Basics

My Grandfather was a WWII Vet although he didn’t talk much about his war experience. In his last years of life, he suffered from the crippling effects of a stroke. For almost three years he struggled to speak, move around on his own, and provide for his normal activities of daily living. As far as I know, none of his family members had any idea that his service in the military made available to him nearly two thousand dollars per month of reimbursements for his medical expenditures including in-home health care, assisted living and other health care costs.

Today I read an excellent article warning CPAs (Certified Public Accountants) of the risks that many of their clients face with regard to estate planning. Even when some form of estate planning has been done, the following mistakes show up repeatedly in clients' estate plans:

(1) "Outdated or Unsigned Estate Planning Documents" (i.e., if they have a plan at all, most clients' plans are either outdated or inadequate, and worse yet, unexecuted)

(2) "Lack of Coordination between the Estate Planning Documents, Titling of Assets and Apportionment of Estate Taxes" (i.e. the house is still in dad's name rather than in the name of the trust resulting in an unnecessary probate proceeding)

(3) "Lack of Understanding That a Transfer of $1 Is a Gift" (i.e., that transfers (typically of real property) for less than the fair market value of the property constitute a gift)

(4) "Life Is a Movie, Not a Snapshot" (i.e., that estate planning should be viewed as a process rather than a one-time transaction)

This week, my eight year old boy came home from school telling me all kinds of things that he had learned in school about the first two World Wars. With his eyes wide, he said that one of his friends had a grandpa who had been in WWII. It dawned on me that he didn’t realize that he too came from a family with a history of service in the military.

I had the opportunity to go grab a copy of one of my history books about World War II and together with my boys and my wife we spent a good deal of time talking about my grandpa, his service in the Army in Europe during WWII and about the incredible sacrifices made by so many for the freedom of not only our own countrymen, but of people throughout the world. It was a proud moment for me to be able to share with my children how their great-grandfather put everything on the line to defend innocent people and put down evil men. I saw the admiration and pride in their eyes and was grateful that we celebrate Veteran’s Day for that reason.

Divorce can be complicated, frustrating, disappointing, expensive, along with a whole range of other emotions, as anyone who has endured this type of proceeding can attest. As difficult as the issues can be in a divorce proceeding, can you imagine what happens when divorce involves a child with a disability?

We will focus on one case study to illustrate how much more difficult the issues can be when a child with a disability is involved in the marital split, and how important it is to have someone knowledgeable in government benefits and special needs planning issues participate in the proceedings.

The Facts
Consider the following situation: Husband and wife divorce in 1996, when their child, who is disabled, was 4 years old. The husband was ordered to pay approximately $2,800 per month in child support (considered to be about three times an ordinary child support order based upon his assets and income) for the life of the child. While it is unusual to see lifetime child support payments, and the award was larger than is customary, the husband agreed to this primarily because of the guilt he felt around the divorce. He also knew that his daughter was disabled and would require as much help as possible.

I’ve briefly discussed the case of the late Amy Winehouse before. She was young, very talented, and had found financial success and notoriety as an R&B singer. Here’s a great video of one of her performances in case you’re not familiar with her.

In the past, I’ve pointed out times when celebrities have really dropped the ball when it came to estate planning. And more often than not, when an estate plan fails big, it’s not that an estate plan was never done, it’s that an estate plan WAS done, but it was out of date or did not reflect the current wishes of the deceased individual.