August 2012      

Team Tisser Foundation (TTF) is a non-profit corporation founded by Doron M. Tisser and his wife Laurie. TTF raises money for various charitable purposes and does not focus on any one charity or charitable purpose. The goal is to raise as much money as possible to "Help Make A Difference" by "Improving Life for Others." TTF has made donations to Memorial Sloan-Kettering Cancer Center, Leukemia & Lymphoma Society, Challenged Athletes Foundation, as well as charities helping people affected by natural disasters such as Hurricane Katrina and the Tsunamis. Since 2000, TTF has donated over $250,000 to over 40 different charities. Friends and clients generally donate money to TTF to support Doron's participation in triathlons and marathons. If you would like more information about TTF, please contact Doron at doron@tisserlaw.com, or visit www.teamtisser.org

Quick Links
www.tisserlaw.com
www.teamtisser.org

About
Doron M. Tisser

Doron M. Tisser has specialized in estate and gift planning, tax planning, trust and probate administration, charitable giving, buy-sell agreements and related areas for over 30 years. Mr. Tisser is one of less than 100 attorneys in California who has been designated as both a Certified Specialist in Probate, Estate Planning and Trust Law, and as a Certified Specialist in Taxation Law by the State Bar of California Board of Legal Specialization. He was chosen by his peers as a Super Lawyer for 2009, 2010, 2011, and 2012 for Southern California, and enjoys an "a.v." rating by Martindale-Hubbell Law Directory, which is the highest possible rating and is based on ethical considerations and legal skills. Mr. Tisser has published over 65 articles and chapters in books on various estate and tax planning subjects and is a frequent speaker and lecturer at estate and tax planning seminars. Mr. Tisser competes in triathlons, including Ironman races, and raises money for charities through Team Tisser Foundation, a non-profit corporation he co-founded with his wife Laurie.

What’s Happening

Doron M. Tisser recently appeared on Cindy Rakowitz’s radio show, Stars of PR, discussing estate planning and estate taxes. If you would like to listen to the show, please go http://www.voiceamerica.com/episode/62890/estate-planning-basics-with-doron-tisser.

Doron M. Tisser was recognized as a Superb Rated Attorney by Avvo, for being widely recognized by the legal community for superb conduct and experience.

If you would like Doron M. Tisser to speak to your group or organization about the new estate tax laws, trust administration or other estate planning subjects, please contact Laura Stein at laura@tisserlaw.com or call Laura at (818)226-9125.

SPECIAL NEEDS TRUSTS

If you have a child or other beneficiary of your estate that will inherit from you at your death, but that person receives or expects to receive governmental benefits through Supplemental Security Income (SSI) or Medi-Cal, you must do special planning for that person. This article will refer to SSI and Medi-Cal benefits as Benefits, and will refer to the person who is receiving or is eligible to receive Benefits as the Recipient.

Qualifying a Recipient for Benefits

SSI and Medi-Cal are needs based governmental benefits available to persons who do not have assets of more than $2,000, excluding exempt assets such as a residence or car. If a Recipient has assets valued at more than $2,000, the person will not qualify to receive either Benefits or if he or she was receiving Benefits, he or she will lose the Benefits.

In estate planning, the issues arises when a Recipient who otherwise qualifies for Benefits inherits assets. If the inheritance will bring the Recipient’s assets up to a value of more than $2,000, Benefits may be lost.

The way to protect a Recipient’s Benefits is to place the inheritance into a Special Needs Trust (SNT). A SNT is a trust set up to hold the Recipient’s inheritance without disqualifying him or her from receiving Benefits.

The trust will be controlled by a person named as the trustee and will provide that the assets will be used to supplement the Benefits the Recipient receives, not replace the Benefits. For example, money from the trust can be used to pay directly to providers of medical care, phone bills, education and entertainment.

As an example, if a Recipient does not qualify for private medical insurance, he or she may want to take advantage of the medical benefits he or she can receive under Medi-Cal. However, if the Recipient has more than $2,000 in assets because of the inheritance, he or she will not be eligible to receive those medical benefits. As a result, most if not all of the inheritance may go to pay medical bills, which could have been avoided if a SNT had been set up for the Recipient.

Setting up a SNT for a Recipient will allow that person to qualify or continue to qualify for Benefits, regardless of the amount in the trust.

Types of SNTs

There are two types of SNTs. One is a third party SNT, which is set up for a Recipient by someone else, most often by a parent who wants to leave a child assets, but does not want the child to lose Benefits. The other type is a first party SNT set up by a court for the benefit of a Recipient and usually involves a beneficiary asking a court to place his or her assets into a SNT so he or she can qualify, or continue to qualify, for Benefits.

The difference between a third party SNT and a first party SNT is that in a first party SNT, when the Recipient dies, the State is entitled to be reimbursed for Benefits it has paid out on behalf of the Recipient. This reduces how much will be left in the SNT to go to other family members after the beneficiary has died. This is not the case with third party SNTs, where no reimbursement to the state is required.

Know all the Beneficiaries of Your Estate Plan

When doing one's estate plan, it is important to know which beneficiaries are or will be receiving Benefits. For example, if a parent leaves assets to a child through a trust, and the trust says that if the child is not alive when the parent dies, the assets are to go to the child's children (i.e., the grandchildren), a grandchild who is a Recipient could lose his or her Benefits because of this inheritance.

IRAs, Retirement Plans and Life Insurance

We have often seen situations where a SNT is set up for a child by a parent to allow the child to qualify for Benefits. However, the parent has IRAs or other retirement benefits which name the child as a beneficiary. The child being named a direct beneficiary of an IRA or retirement account will cause the child to be ineligible to receive Benefits and negates the use of the SNT.

Naming a SNT as the beneficiary of IRAs and retirement benefits will generally cause those benefits to be subject to an immediate income tax at death. However, structured properly, the SNT can be a qualified designated beneficiary of these assets and the income tax will be paid over the Recipient’s lifetime, thereby allowing those assets to continue to grow inside of the SNT.

The same is true of life insurance proceeds. Being the beneficiary of a life insurance policy will cause a Recipient to lose Benefits.

It is important to make sure the Recipient is not named personally a beneficiary of IRAs, retirement benefits and life insurance proceeds and to make sure that if the SNT is the beneficiary of IRA and retirement benefits, the SNT includes special provisions to allow the deferral of income tax on those assets.

Conclusion

It is important to look at all at all potential beneficiaries of your estate to determine if any of them may become Recipients of Benefits. If yes, then you should see if a SNT may be necessary for that person.

If a SNT is called for, and you have IRA and retirement accounts, the SNT needs to be carefully established in order to minimize the income taxes on those assets. In addition, if there is life insurance on you, the life insurance proceeds need to be coordinated with the SNT.

Tisser Law Group | 5425 Farralone Ave, Suite 100 | Woodland Hills | CA | 91367

doron@tisserlaw.com – Doron M. Tisser, Esq.
brian@tisserlaw.com – Brian H. Standing, Esq.
armine@tisserlaw.com – Armine Bazikyan, Esq.
judy@tisserlaw.com – Judy Schwarz, Legal Assistant

erica@tisserlaw.com – Erica May, Legal Assistant

laura@tisserlaw.com – Laura Stein, Admin. Director
amber@tisserlaw.com – Amber McBride, Practice Coordinator
heather@tisserlaw.com – Heather Lanet, Admin. Assistant
zion@tisserlaw.com – Zion Dungo, Admin. Assistant
jesus@tisserlaw.com – Jesus Esteves, Admin. Assistant  
This Newsletter is intended to provide legal information only; legal information is not legal advice and you should consult with qualified legal counsel prior to implementing any estate planning. The transmission or receipt of information to or from this Newsletter is not intended to create, and does not create or constitute, an attorney-client relationship. No portion of this Newsletter may be reproduced or used in any manner other than for the private information of the reader without the express written consent of Tisser Law Group. The testimonials throughout this Newsletter were provided by actual clients. To maintain their privacy their names may have been abbreviated. Please note that testimonials do not warrant, guarantee or predict your particular results. Copyright Tisser Law Group 2010. All Rights Reserved.