How Dying Intestate (without a will) Affects Your Dependent With Special Care

The sad reality is that many of us have not taken the time to execute a will or develop an estate plan.  The estates of individuals who die without properly drafted and executed wills, are distributed in accordance with the law of the states in which they reside at death, which spell out steps and procedures in distributing their estates.  This can be particularly disastrous for dependents with disabilities who are receiving government benefits at the time of their caregiver’s death.  Some of the implications are discussed below.

State intestacy laws generally provide that if a decedent is survived by a spouse and dependents, his or her assets will be divided among the surviving spouse and dependents.  For example, state law may provide that the surviving spouse receives $50,000 plus one-half of the remaining property, with dependents receiving equal shares of the balance of the property outright.  The needs of the family are not considered.  If a dependent is a minor, depending on the amount of his or her inheritance, a guardian may have to be appointed by the court to manage the dependent’s property.  Smaller amounts, usually less than $10,000, may be payable to the surviving spouse on behalf of the minor dependent under state Uniform Transfers to Minors Law or other provisions of the state probate code.  When the dependent reaches majority age, he or she has the right to demand a full accounting and can even sue if there is evidence of mismanagement of the dependent’s funds.

If the surviving dependent has a disability and cannot make financial decisions on his or her own behalf, there are other issues. 

The choice of a guardian for such a dependent has major implications.  If the caregiver dies intestate, the court must appoint a guardian to manage the money on behalf of a minor dependent without knowing the caregiver’s wishes. The court appointed guardian may not have an emotional connection or vested interest in the person with special needs, which may further complicate the situation, causing considerable distress to surviving family members.

Many government benefits, like SSI, are subject to income limitations; other needs-based benefits like Medicaid and food stamps look at assets, as well.  If a person with a disability is receiving government benefits, and receives more from the deceased caregiver than permitted by program guidelines, benefits will stop.  The dependent will generally have to reapply and requalify for benefits.  During the interim, the dependent could be expelled from a residence such as a group home or be removed from a treatment or day habilitation program.

Substantial amounts of money and/or property left to a minor or adult with special needs who cannot make financial decisions for him or herself could be subject to ongoing court scrutiny.  Most courts require that the guardian of the estate, even if a caregiver, be bonded and make periodic accountings with respect to minors or anyone with special needs.  In addition, the guardian may need prior approval from the court before spending of the dependent’s money.  This could include a purchase of a wheelchair, other durable medical equipment or assistive technology for the dependent with special needs.

In the event of remarriage of the surviving parent, the financial security of the dependent with special needs can be compromised.  A spouse is generally entitled to a specific share of his or her deceased spouse’s estate, regardless of whether there was a valid will or not.  If the surviving parent had remarried without a prenuptial agreement and subsequently died, his or her surviving spouse would be entitled to a share (typically a third) of the estate, whether or not his/her will provided for such a share..  The surviving second spouse would generally have no obligation to support dependents from the deceased spouse’s first marriage.

When a properly drawn up will is not in place, money that could normally benefit a dependent with special needs and other surviving dependents may be diminished by unnecessary court costs and lawyer fees.  Depending on the value of your estate, a properly drawn up will may also permit you to reduce or avoid state and federal estate taxes.

In summation, state intestacy laws seldom provide proper planning for people with special needs.  Caregivers of such dependents are encouraged to consult knowledgeable professionals and, at the very least, to execute wills.

Due to the complexity of federal and state laws, you may require specially trained professionals to help you plan for the future of your dependent with special needs.  Call Special Care Planner Christina M Maurillo at (914) 372-2981 for a confidential consultation. 

For more information about this and other related topics, contact me!

 

Securities and investment advisory services offered through qualified registered representatives of MML Investors Services, LLC. Member SIPC.  www.SIPC.org

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