Help with inheritance for disabled brother-in-law

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crazyhorse
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Joined: Sun Oct 24, 2010 3:32 pm

Help with inheritance for disabled brother-in-law

Post by crazyhorse » Wed Jul 02, 2014 9:51 am

My 62 yr old brother-in-law 'T' will inherit about $100k from his mother who just died. The will names him as beneficiary and there is currently no trust. He is disabled with mental illness. He has a current income of about $20k which is a combination of SS disability and pension. He has medicare and private retiree insurance. He lives in northern Virginia and 'T' has been able to live modestly on this income. His brother currently has durable POA for him but not guardianship. 'T' has a history of irresponsibility with money – just recently delared bankruptcy for 2nd time. We feel he needs supportive housing where he will get his meds under supervision and someone will monitor his condition.

Our goal for the money is 1) The assets be used for his care, possibly including housing, and last as long as possible 2) The money is not easily accessable to 'T' so he cannot squander it. 3) If 'T' dies, any remaining money will go to his daughter.

Questions: What kind of trust or other provision will best help us meet our goals? Is an immediate annuity with guaranteed return of principal a good solution – That way the money would only be accessable in small monthly amounts and when 'T' dies any remainder would go to his daughter. We don't want to make him ineligible for housing that could eventually be paid by medicaid – would tying his money up in an immediate annuity cause a problem with medicaid? We have looked into 'special needs trusts' but feel that would restrict us from using the money for housing. Thank you for your ideas.

ddunca1944
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Re: Help with inheritance for disabled brother-in-law

Post by ddunca1944 » Wed Jul 02, 2014 10:23 am

I'm puzzled as to why you feel a special needs trust would preclude using the money for housing?

Have you talked to an attorney who specializes in special needs trusts? That would be my first step...

(I have a special needs trust account for my disabled granddaughter. It is very inexpensive because it is set up as a cooperative with the state of WA. It's called the "Life Opportunity Trust" and the set up fee was only $600 which was reimbursed by the state. Perhaps your state has a similar program.)

crazyhorse
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Re: Help with inheritance for disabled brother-in-law

Post by crazyhorse » Wed Jul 02, 2014 10:29 am

This is on a Virginia special needs trust web site - and explains why special needs trust may be too restrictive for 'T's needs
What Expenses Can't a Special Needs Trust Pay for?

Special needs trusts are designed to supplement, not replace, the kind of basic support provided by government programs like Medicaid and Supplemental Security Income (SSI). Special needs trusts pay for comforts and luxuries -- "special needs" -- that could not be paid for by public assistance funds.

This means that if money from the trust is used for food or shelter costs on a regular basis or distributed directly to the beneficiary, such payments will count as income to the beneficiary. This can affect eligibility for government benefits like Medicaid and SSI. One of the trustee's most important jobs is to use discretion in making distributions from the trust so as not to jeopardize the beneficiary's eligibility for these government benefits.

Retread
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Re: Help with inheritance for disabled brother-in-law

Post by Retread » Wed Jul 02, 2014 10:47 am

I'm wondering how anyone can do anything about this. Apparently he hasn't been declared incompetent and is an adult. I would think he can do anything he wishes with the money and no one can do anything about it. You state your goals for the money, what are "T's" goals?
Bruce
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prudent
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Re: Help with inheritance for disabled brother-in-law

Post by prudent » Wed Jul 02, 2014 11:05 am

How can the money be put in to a trust unless 'T' wants it that way? I'm assuming the powers granted by the POA to 'T''s brother are not currently in effect.

Ron
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Re: Help with inheritance for disabled brother-in-law

Post by Ron » Wed Jul 02, 2014 11:23 am

ddunca1944 wrote:Have you talked to an attorney who specializes in special needs trusts? That would be my first step...
I would agree. Every state has their own rules concerning use of an SNT in conjunction with benefits paid, and repayment of those benefits upon death.

I also have an SNT for my adult disabled "child", even though he is not currently receiving SSI/Medicaid (he's getting SSD and he's on Medicare). However, we put it into place since we never know what the future holds and if he will be on any alternate program after we (who manage his finances) are gone.

Here's some additional info:

http://www.kidsource.com/kidsource/cont ... l.3.3.html

- Ron

crazyhorse
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Re: Help with inheritance for disabled brother-in-law

Post by crazyhorse » Wed Jul 02, 2014 11:59 am

Yes the POA is in effect. Right now 'T' is hospitalized and we feel there is a fair chance he would agree to something his brother and attorney recommended. 'T's goals are frequently not rational - however he has stated he wants to leave something to his daughter. If he didn't agree to a trust or whatever was suggested, we'd have to decide to go for guardianship or just let fate take its course. There is a pro bono attorney helping but he is not a trust specialist. What about the idea of an annuity - It would keep his income fairly low, he would only get a small amount each month - if full principal had not been paid out his daughter would inherit. AARP is currently advertising an annuity with guaranteed payout. Also wondering how this kind of annuity impacts medicaid look-back in case he needed nursing home. Thanks again

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