  This is the opposite of probate and guardianship proceedings, which are both public matters.  With a trust, you can avoid both probate and guardianship.
  2. Avoid probate if you own property in other states (ancillary probate). For snowbirds and others who own homes and other property in another state, if the property is held by (deeded or titled to) a trust, then you do not have to have ancillary probate.  If you died owning a condo in Florida, you would have to hire a Florida attorney to probate your Florida property, unless the condo was held by the trust.
  3. A trust can serve as ‘contingent beneficiary.’ If you have a life insurance policy and name the trust as the beneficiary, then at your death the payout is to the trust which then manages that money according to the terms you set.  If the payout goes directly to a child, the money could be depleted, or attached by creditors (your child’s divorcing spouse, or a victim of car accident your child/beneficiary caused, etc.).
  4. Protect assets from surviving spouse. Assets in a trust are not part of a probate estate, which means that they are not subject to a surviving spouse’s right under law to elect against the will.  A trust reduces the chances that a surviving spouse can change the deceased’s estate plan after death, which can be important in blended families.
  5. Protect assets from creditors of Grantor’s estate. Assets in a trust are not part of a probate estate, and creditors generally cannot get to those assets.  If I died with creditors wanting to get to my estate’s assets, the creditors would not be able to get to assets in my trust.  Of course, there are some exceptions to this.
  6. Control the disposition of your assets. This benefit is similar to what I describe in the “Why Have a Trust?” paragraph above, but goes deeper.  You can determine the terms of the trust.  You can decide on whatever terms you want, except those terms that are against public policy (“nothing to my daughter if she marries someone outside of her race,” or “at my death dump the waste from my chemical company into the nearest river”).  Some terms my clients have chosen include distributions to a beneficiary with addiction issues conditioned on passing drug tests, certain incentive distributions for a beneficiary pursuing higher education or receiving certain grades, etc.  You can leave assets to a disabled beneficiary without jeopardizing that beneficiary’s government benefits (typically Medicaid and SSI).  You can provide funds for the down payment of beneficiary’s first house or a car upon graduating from college.  A trust can do most everything for a beneficiary that you would want to do if you were alive.

Trusts do cost substantially more than wills.  The cost of will plans is in the hundreds of dollars, where the cost of trust plans often starts at about $1,200.  However, probating an estate (with only a will) will likely cost more than having a trust plan prepared.

A trust is not for everyone.  I highly recommend trusts for people with minor age children, blended families, and for those who wish to maintain control over the disposition of their assets after they die.

To find out if a trust is for you, email me at julie@juliemillslaw.com.

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The IRS begins scrutinizing tax-exempt organizations more closely

Charitable organizations, typically recognized as 501(c)(3) organizations, are beholden to the public financially and otherwise, which is one of the trade-offs for being exempt from paying most taxes.  The IRS and the Attorney General in each state ensure that tax-exempt organizations are acting, in a very broad and general sense, “reasonably.”  Focus is generally put upon compensation of key people (directors, officers), and private inurement (benefiting privately).  Tax exempt organizations need to review their practices because, in my opinion, when the IRS announces “closer scrutiny,” audits are forthcoming.

Read this article to learn more about what the IRS will be scrutinizing, and steps for your organization to take:

https://www.benefitslawadvisor.com/2018/03/articles/irs/irs-announces-heightened-scrutiny-for-tax-exempt-entities/

Estate Planning—Crucial for Business Owners

Do you own your own business?  Are you about to join the world of business owners?  If yes, then this information is crucial for you.

Most people who contact me for estate planning know the basics of what is needed–a last will and testament (“will”), possibly a trust.  Business owners need to engage in similar planning for what happens to their business if they die, yet many clients sit down to discuss post-death planning for everything but their business.  Providing for the future of your business without you is important to your business, and equally important to your family.

Real-Life Scenario.  Jim (not his real name) started a remodeling business.  He fell through the roof of a dilapidated house and died (not really—he is alive but his possible death is a situation we discussed).  Jim did not have a will, or any documents spelling out what happens to his personal or business assets if he died.  As with your personal assets, your business assets are distributed to your heirs at death if you do not have a will.  It is entirely possible that the remodeling business’ assets would be distributed to an heir who is not knowledgeable about, or remotely interested in, remodeling houses or running a business.  If Jim’s business has employees or investors, serious issues with business matters might develop if he died because of the business’ operations being put on hold or left “up in the air” while the probate process proceeds.  It could take months to a year until probate is complete and the business either finds a new owner, is sold, or dissolved.

“What should I do?”

  1. Advice is basic: specify who you want to take control of running the business, and what you want to happen to your interest in the business. The best method to accomplish this planning is, in my opinion, a buy-sell agreement.  This agreement controls everything from who would receive shares of the business, what would happen to the business’ assets, and how ownership would transfer to another person or people.  It is your business’ “last will and testament.”
  2. What if you want your heirs to inherit the value of your interest in the business but not any control in it? Jim, the remodeler, might want to provide his grieving spouse with money from his business but knows she would not want to quit practicing law to remodel houses, or run a business.  In this case, consider purchasing buy-sell insurance. Business partners or investors could purchase Jim’s share of the business’ value which would provide Jim’s wife (or heirs) with money.
  3. Prepare a business succession plan. Designate who will run the business and a couple of alternates.  Detail the business’ assets, liabilities, future ventures, and everything people taking control and ownership of the business should know if you are not there to tell them.

Preparing for the future of your business is as important as preparing for the future of your loved ones should something happen to you.  Business and family assets are often intertwined, requiring plans to determine what will happen to both.

Contact me at julie@juliemillslaw.com to discuss estate and business succession planning.

“Develop IEP Goals.” Where do I start?

Parents and some (typically newer) teachers who are told to develop IEP goals for their child or student find out quickly how difficult it can be.  According to special education attorney Peter Wright, parents and teachers frequently ask him how to write IEP goals and objectives.  What is so difficult about placing goals in an IEP?

The IEP—Individualized Education Plan—is governed by the Individuals with Disabilities in Education Act (IDEA), a federal law that governs special education.  Too often, people start thinking immediately of goals that might sound great but are not specifically tailored to the child.  So “read and comprehend well” from a parent, or “read at xyz level” from a teacher, look like laudable goals, but are they appropriate?  How do you know what is appropriate when developing goals?

First Step.  Before anyone starts developing goals for a child, the IDEA requires that the IEP team know the child’s “present levels of academic achievement and functional performance.”  (See IDEA Sect. 1414(d)(1)(A)(i)(I).)  Often referred to as “present levels,” these indicators will dictate where the IEP team goes from this present situation.  How can anyone formulate goals for someone when the present situation is unknown?  A goal of “losing a maximum of 20 pounds” might seem beneficial, unless you are clinically morbidly obese where a maximum of 20 pounds might have little effect on health.  Or consider a six-foot tall man who presently weighs 100 pounds and would have detrimental effects from being so underweight at 80 pounds.  Now that goal is not so clear, and definitely not appropriate.

Second step.  Once you know where the child is academically and functionally, you can then develop goals that get the child to where he or she needs to be.  Language in the IEP needs to be clear, goals need to be measurable.  For example, “Can add” is a vague phrase that conveys little, whereas  “Writes answers to double-digit addition problems” is specific.  Then, the analysis becomes how this present level performance measures against where the child should be academically.

Goals needs to be clear and measurable.  To be measurable means that you can count or observe it.  Often parents think it is only teachers who can measure goals, but this task is not limited to teachers.  If there is dissent or confusion about whether goals were reached, consider evaluation by an objective party.

In summary, when developing an IEP start at the present levels of the child and develop measurable goals.  The IEP process can be daunting, but starting from a point of present levels of academic achievement and functional performance will guide you to what is needed for that particular child.

Contact me at julie@juliemillslaw.com to review your child’s IEP or discuss setting goals.

School shootings: helping students with disabilities prepare

The title of this post is so disheartening.  The school shooting in Florida has schools assessing their security plans and emergency drills, which has become as necessary today as huddling in the hallway for tornado drills was when I was in school.  Schools are required by federal law to have emergency plans for students and staff with disabilities.  The best way to ensure that your school has an emergency plan for your child is to advocate for it.

My elementary-age child’s classroom practiced “The Sheep, The Shepherd and The Wolf” emergency drill.  The sheep are the young students, the shepherd is the teacher guiding them, and the wolf–the wolf is an active shooter who the teacher instructs the sheep to “stay out of the wolf’s way!”  This method of preparing for an active shooter is used to instruct young children in a non-threatening way.  Elementary children obviously cannot handle information about an active shooter drill that might be given to high school students.

As schools tailor emergency plans for students according to their development stage, the same tailored plans must occur with students with disabilities.  How will pulled fire alarms, shouting, shooting and other paralyzing noises affect a child with autism?  Or a child who cannot hear or see?  Would a child with developmental delays understand emergency instructions?  Plans for the most vulnerable should be tailored to individual needs, and practiced often.

This article in the Washington Post, “How can we prepare our kids with special needs for a school crisis” provides clear advice on ensuring that your child is included appropriately in emergency plans.  Among much advice, the article suggests:

  • Ask your school district about how they include students with disabilities in emergency plans (required by federal mandate).  Here is a sample plan.  In Ohio, school emergency management plans are not public record but discussions can and should happen.
  • Talk with the administrators in your child’s building about your child and their plan for your child, specifically.  If your child uses a wheelchair, are there steps to get outside at the door nearest your child’s room, and how will your child get outside?
  • Include instructions in your child’s IEP or 504 plan detailing what help your child will need in an emergency.  Make sure your child’s teachers are aware of what help your child will need.  This “Teacher’s Emergency Plan Procedural Checklist” should be provided to your child’s teachers.

Schools are required to have emergency plans for students with disabilities, but the best way to help protect your child with special needs is to make sure there is a plan in place that is tailored to your child’s needs, and known by teachers and administrators.

Contact me at julie@juliemillslaw.com with any questions.

Study: Parents are not planning for future of child with disabilities

A recent “Disability Scoop” article reported on a study in the upcoming April edition of the journal Intellectual and Developmental Disabilities showing that few parents plan for the future of their children with disabilities.  This is not be surprising considering the complexity of planning involved, and the lack of resources afforded these parents.  However, the end result is still the same as with estate planning in general: the person who knows the child and child’s needs best is leaving the future of their child up to someone who does not know the child.  In other words, future decisions are left to the court.

Deciding on residential placement, guardianship, preparing a special needs trust—parents need help navigating this overwhelming journey.  As a special needs planning attorney who prepares special needs trusts, my focus is on securing the financial future of a loved one with special needs without jeopardizing means-tested benefits, typically, Medicaid and Supplemental Security Income.  Planning is particularly important since many children with special needs are living longer, and outliving their parents.

There is more to planning for your child’s future than securing his or her financial future with trusts, however, if your child has a disability.  Where will your child live?  Who will be his or her caregiver?  There are many options available to explore, but knowing where to start is key.  My recommendation is to start with The Arc: For People with Intellectual and Developmental Disabilities.

To learn more, or if you would like more information on special needs planning, email me at julie@juliemillslaw.com.

“Teachers want copies of my child’s IEP–what about confidentiality?”

A parent was concerned that several of her child’s teachers wanted copies of the child’s IEP.  She felt that confidentiality regarding her child, his disability, and his education plans would be jeopardized.  “Are teachers entitled to copies?”

Yes.  And, common sense dictates this even if the law did not, as long as everyone understands their legal obligations.  The law states that teachers, related service providers, and others responsible for implementing the IEP should have easy access to it.  How else are they to know what needs implemented if they do not know what is needed?  I suggest giving copies of your child’s IEP to the teachers and service providers.

“But what about confidentiality?”

The school is responsible for instructing all staff who have access to IEPs regarding their legal obligation to maintain confidentiality of student records, and student information.  Personally-identifiable student information cannot be disclosed to anyone without obtaining parental consent.

Student records privacy is covered by FERPA: Family Educational Rights and Privacy Act.  It provides an array of protections for maintaining confidentiality of student records and information.  Most relevant to parents, in my opinion, is what I mentioned above, i.e., personally-identifiable information.  This information must be kept confidential and includes, but is not limited to:

  1. The student’s name
  2. The name of the student’s parent or other family member
  3. The address of the student or student’s family
  4. A personal identifier, such as the student’s social security number or student number
  5. A list of personal characteristics that would make the student’s identity easily traceable; or
  6. Other information that would make the student’s identity easily traceable.

Schools, under FERPA, can release certain directory information to others without violating FERPA.  “Directory information” generally includes information that, if released, is not considered harmful or an invasion of privacy.  The U.S. Department of Education has listed directory information to include:

  1. Name
  2. Address
  3. Telephone listing
  4. Date and place of birth
  5. Participation in officially recognized activities and sports; and
  6. Dates of attendance

What differentiates two seemingly-similar lists is the use of the information.  Directory information is what you see in yearbooks, school directories, and other publications where there is generally no harm or invasion of privacy if released.

If you have questions have your child’s IEP, confidentiality, or FERPA, contact me at julie@juliemillslaw.com.