It’s Not Your Money

Sometimes even the most seasoned lawyer is shocked by the conduct of people, often those in their own family.

I am just fresh from the probate and guardianship calendar where I witnessed an institutional trustee, a bank no less, hand up an order approving expenditures from a child’s special needs trust that was rejected immediately by the bench.  Instead our Court had lots of questions about why it was necessary to spend in increasing amounts tens of thousands of dollars taking the extended family on fabulous trips to Mexico and the Caribbean.

Meanwhile the needs of this special needs child who apparently had been left quite a bit of money in a will seem to be glossed over.

The really remarkable thing was the bank seemed unphased by this spending. Usually I see this kind of conduct from individuals named as trustee, because the term “fiduciary” is not part of their lexicon. Webster defined fiduciary as one who holds the trust or confidence of another. The first known use of the term is from 1641, and derived from the Latin fiduciarius which sounds a lot like fidelity to me.

I wonder what the Latin is for “taking advantage of the helpless”? And what about the bank, what Latin term can we assign them? There is no Latin term for “clueless”.


Things Happen Along the Way

In 1519 Ferdinand Magellan departed Spain with 25o officers and crew in five ships. He didnt tell the crew, but the objective was to sail around the world. In 1522 only one of the original ships limped into the port of Seville with 18 of the original Europeans on board along with 3 Indonesians they picked up along the way.

What happened? Stuff. They ran into cannibals on the southern tip of South America, the Pacific was a lot wider than they had expected and they ran short of food, and Magellan himself was killed in the Philipines.

What has this got to do with estate planning? Would you leave on a perilous voyage without a will?  Before the author of the account of the First Voyage Around the World left, he executed a will. That seems prudent, but there is no record if the remaining 249 Spaniards, Portuguese and Italians on board did the same.

This is pretty much what I encounter each day in my practice; a patch work of estate planning executed in bank lobbies, stock brokerage offices and sometimes a lawyer’s office. Why is such a mess?

Conditions change. Emotions wax and wane. People have ideas about what the people they leave behind “need” without considering what really happens when application of Dead Man’s Statute prohibitions on hearsay are made, or the impact of an inheritance on a disabled person without a preexisting Special Needs Trust really means.

We are on a perilous voyage. All kinds of decisions made in the wake of your ship may come back to haunt you. Think about it.

Patrick Henry and the Special Needs Trust

We The People,  now have a segment population who would otherwise pass away naturally due to birth defects or accidents but for the advanced medical care in America. In legal parlance we refer to this segment as “disabled” and having “special needs”. Because we sense a  duty to these folks we tend to leave them money in our wills because we think they will need it after we pass.

That sounds good but it has to be done right because the government is already there doing the same thing. It’s sort of their territory so you have to play by the governments rules if you want to add to the support. A person unable to provide for himself may qualify for SSI, or a supplemental income from social security regardless of whether they have ever had earnings that would pay into the system. This stream of benefits long-established and part of a structure can suddenly be undermined by an inheritance or gift to the child not otherwise funneled into a legally recognized catch basin called a “special needs trust” or “supplemental needs trust”.

Often, in my experience, the parent hangs on to the disabled child far into that child’s adult life, the parent ages naturally and one day dies. There is no special needs trust, but more important the lack of that estate planning process also  leaves no one really available who knows what the needs of the disabled adult are, what he or she likes, what makes them upset, what their medications are and what kind of food they tolerate. That is a dramatic definition of crisis.

Properly drafted, the special needs inheritance then exists side by side with the money we have already paid into social security to shelter and provide health care for these people. Without it the government pulls back, and in a short time the money that is inherited by the disabled person is used up, and we better hope there is a guardian or other caring person left alive to make sure the benefits of social security is sought again. Otherwise we have the disabled person exactly where we feared they will be; alone and unable to survive independently.

It has been a long time since 1775 when Patrick Henry declared he would prefer death to a loss of Liberty. People like my daughter Amy would not have survived infancy to acquire the kind of liberty Henry wanted at the time. Today liberty for Amy is death.

Born profoundly mentally and physically disabled, Amy resides in a state-run facility in Shoreline Washington called Fircrest School. The other residents there are quite a bunch. Going there to visit or retrieve her for a weekend one has the same reaction one might have entering the Star Wars bar. There are a lot of this segment of The People that look only vaguely human and can make you feel uncomfortable. They make all kinds of noises and require bits of blinking machines to be fed or otherwise maintained.

The music is turned up loud enough so “all the residents can hear it” and the television is always on. This sounds terrible, but for these folks there is a comfort level there, it means they have something to do all day. The truth is the staff is first rate, and care about our family members there.

It’s the outsiders that pretend to know what Amy and her cohorts need, based largely on film or other fictions. There is something  in the myth every American believes and protects that includes the theory that no matter how disabled, an American has rights that have to be protected; those rights are identical to those Thomas Jefferson wrote about before any of these people could have survived infancy and therefore these rights we have to be pressed upon this population, even if it kills them.  This is the ostensible claim of those outsiders who really dont know what they are talking about but have a lot of education on political theory might conclude. Or they have seen too many movies.

Far from the common perception that the people residing there have been dumped by their families the reality is that parents as they age need to have a plan for these children as they mature. That includes a care arrangement that will survive the parents as well as an estate plan that ensures maximum financial assistance for the disabled adult during their lives.

The testamentary trust is called Special Needs. The needs are special, different than ours, and we do that population a disservice to read our own expectations and desires into theirs.  The disservice is greater when we leave them money without a proper plan.