Some people hear the term “estate plan” and assume it is reserved for the ultra wealthy.  I assure you, that is not the case! Anyone over the age of 18 should consider making an estate plan. Your “estate” simply refers to your possessions – the money in your bank account, your car, your personal possessions – all comprise your estate.

There Are Three Ways To Die

No matter where you live in the United States, there are essentially three ways to die:

Intestate:

This simply means you never made a will or a trust, and you rely on the laws of the state to dictate how your assets will be distributed and who will be in charge of your  estate when you die. These may not be the people you would have chosen.

Make a Will

Most people have heard of a will and understand its basic function. Your will takes no effect until you die, and it simply allows you to choose how your assets are distributed and who is in charge of this. Contrary to popular belief, a will does not avoid probate. Your will must be filed with the probate court before any assets can be distributed. Thus, your estate will be open to creditor claims and beneficiary challenges.

Create a Living Trust

A living trust is like a treasure chest that you build during your lifetime and fill up with your own assets. You put a lock on the chest and you hold the key. During your lifetime, you can go in the treasure chest and take assets out, put new assets in, and utilize the assets any way you want. You also give a spare key to someone else, who can step up and manage your assets if you become incapacitated, or when you pass away. Unlike the other two ways, dying with a trust creates a private and seamless way to pass on your estate and avoids probate, if it is set up correctly.

Incapacity

When you are a child, all of that property really belongs to your parents or guardians. In addition, your parents or guardians make financial and healthcare decisions for you. But once you are an adult they are legally unable to handle your affairs without your explicit permission. Adults who are no longer able to handle their finances or make healthcare decisions for themselves are set up for “living probate,” which refers to a guardianship or conservatorship. However, creating Powers of Attorney, one for finances and general property, and one for healthcare, appoints someone to make these decisions in the event you cannot, thus, avoiding the living probate situation.

Life is unpredictable, and wonderful things (such as winning the lottery or selling a book and making millions) or terrible things (such as accidents or illness) are bound to happen. So, the answer is yes – you most definitely need an estate plan.

Adults who are no longer able to handle their finances or make healthcare decisions for themselves are set up for “living probate,” which refers to a guardianship or conservatorship.

In simpler terms, you want to avoid guardianship for the same reason you want to avoid probate. The real situation you want to prevent while you are still alive is anything that’s going to start the probate process early.  So if you become incapacitated and cannot handle your finances or make good health care decisions for yourself – who has the authority to make these decisions on your behalf?  Do you want a court to make these decisions?  Or would you decide on your own?

If you do not already have a comprehensive estate plan, you can end up in probate court, subject to guardianship proceedings–While You Are Still Alive. Guardianship is essentially a “living probate.” Just like probate after death, it is a public process to appoint a person to look after your affairs, and you do not get any say in the matter.

So, how can you avoid such a situation? By creating a comprehensive estate plan that includes “Powers of Attorney” for your finances, property and healthcare. You appoint the person you want to handle these matters, not a probate court judge.

What’s a Power of Attorney?

A Power of Attorney (POA) is a legal document that lets you name someone you trust to handle things on your behalf—like paying your bills, managing your property, or talking to your insurance company—if you can’t do it yourself. This person is called your “agent” or “attorney-in-fact.”

POAs can be:

General – giving broad powers to act on your behalf.
Limited – authorizing specific actions or applying for a certain time period.

There’s also a Health Care Proxy (sometimes called a medical POA), which lets someone make medical decisions for you if you’re unable to speak for yourself.

More Than Just a Signature – How to Decide Who Is The Best Fit For Your Powers Of Attorney While You Are Still Alive

When you sign a POA, you’re giving someone the keys to your financial or medical life—so you want to pick that person carefully. Here are a few things to think about:

Do they live nearby in case of emergencies?

Are they capable of handling paperwork and talking to professionals?

Do you trust them 100% to act in your best interest?

Why the Right Wording Matters

Not all POAs are created equal. You can find templates online, but many of them are too vague—or sometimes too specific. That might work fine in theory, but in real life, banks, hospitals, or real estate offices might reject a POA that doesn’t include the exact language they want to see.

I have heard plenty of horror stories where a loved one thought they were prepared, only to be told their POA wasn’t valid for a crucial transaction. That’s why having a properly written POA—customized for your situation—is one of the best gifts you can give yourself and your family.

Bottom Line

If you want to avoid the stress and expense of living probate, a solid Power of Attorney and Health Care Proxy should be at the top of your estate planning to-do list. It’s a simple step that can save your loved ones from a legal headache down the road. If you work with us, your comprehensive estate plan will include POAs for both finances and healthcare–so your plan will protect you from day one, and you will never have to worry about living probate.

If you’re not sure where to start or want to review what you already have, we’re happy to help. Give us a call and let’s make sure your plan covers everything—not just what happens after you’re gone.

Planning for a loved one with special needs requires more than just good intentions—it requires thoughtful, strategic action. Leaving assets directly to a special needs beneficiary, even with the best of intentions, can unintentionally jeopardize their eligibility for essential government benefits like Medicaid or Supplemental Security Income (SSI). That’s where a Special Needs Trust (SNT) comes in.

This powerful estate planning tool allows you to provide long-term financial support for your loved one without compromising their access to critical public assistance programs. A SNT can be created within a trust or a will, which will not become funded until after the death of the person who created the plan, or, a trust can be created and funded during one’s lifetime.

But what if YOU are the person with special needs? What happens when an estate plan was not created with a special needs beneficiary in mind? What if there is no plan at all?

(Spoiler: I handle special needs trusts for both first and third parties, which most attorneys don’t do–but more on that later.)

There are two types of Special Needs Trusts–the Third Party Trust, which is created for the benefit of someone else, and First Party Trusts (sometimes called self-settled special needs trusts), which are created by the person with special needs, using their own assets.

The First Party SNT in Rhode Island

This type of trust is funded with the assets or inheritance of the person with special needs. It is often used when the individual unexpectedly comes into money, like receiving an inheritance or a settlement from a lawsuit, so that they do not lose Medicaid or SSI benefits.

In order to create a SNT for yourself,

you must be under 65 years of age,

have a qualifying disability and the trust must be funded with our own assets.

If you are over age 65,

you may qualify for a pooled special needs trust.

You cannot be the trustee of your SNT. You must name someone who will manage the trust assets on your behalf.

Medicaid CLAWBACK provision 

A First Party SNT is subject to Medicaid payback provisions, meaning that any funds remaining in the trust upon the beneficiary’s passing must be used to reimburse the government for Medicaid expenses incurred during their lifetime

The Third-Party SNT in Rhode Island

Family members or loved ones establish this type of trust for the benefit of the person with special needs. It is commonly used to provide for the individual’s supplementary needs, such as education, transportation, and recreation. Unlike first-party trusts, there are no Medicaid payback provisions, so any remaining funds can be distributed to other heirs or charities after the beneficiary’s passing

Not Every Estate Planning Attorney Drafts First-Party Special Needs Trusts—Here’s Why

First Party SNTs did not exist until December 2016, when Congress passed the 21st Century CARES Act. Before this law was enacted, people with disabilities would often lose eligibility for government benefits due to the very low asset threshold. Thus, even attorneys with many years experience in estate planning may not have had the opportunity to create this type of special needs trusts.

Many attorneys choose not to draft first party special needs trusts because of the strict and complex legal requirements involved. Because first party special needs trusts are funded with the beneficiary’s own assets (usually from a personal injury settlement or inheritance) they must meet specific federal and state guidelines to preserve eligibility for needs-based benefits like Medicaid and SSI. In addition to being irrevocable and including the  Medicaid payback provision, First Party SNT are often subject to court approval and ongoing court supervision, depending on the jurisdiction.

Because even small errors in drafting or administration can result in loss of benefits or legal complications, many attorneys without specialized experience in public benefits or elder law choose to refer this work to attorneys who regularly handle such trusts.  I do this work myself, so I’m the type of attorney others are referring to. So if you’re reading this and you’re considering working with me, know that you’re in good hands.

Work With An Experienced Special Needs Trust Attorney

Our firm has experience creating First Party Special Needs Trusts that protect our clients’ much-needed government benefits, such as SSI and Medicaid. Because these trusts are available, clients can still benefit from their assets and continue to receive benefits. If you or a loved one would benefit from a SNT, click below to give me a call.