When a person dies who does not have a will the probate court must manage his or her estate. Without making a will the person is said to have died “intestate”. Simply put, the court, according to the laws of each particular state, decides who shall receive outright your personal belongings and money.
But there are some heirs who do not necessarily benefit from receiving a direct line to significant funds. These may include:
Heirs with addiction issues – Those persons with alcohol or drug dependency issues can go through large amounts of money in a short time, possibly contributing to their further downfall.
Heirs that are known credit risks – People with poor credit ratings or who may have filed for bankruptcy may not be fiscally responsible. Big spenders without financial discipline can also go through an entire inheritance due to reckless spending.
Disabled spouses – As persons with disabilities may qualify for public benefits at some point, such as Medicaid or Social Security disability, their eligibility for such programs may be jeopardized by even a small inheritance.
Disabled children and minors – Minors cannot inherit from an estate until they are of legal age. Any money left to a minor must be paid to the clerk of court without any guidelines in place as to how it should be spent to assist the minor. And minors with special needs can be put at the same disadvantage as spouses with disabilities; that is, minors with special needs may be eligible for government benefits and any inheritance may adversely affect their eligibility.
If any of your family members are in one of these categories special provisions can be set up through a well-drafted trust based on the circumstances that will protect their inheritance. A trust permits its creator, or ‘trustor’, to control how the money is distributed by setting forth certain criteria for the beneficiaries to receive money.
For more information about the estate planning process, or how a revocable trust works, contact our East Bay Estate Planning Law Firm at 925-322-1795.