ONCE UPON A GENE - EPISODE 035 - Sage Graves - Estate Planning, Guardianships, Special Needs Trusts
Today we're talking about a really important topic- planning for our kid's future. Sage Graves is an attorney local to the Seattle area, here to share information about wills, estate planning, special needs trusts, guardianship and ABLE accounts.
EPISODE HIGHLIGHTS
Share your background and why you've chosen this type of law to practice.
This is my fourth year in practice and I graduated in 2016. I went to law school with the purpose of going into an all-encompassing field called elder law. Elder law also encompasses a lot of disability law and I was interested in this area of law after I graduated college and before I went to law school. I was working at an assisted living facility where it was an eye-opening experience for me around the senior and disability issues of vulnerability and exploitation. I felt like it was an interesting group to advocate for and where people need someone to be their voice and look out for their interests. In my practice now, I do a lot of guardianship work, estate planning and family advocacy. Being able to answer questions and be a source for families with questions, it's a really great feeling for me and something I really enjoy.
Let's cover the basics. What do we need to do? What do we need to think about? When should we do it? Why should we do it? What's the difference between the documents we should get finished for our kids?
As a general matter, estate planning is always important. Generally the documents people should have in place includes a will or trust to dictate where your property goes upon your death, and a power of attorney to allow someone else to act on your behalf or represent you in some capacity. For parents of kids with disabilities, when it comes to preparing a will or trust, parents want to consider leaving assets to their children with disability in a special needs trust rather than leaving it to them outright. The purpose of leaving money to a special trust, which works as a form of protection against the inheritance, prevents any conflict of state provided benefits the child may be a recipient of. The child's share is left in the trust, which is included in your will, appoint a third party as trustee, and the money is held in the trust, available for your child's needs while still allowing them to maintain their state allowed benefit. Rather than the inheritance being spent down quickly on medical needs, it serves as a nest egg that they can use and benefit from for years into the future. The main takeaway for guardianship is if you're a natural parent to your child, there's no need to get any special authority from the court through a guardianship to make decisions for your child. The guardianship work I do is for when your child is aging into adulthood who may not be able to make their own medical decisions or handle their financial affairs. Guardianship is in place to appoint parents the authority to make decisions for your child, applying for benefits or managing finances. When planning, plan for the next 1-5 years and name the people you know and trust. Don't get wrapped up in planning for too many contingencies or looking too far ahead. Getting documents prepared should take precedence over trying to control every possible outcome and not getting documents in place for years.
Can you tell us about ABLE accounts and how they differ from special needs trusts?
The ABLE account is a newer option. For SSI, you can't have more than $2000 in un-exempt resources, like cash in a checking account. If a person can never have more than $2000 and SSI is about $750 per month, they cannot save or accumulate money. The ABLE account is a response to that. Achieving Better Life Experiences (ABLE) is the result of a federal law passed in 2014 that serves as a special account for people that receive benefits like SSI to tuck away extra money and still maintain their government benefits. The beneficiary, family members or friends can contribute up to $15,000 per year. The funds in the account do not count towards the resource limit for SSI eligibility. The ABLE accounts can be up to $100,000 without an impact on benefit eligibility, so it's a great option. You have to be determined by social security to be disabled before the age of 26 to use an ABLE account. A special needs trust and an ABLE account in estate planning is like comparing apples and oranges. You can't write a will and leave money to an ABLE account. You can contribute to the ABLE account during your life, but the special needs trust will be used after you pass away.
What opportunities do kids have for setting up college funds?
A 529 plan is an option for kids with special needs. It generally would be considered part of the parent's estate. A family could set aside a significant amount of money dedicated to the child's education and could be put into what's called a third party special needs trust. It's a standalone special needs trust, funded by money that doesn't belong to the beneficiary and it operates like a special needs trust under a will except that you establish it during life. The idea is that money is set aside and prevents the funds from being available to the beneficiary and accounting against their ability to receive benefits.
What is the general cost for setting up a will and special needs trust?
There's a cost benefit analysis people can do where it makes sense to spend money on estate planning because the downside is that a lot of fees can be incurred when you don't do planning. Most attorney's do estate planning on a flat fee basis, which for married couples is around $2500 for wills, trusts, powers of attorney and healthcare directives. For a single person, the flat fee rate starts at about $1200 and goes up for more complex planning. You can expect to pay half up front and the balance upon completion of the planning.
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