Get Your Estate Plan Right

A column I came across in the Wall Street Journal the other day got right to the point when it comes to estate planning.

Last Will And Testament (Photo credit: Ken_Mayer)

Last Will And Testament (Photo credit: Ken_Mayer)

Start out by making a will.

The column quotes a financial advisor from Illinois who says he has clients in their 40s and 50s who have never done a will.

But it says there is now a “growing urgency” among Baby Boomers to get their estate plans in order. And this is especially important for those who have children with disabilities.

The will, the column says, is the foundation of any estate plan. It says who gets what and appoints guardians for children or adult children with disabilities.

Without a will, the state will decide these things for you.

Estate plans may also include trusts in the will to take care of children and name trustees to oversee those trusts. Without a trust, the children would get their inheritance right away once they are of age.

A special needs trust is a must if you have a child with a disability who is unlikely to be able to support himself or herself, the column points out. If your assets were to go right to the child, he or she might be disqualified from government benefits. The trust gets around that.

One reason many parents delay setting up trusts is that they don’t know whom to name as the trustee. The column’s advice for these people: name someone and you can revisit it later if you want.

If the child is one with disabilities, you may want to consider naming more than one person to handle different duties for the child.

There are many things to think about. The message of the column — and of this blog post — is that you need to get on this if you haven’t already.

You never know what is going to happen in life. Better to be prepared.

Income Tax Benefits Available To Families With Special Needs Children

As the cost to care for children with special needs continues to rise, parents need all the help they can get. Unfortunately, as many as 15% to 30% of parents with a special needs child are not taking full advantage of tax benefits available to them, according to a recent article in the Journal of Accountancy. Hundreds, perhaps thousands, of dollars in tax benefits and deductions are going unclaimed by some families. Let’s take a look at some of the benefits available.

Cropped version of Image:Child piggyback.jpg. ...

(Photo credit: Wikipedia)

The Dependency Exemption
This exemption can be taken for a “qualifying child” or “qualifying relative.” In 2013, the exemption amount was $3,900. In addition, if the loved one with special needs is permanently or totally disabled, the exemption may be available regardless of his or her age.

Special School Instruction
Certain expenses associated with attending a special school can be deducted as medical expenses. These include lodging, transportation, and meals. Costs incurred for treatment, care, supervision, training, and more can also be deducted if the special school provides them.

Capital Expenditures
Capital expenditures to a residence that are undertaken to provide for medical care or assistance with physical limitations (such as an entrance ramp, railings, custom bathing facilities, etc.) may be deductible as medical expenses.

Conferences and Seminars
Registration fees and travel expenses to attend conferences and seminars dedicated to issues essential to the care of a special needs child may be deductible.

Impairment-Related Work Expenditures
If a special needs child gets a job later in life, some expenses related to maintaining his or her employment may be deductible.

These are just some of the income tax benefits available to families with special needs children. It is important to note that the rules governing eligibility for these tax deductions are extremely complicated and change over time. You can learn about them by reading the entire Journal of Accountancy article at

If you are caring for a child with special needs, you are not alone. I am always available to discuss special needs planning tools and strategies, including special needs trusts. Give me a call at your earliest convenience.