When an Inheritance is a Problem

Every month or two we get a call from someone on SSI or Medi-Cal who has been told they are about to inherit some money. Usually they are in a panic about losing their benefits. We see a lot of similar situations, and they are not always fixable. The sad thing is, the deceased person almost could have avoided the problem in the first place with some basic (but essential)  planning.

In the American legal system, there are certain individuals who should never inherit money outright:

1. People on disability.
2. People on Medicaid (in California, “Medi-Cal”).
3. People on SSI.
4. People with expensive addiction problems.
5. People carrying unmanageable debt.
6. People in bad marriages.
7. People with major tax problems.
8. Minor children.
9. Elderly parents.
10. College students getting need-based financial aid.
11. Dogs and Cats.

“Everyone in my family is on that list three times,” you might be saying. “Should I just leave them out of my will?”

On the contrary – often the individuals on that list are the people who need help the most, but a lump-sum inheritance will do more harm than good. As estate planners, one of our highest goals is to put together estate plans that protect their ability to benefit from an inheritance.

The legal strategies we create are very easy to add to a basic revocable living trust. The tools we use most frequently in our practice are special needs trusts, spendthrift trusts, multi-generational trusts, irrevocable trusts, and pet trusts. These trusts protect assets from a beneficiary’s creditors, tax collectors, greedy spouses, or even the beneficiary’s own worst impulses. (And in the case of your pets, their lack of math skills and opposable thumbs.)

Gale & Nielsen offers a no-charge half-hour initial consultation with one of our attorneys to discuss your situation.