1. Copyright © 2007 DALTON & FINEGOLD, LLP David J. Burbridge, Esq. D ALTON & F INEGOLD, L.L.P. 34 Essex Street Andover, MA 01810 (978) 470-8400 “Planning For the Financial Future of Your Child with Special Needs” “Planning For the Financial Future of Your Child with Special Needs” Special Education Advisory Council Of Marblehead Special Education Advisory Council Of Marblehead

2. Copyright © 2007 DALTON & FINEGOLD, LLP Did you ever Leave Baby-sitting Instructions?

3. Copyright © 2007 DALTON & FINEGOLD, LLP Estate Planning is Set of Instructions on how to: n n Maintain Control during lifetime n n Care for yourself during Disability n n Protect your CHILDREN after passing n n Maintain Control during lifetime n n Care for yourself during Disability n n Protect your CHILDREN after passing

4. Copyright © 2007 DALTON & FINEGOLD, LLP Ron and Pam’s Estate Planning Goals Child 1Child 2Child 3 (Special Needs)

5. Copyright © 2007 DALTON & FINEGOLD, LLP 3 Ways to Pass Assets in Massachusetts: 1. 1. Joint Ownership 2. 2. By Contract 3. 3. “Through” Will or Trust 1. 1. Joint Ownership 2. 2. By Contract 3. 3. “Through” Will or Trust

6. Copyright © 2007 DALTON & FINEGOLD, LLP Joint Property 100%ownership100%ownership100%ownership100%ownership Assets Automatically Transfer

7. Copyright © 2007 DALTON & FINEGOLD, LLP Joint Property Family Home / Second Homes Checking & Savings Accounts Family Home / Second Homes Checking & Savings Accounts

8. Copyright © 2007 DALTON & FINEGOLD, LLP n n Life Insurance n n 401k’s/IRA’s Beneficiary Designation Controls n n Life Insurance n n 401k’s/IRA’s Beneficiary Designation Controls By Contract

9. Copyright © 2007 DALTON & FINEGOLD, LLP Do Not Pass Automatically – Usually Pass Through Probate Do Not Pass Automatically – Usually Pass Through Probate Individual Assets

10. Copyright © 2007 DALTON & FINEGOLD, LLP Estate Planning Car Wash: n n Basic= Let State Decide n n Better= Simple Wills with Supplemental Needs Trusts n n Best= Trusts for Parents Trusts for Children n n Basic= Let State Decide n n Better= Simple Wills with Supplemental Needs Trusts n n Best= Trusts for Parents Trusts for Children

11. Copyright © 2007 DALTON & FINEGOLD, LLP Let State Decide = Intestate n n State Decides Asset Distribution n n Strict Family Tree n n Will Contests n n State Decides Asset Distribution n n Strict Family Tree n n Will Contests

12. Copyright © 2007 DALTON & FINEGOLD, LLP Problem #1: Intestate Reality Children Split 50%

13. Copyright © 2007 DALTON & FINEGOLD, LLP SSI and MassHealth Benefits n n Initial Application = $2,000 limit n n Continuing Eligibility = Lost if Exceed $2,000 limit SSI and MassHealth Benefits n n Initial Application = $2,000 limit n n Continuing Eligibility = Lost if Exceed $2,000 limit Problem Problem # 2

14. Copyright © 2007 DALTON & FINEGOLD, LLP Many Plans call for: n n Disinherit and Give to Siblings n n Direct Distributions to Special Needs Child Many Plans call for: n n Disinherit and Give to Siblings n n Direct Distributions to Special Needs Child Worst Solution

15. Copyright © 2007 DALTON & FINEGOLD, LLP = Other Children’s Creditors, Divorce Direct Distribution =Dollar for Dollar Reduction DisinheritanceDisinheritance

16. Copyright © 2007 DALTON & FINEGOLD, LLP Minor Children & Children with Special Needs 1.Judge Chooses Guardians 2.Judge Chooses Trustee 1.Judge Chooses Guardians 2.Judge Chooses Trustee

17. Copyright © 2007 DALTON & FINEGOLD, LLP “Simple Will Plan” n n Last Will & Testament n n Durable Power of Attorney n n Health Care Proxy n n Supplemental Needs Trusts “Simple Will Plan” n n Last Will & Testament n n Durable Power of Attorney n n Health Care Proxy n n Supplemental Needs Trusts Better Solution

18. Copyright © 2007 DALTON & FINEGOLD, LLP Mom and Dad’s Wills Ron’s Trust Pam’s Trust Will Feeding Supplemental Needs Trusts Will Feeding Supplemental Needs Trusts Supplemental Needs Trust Child #3 Inheritance At Passing Child #1 Inheritance

19. Copyright © 2007 DALTON & FINEGOLD, LLP n n Trust is like a Bucket n n Trustees = Surrogate Parents n n Trustees Manage Assets n n Trustees Follow Instruction Manual n n Trust is like a Bucket n n Trustees = Surrogate Parents n n Trustees Manage Assets n n Trustees Follow Instruction Manual Supplemental Needs Trust Trust Instruments

20. Copyright © 2007 DALTON & FINEGOLD, LLP n n Trust assets not counted at Application n n Trust assets not counted moving forward n n Trust “Supplements” Government Benefits n n Trust assets not counted at Application n n Trust assets not counted moving forward n n Trust “Supplements” Government Benefits Supplemental Needs Trust Preserves Benefits

21. Copyright © 2007 DALTON & FINEGOLD, LLP Mom and Dad’s Wills Ron’s Trust Pam’s Trust Coordination Wills and Beneficiary Designations Supplemental Needs Trust Supplemental Needs Trust #2 Gifts from other Family Members Insurance/ 401k/IRA

22. Copyright © 2007 DALTON & FINEGOLD, LLP Identify/Instruct Care Provider How to assure the kind of care I would personally give my child?

23. Copyright © 2007 DALTON & FINEGOLD, LLP The Letter of Intent n What is it? n Why does my child need one? n How do I create one?

24. Copyright © 2007 DALTON & FINEGOLD, LLP If my child is under 18. Depending upon where my child lives... If my child is over 18. Guardianships/Conservatorships Self-Determination/Advocacy Issues

25. Copyright © 2007 DALTON & FINEGOLD, LLP Issues When You Have “The Basic” 1.Living Probate 2.Death Probate 3.Unprotected Assets

26. Copyright © 2007 DALTON & FINEGOLD, LLP Problem #1: Living Probate n n “ Stale” Power of Attorney

27. Copyright © 2007 DALTON & FINEGOLD, LLP Problem #2: Death Probate n Expensive n Public Record n Time n Multiple Probates

28. Copyright © 2007 DALTON & FINEGOLD, LLP ½ Assets Ron’s Assets Remarriage Trap Total Assets Divorce = ½ to New Spouse Ron Passes Spousal Election = ½ to New Spouse All Assets Outright to Pam All Assets Outright to Pam

29. Copyright © 2007 DALTON & FINEGOLD, LLP “The Best” Solution The Revocable Trust “The Best” Solution The Revocable Trust

30. Copyright © 2007 DALTON & FINEGOLD, LLP n n Who will Take care of Ron/Pam n n How to Take Care of Ron/Pam n n How to Care for Young Children n n Who will Take care of Ron/Pam n n How to Take Care of Ron/Pam n n How to Care for Young Children Revocable Trust Disability Provisions Incapacity: Never Gets “Stale”

31. Copyright © 2007 DALTON & FINEGOLD, LLP Fully Funded and Maintained Trusts Avoid Probate Protected Trust n Outside of Probate n Pam is in Control n Outside of Probate n Pam is in Control Pass Automatically Ron’s Pam’s Assets

32. Copyright © 2007 DALTON & FINEGOLD, LLP Divorce Protection Protected Trust Second Spouse Only Gets ½ of Pam’s Assets Ron Passes Ron Pam ½ Assets

33. Copyright © 2007 DALTON & FINEGOLD, LLP Ron & Pam’s Trusts Ron’s Trust Pam’s Trust Individualized Trusts for EACH Beneficiary Child 1 Charity Supp. Needs

34. Copyright © 2007 DALTON & FINEGOLD, LLP Problem #4 Taxes

35. Copyright © 2007 DALTON & FINEGOLD, LLP Pam’s Assets $2,000,000 Ron’s Assets Pam Marital Deduction Trap $2,000,000 All to Beneficiaries $2,000,000 All to Beneficiaries $2,000,000 $4,000,000 Coupon Amount Unlimited Marital Deduction $2,000,000 $1,000,000 to Beneficiaries $1,000,000 to Beneficiaries $1,000,000 to Uncle Sam $1,000,000 to Uncle Sam

36. Copyright © 2007 DALTON & FINEGOLD, LLP Pam’s Trust $2,000,000 Ron’s Trust Pam’s Trust All to Children $2,000,000 Coupon Amount Pam’s Trust Ron’s Trust Coupon Amount Ron Passes Pam Passes All to Children Marital Deduction Trap Solution

37. Copyright © 2007 DALTON & FINEGOLD, LLP Please 1.Fill out the “Seminar Evaluation Sheet” 2.Indicate if you would like Letter of Intent Please 1.Fill out the “Seminar Evaluation Sheet” 2.Indicate if you would like Letter of Intent

38. Copyright © 2007 DALTON & FINEGOLD, LLP THANK YOU FOR VIEWING OUR PRESENTATION