I was recently asked the following estate planning question by a nice couple who had moved to Alabama.  I thought the question and the answer would be beneficial to my blog readers.  In this case, the information could prove helpful whether your estate plan is for Alabama or not.

Question: My son is 100 percent disabled and is currently receiving benefits for Social Security disability and Medicare. We want to leave our assets to him after our deaths. We want the funds to be administered by our daughter, whom we hope to have as his caretaker after our passing. Is there a way we can go about this so that the proceeds from our estate will not interfere with his income from disability and his Medicare benefits? We also would like for our daughter not to be required to pay income taxes on money that will go to our son.
Answer: Before doing anything about your assets, will, trusts, etc., you should seek the services of a competent estate planning attorney. It very well could be that if the money is left to your son, his benefits may be endangered. That would be tragic. There are ways to plan for this, perhaps through a Special Needs Trust.

However, you mention that you “hope” for your daughter to become his caretaker. Have you discussed the matter with her? These are all things that need to be taken into consideration. The actions you take will have some bearing on whether or not taxes will be paid. Again, this is a clear case for a competent estate planning attorney, who you should have a consultation with before making any definite decisions.