Special Needs Trusts

Dear Len & Rosie,

My mom doesn't have a will yet but we're encouraging her to make one. She has a draft will that leaves her home to all three children, but I have some questions. First, the house is under my mother name and my brother's name. Is it true that he will get the house automatically on our mother's death? Also, my other brother is autistic and will have special needs. How does my mom work that language into her will?


Dear Pilar,

We hope that your mother isn't trying to make her own will. Doing your own estate planning works for some people, but you should never try it if there is anything about your estate that is out of the ordinary. Your mother's proposed will won't work the way she wants, and it's not what your disabled brother needs.

If your mother's home is in joint tenancy with your brother, then when your mother passes away, your brother will own 100% of the home outside of probate, regardless of what your mother's will says. Wills do not have any effect on assets not subject to probate administration, such as assets held in joint tenancy and accounts with pay-on-death beneficiaries. If your mother's home is to pass under the terms of your will, your brother has to give it back to her or he has to pass away first.

As for your disabled brother, your mother can create problems for him if he inherits a share of her estate outright. If your brother collects Supplemental Security Income (SSI) or Medi-Cal benefits, then he can have only $2,000 in countable assets. An inheritance from his mother can cause him to lose his income and medical benefits that he relies on today and will need in the future.

Your mother has three planning alternatives for your disabled brother. She can simply give him his share outright, and cause him to lose his benefits. She could also disinherit him and rely on you and your other brother to step up and provide for your autistic brother's needs. Or she can create a special needs trust for his benefit.

A special needs trust is not a do-it-yourself project. These trusts are designed to follow specific loopholes in federal entitlement regulations to allow an inheritance to be held for a disabled person without causing a loss of public benefits. Your mother should meet with an estate planning attorney and create an estate plan that won't make things more difficult for her children down the road.

Len & Rosie