A Special Needs Plan Gone Wrong (Part 2)

     Last week I was telling you about Bob’s call. Dad’s will left everything to Bob and his brother Sam. According to Bob, they had conversations with his dad about setting up a special needs trust for their disabled sister, Sally and transferring her 1/3 share to that trust.

     When Sam reneged on that agreement Bob didn’t really have a good option. Going to court to try to enforce a verbal agreement is costly and not likely to get the result he wants. Since Dad isn’t alive to support Bob, it is Bob’s word against Sam’s. So, where did they go wrong?

     What his dad should have done is make his wishes clear in writing by way of his will. It would seem obvious, but to be clear, no one can know for sure what your wishes are after you die unless you put them in writing. As we can see with Bob and Sam, wishes stated verbally can’t be proven later on if there is a dispute. Court intervention is costly, time consuming and likely to get an unsatisfactory outcome. That’s why the law has established a process to carry out those wishes. It’s called a Last Will and Testament.

     What Dad should have done is one of two things. He could have set up a separate standalone special needs trust for Sally while he was alive. He could then have either funded it while alive or, in his will, designated Sally’s 1/3 share be left to that trust. Alternatively, he could have established a testamentary SNT, meaning the trust would be contained in his will, to be set up after he dies.

     Either way, Bob would not have been left to argue with his brother about what Dad wanted, resulting in a bad result for Sally and tense relations between Bob and Sam.  Not the end result Dad surely would have wanted.