Mary Jane Foseid received a large settlement following an accident that killed her husband Walter. What Mary Jane chose to do with this money should have been no one’s business but her own; however, the question of why she did as she did when all the way to the Wisconsin Court of Appeals. Why? Because she gifted $51,000 to two of her four children, $102,000 to one of her children and 73 cents to her four child. As you read this, you have likely jumped to your own conclusions. Perhaps Mary Jane had a favorite child and a child she just didn’t get along with. What if I were to tell you that one of Mary Jane’s children was a special needs person –would that effect your conclusion about her motive for gifting as she did?
What plan should you make when one of your children, disabled from birth, depends upon the Medicaid system to provide her with life sustaining medical care? Do you give her share to one of her siblings and ask that they spend it to her benefit? Although this is a fairly common question I am asked by parents in my practice, it is one of the few times that I give a universal answer: No. It’s doomed to fail in ways that you might not imagine. Certainly, Mary Jane could not imagine that one of her children, more than seventeen years after she gave her gifts would contest the way in which her sister spent her ‘double share’ by suing two of her siblings. She hoped her lawsuit would force them to divulge their mother’s plan. She was absolutely certain that her mother intended her sister to provide one half of her share to her little sister with disabilities and she wanted an accounting to prove that the money was spend appropriately. Whether the lawsuit was motivated by a desire to make sure her sister got her fair share of the gift or she was incensed at not being included in the so-called family planning, the reason for her action is less important than its result which was many thousands of dollars wasted on an expensive lawsuit that need never have happened.
There is absolutely no reason to exclude a child with special needs when it comes time to make gifts. The solution to maintaining their eligibility for government programs such as Medicaid is to create and fund a special needs trust. The money held by the trustees won't affect the beneficiary's ability to qualify for those government benefits and will be clearly set aside for her benefit with legal as well as moral obligations to use the funds in the trust for the disabled child’s sole benefit.
If you are thinking of making gifts to children or other relatives or friends, and one member of the group has special needs, talk with us or your estate planning law firm about how best to structure your gift. Call us to request your complimentary consultation today.
References: Special Needs Answers (9/30/2015) https://specialneedsanswers.com