Add in the quarterly switching of credit cards and maximizing various online shopping cash back programs and remembering to redeem your trail of unused points can turn the mess into an organizational nightmare.

AwardWallet Point and Miles Tracking

When I switched from Microsoft Money to Quicken, one of my favorite features was lost – the ability to track frequent flier miles. Ever since I’ve been on a search to find a better way to track not only miles, but all of these point balances for the programs I use.

I think I finally found the solution with AwardWallet! It’s a free service that consolidates the viewing of all of your award programs: airline, hotel, credit card, car rental, and online shopping. AwardWallet currently has 368 loyalty programs. Once you set it up you can track the balances and update all of the accounts at once. Here are some of my favorite features:

Expiration Date. In addition to showing you your mile or point balance, it also displays the expiration date, which is nice.

Multiple People. AwardWallet lets you assign additional people to your account. I can easily track both my awards and my husbands awards in the same account (or they have an option to connect with another person’s AwardWallet account).

Android Access. I tried using Yodlee to track miles for awhile, but now that I’ve taken a liking to android finance apps, I like programs that integrate with my phone; AwardWallet does, Yodless doesn’t.

Itineraries. They also advertise the ability to gather itineraries for you, but I don’t have any airlines tickets booked, so I’m not sure how well that feature works.

Free vs Paid Membership

AwardWallet has a premium membership version that you have to pay for called AwardWallet Plus. The weird part is that is says “you get to choose” the price, although I did see a $5 credit on my account, so I assume you can choose $5, but I’m not entirely sure.

The free version displays everything I need to track my account balances. The plus version has the ability to export to excel and display historical balances. Not something I’d pay for, but something I’d be happy to try out for free.

Earning Extra Points

The AwardWallet referral program caught my eye! I love referral programs so I can sign up my parents, my kids, and all the other family members who have agreed to be in my circle of signing up for stuff to maximize offers. AwardWallet says they are experimenting with referrals:

If you invite users and they join you get free upgrades for every 5 people who join, however there is more to it. If any of the people you invite pay us for AwardWallet upgrades, you will get bonus points in proportion to their contribution. If the people you invited don’t pay us for upgrades you don’t get any points. When you reach certain thresholds, we will convert those points into miles of your choice and deposit those points into your loyalty account.

It’s an interesting concept, although I’m still not sure if there is any value in the service beyond the free account. If not, the referral program doesn’t add much value.

Startling Statistics

As I was checking out all of AwardWallet information, some startling statistics caught my eye:

• There are an estimated 10 trillion unused frequent-flier miles in circulation worth over $165 billion.
• 20% or more of all frequent-flier miles don’t ever get redeemed.

That means that roughly $33 billion worth of frequent flier miles are just tossed aside. I don’t know about you, but I don’t have plans to waste any of my points or miles!

Free Upgrade

I sent AwardWallet an email and asked them if they’d be willing to provide a code for a free 6 month upgrade to AwardWallet’s premium membership for My Dollar Plan readers, so we can try out the plus service.

They agreed, and gave me the following code to use when you open an AwardWallet account: 1stTimeUsersAWPlus.

Thanks for the code, AwardWallet!

What do you use to track all of your point and mileage balances?

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But there have been some bumps in the road. Most of them are just little things that can be fixed, but finding the answers has been time consuming!

I’ve been making a running list of the topics I needed to research to make Quicken work more like we expect it to. This should help all of the orphaned Microsoft Money users navigate Quicken more easily.

Quicken Tip List

• Rename All Accounts. I wish I would have done this before conversion, but all of my account names were too long. You should also rename your account names to include the last four digits of your account number since they don’t show up in the Quicken account list.
• Change Loan Terms. All of my loans came through the conversion, but the splits on the payments didn’t work, they all came through as principal only. You can change all loans to have correct details & create new bills for each. I manually deleted the bills and reset up each loan. When it requested a payment setup, I did that.
• Change Savings Bonds Type. Do yourself a favor and change Savings Bonds to another type of investment. For some reason, Quicken didn’t understand these transactions and all of my CD redemptions were incorrect. When I changed the type, it worked fine.
• Change Registers to One Line. To make the registers one line instead of two, you need to press: Ctrl + 2 (You’ll want to memorize this since you’ll have to do it for every register).
• Show All Transactions. If you are used to MS Money, you’ll want to show all your transactions, otherwise the ending balances won’t be correct. If you hide the reconciled transactions the ending balance only shows the transactions listed. It’s a difference you’ll just have to get used to.
• Alphabetize Accounts. I’ve searched high and low for a way to alphabetize accounts automatically. You can’t, so you’ll have to do it manually by going into the account menu.
• Make Account Bar Faster. The account bar on the side is really slow to scroll. You can right click on it, and choose “add/remove accounts from bar” then check the box to “hide this account in account bar. All the hidden accounts will show up on the other accounts list when you hover over it. I did this with many of my open, zero balance accounts.
• Show Cents. Quicken didn’t show cents when I first converted. What? Here are some tips and instructions from Mako, on how to fix it.
• Last Transaction Hiding. The register hides the last transaction with the “Enter, Edit, Split” button. You can fix it by going to edit, preferences, quicken preferences, register. Uncheck the box: show transaction toolbar.
• Reconciled Transactions Hard to Read. In the same location as the transaction toolbar, remove the option that makes the reconciled transaction grey. What an eyesore!

Overall, I’m still pleased with the Quicken conversion. Hopefully, these tips will make your conversion go even better!

Do you have any more Quicken tips to add?

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After reviewing most of the money management software available, I decided to go with the market leader, Quicken.

A large part of the decision was based on the converter that Quicken is perfecting for Microsoft Money users to easily convert Microsoft money to Quicken with huge files. Ours dates back to 1996 and had over 200 accounts.

Microsoft Money Software Discontinued

If your copy of MS Money is now expired, you don’t have to quit using it. However, these online services will no longer work:

• Online Quotes
• Direct Online Banking
• Bill Pay

The final expiration for all copies of Microsoft Money is January 2011. If your copy already expired, you might be able to purchase another copy of the Microsoft Money software on ebay but it will only work until the end date in January 2011.

Quicken Promo Codes

If you’re planning to buy a copy of Quicken to make your Microsoft Money to Quicken conversion, you’ll want to take advantage of the Quicken coupon codes for $20 – $50 off until July 31, 2010:

• Quicken Deluxe: Quicken Deluxe – $20 Off
• Quicken Premier: Quicken Premier – $30 Off
• Quicken Home and Business: Quicken Home and Business – $30 Off
• Quicken Rental Property Manager: Quicken Rental Property Manager – $50 Off

Our Quicken Conversion

We converted to the Quicken Home and Business version since we had the MS Money home and business version. You need to convert to the equivalent product for the conversion to go smoothly.

I’m not going to say our conversion went flawlessly, as there is a problem with the conversion of savings bonds, but otherwise the converter did pretty well. I’m still working on rebuilding my favorite reports and a few other things that I hope to have sorted out soon. Overall, I’d give the conversion an A-.

We are now running both Microsoft Money and Quicken until I feel comfortable with the new product.

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Are you a former Microsoft Money user who needs to convert your information to Quicken? Based upon my conversion experience I came up with the following tips to make the process even easier. This checklist should work with all versions of Quicken 2009.

How to Convert to Quicken

1. Back Up your Microsoft Money data. Go to File/Back Up and save a copy of your Microsoft Money data file on your hard drive. This is always an excellent precaution to take when working with important data.
2. Install and register Quicken. Quicken will perform an online update after it installs. This will ensure you are running the very latest version. Don’t start Quicken yet, you will do that after you import all of your account information.
3. Read all of the instructions before you begin. Read the Microsoft Money to Quicken Conversion Instructions. IMPORTANT – please take the time to read through ALL of the instructions before you dive in. Pay particular attention to the list of items that will not be imported at the top of the page.
4. Download and install the data converter. Download the Money to Quicken Data Converter and save it to your desktop. Install the converter to your desktop as well. Don’t start it yet.
5. Open Microsoft Money and create your account report. Follow conversion instructions steps 3-11.
6. Create an investment report (optional). This needs to be completed only if you used Microsoft Money to track investments.  Follow steps 12-18 from the conversion instructions.

   PLEASE NOTE: There is a critical omission in step 14. The Account option must be checked, otherwise the data import will produce an error.

   Step 14 should read: Click the Rows & Columns tab, and in the Include fields area, select the Memo, Account, Transfer account, Cleared status, and Category options.

7. Run the data converter. Click the Import into Quicken button. It might take several minutes for this step to complete. Once it is done all of your data should be in Quicken.
8. Double-Check the results. The easiest way to do this is to open Quicken and Microsoft Money and compare account totals. Everything should match up. It is possible some of the investment accounts will be a penny or two off due to differences in the way the programs round numbers.
9. Reconcile your accounts in Quicken. Before you add any information to Quicken at all you need to reconcile each account. The easiest way to do this is:

   Click on the account name in the left column.
   Under the “Cash Flow” button it will say either Reconcile or Reconcile Account. Click on that and follow the instructions.

10. Set up your online updates. One thing that won’t transfer from Money is the online access to your accounts. If you want to access your bank accounts online you will need to set it up:

    Click on the account name in the left column.
    Select “Set Up Online” near the top of the page.
    Follow the instructions.

Learn to Use Quicken

Congratulations! Quicken should now be populated with your data and ready to use! Visit the Getting Started with Quicken page for helpful resources to familiarize yourself with your new software.

Still need to purchase a copy of Quicken? Amazon is selling Quicken Premier 2009 for cheap right now.

Once you’ve converted check out our Quicken Tip List Former Money Users Will Like!

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While I was busy purging paper and backing up the electronic data, I realized that when we don’t know how long to keep something, we end up keeping it forever… or not at all. Here’s how long we should be keeping those important papers:

Forever

• Birth Certificates
• Marriage Certificates
• Divorce Certificates
• Death Certificates
• Military Documents
• Immunization Record
• Employment Records (Why)
• IRA Contributions (Why)
• Social Security Card
• Tax Returns: The IRS can audit your returns from 3 years ago; 6 years if you grossly under reported; indefinitely if you filed a fraudulent return or did not file. So you could pitch your returns after 7 years… however, if they claim you didn’t file, and you pitched it… well, now you know why I put tax returns on the indefinite list! For more details on how long to keep tax records, see how long to keep tax returns.

Keep During Ownership

• Car Titles and Service Records
• Receipts, Manuals, and Warranty Information for Appliances
• Receipts for Major Purchases like Jewelry, Furniture, and Computers

Ownership Plus 7 Years

Even after you sell investments or real estate, you’ll still need to keep the gain or loss documentation for tax purposes.

• Stocks, Bonds, and Investment Records
• Savings Certificates
• Home Improvement Documentation
• Real Estate Records

7 Years

Many of the following will contain information that supports tax returns. Therefore it’s best to keep the following for seven years:

• Canceled Checks
• Credit Card Statements
• Old Bank Statements
• Retirement Plan Contributions
• Supporting Documentation for Tax Returns

Until Specified Date

• Annual Retirement Statements: Until retirement and funds are exhausted.
• Insurance Policies – Until property is sold, policy expires, and all claims are settled.
• Wills: Until replaced by a new one.

Throw Away

• Receipts not used for Warranties, Taxes, or Insurance
• Paycheck Stubs: Once you get your W-2, you can toss them
• Phone Bills not needed for taxes
• ATM Receipts
• Grocery Receipts

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MS Money Stops Yearly Updates

I felt pretty confident with my setup until one of my fellow About.com guides, Shelley, burst my bubble: Money Rumor is Now Official: No Microsoft Money 2009. This news really makes me wonder if MS Money is the best place to run your financial hub from…

Free Quicken Online

Quicken Online to the rescue! I’ve always wanted to try out Quicken, since so many people use it. But I couldn’t justify buying two products. That was until this week, when Quicken took away the fees and made Quicken Online free!

Features from the Overview:

• Automatically downloads and categorizes your transactions, so you know where you’re spending.
• See all your bank and credit card accounts in one place, with one password.
• You can even access your personal finance information from your cell phone.
• Quicken Online connects with over 5,000 financial institutions (and counting).

Action Plan

I’m going to give Quicken Online a try. We’ll see how it compares to MS Money. Of course, since I need the Home and Business version, I’ll have to purchase that one once my MS Money expires, but this should be a good test to see if I like the Quicken product.

Check out more free offers in the Free Money Friday series.

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Taking time off and traveling is fun, relaxing and sometimes stressful. Planning ahead and getting your finances in order before you travel will allow you to get the most out of your vacation and leave some of your worries at home. Here’s a checklist to guide you through the financial preparations needed before leaving home.

1. Pay your bills ahead of time. If you use automatic bill-pay, confirm that all the payments will be sent before the due dates.
2. Make a checklist of financial needs for your trip. Hit the ATM for cash, exchange some money into the needed currency if you are traveling abroad, or purchase traveler’s checks if you plan to use them.
3. Evaluate time-sensitive purchases. Eat all the food that will spoil before leaving home to avoid wasting it (and coming home to the smell of rotted food).
4. Leave a key with someone you trust. You never know when you might have a financial emergency, and someone may need to get into your house to retrieve information or paperwork.
5. Don’t try new financial organization methods. Now is not the time to try to switch to automatic bill-pay in case something goes wrong. Save changes for when you are home and have time to follow-up.
6. Double-check rates. Confirm your flights, hotels and car rentals. If prices have gone down re-book or ask for a credit… yes, even some airlines will issue a credit if the rates drop.
7. Arrange for someone to pick up your mail or have it held. Don’t let mail with your personal information sit in your mailbox while you are gone.
8. Enroll in rewards programs. Look up the frequent flier programs for your airline and rewards programs for your hotels. Enroll before you go to get all your points and miles without hassle.
9. Consider infrequent bills. Remember to check the due dates for car titles, annual insurance payments, homeowners dues and other bills that you don’t pay regularly.
10. Research your destination. Tripadvisor has a great resource that people can review restaurants, attractions and more. Use the reviews to find great places at your destination without spending a fortune.
11. Pay bills for an extra week. Just in case your vacation is extended unexpectedly, you’ll want to have your finances in order.
12. Have fun. Knowing that you don’t have to worry about your finances while you are gone will allow you to relax and enjoy your vacation.

Once you get home from vacation, check to see that everything went smoothly and all your bills were paid on time. If there were any problems, follow up immediately. Open your mail as soon as possible to check for time-sensitive correspondence. Since you planned ahead, you should be able to pick right up where you left off before vacation.

This article is featured in: Carnival of Personal Finance.

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1. Asset allocation rebalancing. Have you rebalanced your portfolio lately? With the decline in the market lately you could be overweighted in bonds. With stock prices down, you will be forced to sell your bonds high and buy your stocks low, just like you are supposed to!

2. Adequate insurance coverage. Do you have enough insurance? (Health, Disability, Life, Car Homeowners, Umbrella, and Flood).

3. Long term goals. Have you set long term goals and put a plan together to achieve those goals? No time like the present to work on them!

4. Set aside money for the holidays. Now is a great time to start saving for the holidays. By December you’ll have money ready to go. If you are a bargain shopper, make your lists now and keep your eye out for sales.

5. Use your vacation time. Make sure that you are using vacation. Sometimes people get so wrapped up in work, they don’t take time off. Instead of being forced to use it all at the end of the year, spend some now while the weather is nice. (As I write this… I’m enjoying my 2+ week vacation!)

6. Read your social security statement. Depending on when your birthday is, you may or may not have received your statement this year. When you get it, did you review all the numbers?

7. Tax withholding. Are you making the amount of income you estimated when you set your withholding level? Now is a great time to make an adjustment using the IRS withholding calculator.

8. 2008 reduced capital gains tax. If you are planning on taking advantage of the 0% capital gains taxes in 2008, have you sold your stock yet?

9. Update your beneficiaries. Don’t get caught with an old beneficiary on your account. Make sure your retirement accounts and life insurance policies are up to date.

10. Backup your files. Have you made a backup of your important files?

Do you have additional tasks you’d like to add to the list? Feel free to add them in the comments.

This article is included in: Carnival of Personal Finance #161: The “Feeling Renewed” Edition

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Data Loss Statistics reveal that “More than 22 percent [of computer users surveyed] said backing up information is on their to-do list, but they seldom do it” and “nine percent admitted they have never backed up their files.”

The Cost of Lost Data illustrates the causes of data loss reminding us of the importance of data backups:

Our Old Storage

I used to make a copy of important files and burn a CD to put in our safe deposit box yearly. However, I got a little lazy and the newest copy is probably a few years old. My husband also set up mirrored hard drives (RAID 1).

This seemed sufficient until I heard a story from a friend about a family who lost all their pictures of their children when their computer failed. I realized that not only do we have very important financial data, but also priceless pictures of our children since we’ve gone to a digital camera.

Looking for an Inexpensive Solution?

Store data offsite using Amazon S3, an online web storage service. Storing data on site (in your home or business using tape, CD, USB, NAS backup) doesn’t protect you from loss due to theft, fire or other natural disasters.

We backed up over 2 GB of photos, financial documents and other important files offsite for less than $1 per month. This includes weekly incremental backups of about 100 MB. Amazon provides a calculator to estimate your pricing.

The software we use to perform the backup is Jungle Disk. Software is free to try for 30 days, purchase for $20. From their website:

• No monthly subscription fee, no startup fee, no commitment
• Your data is fully encrypted at all times
• Data is stored at multiple Amazon.com datacenters around the country for high availability
• Access files directly from Windows Explorer, Mac OSX Finder, and Linux
• Automatically backup your important files quickly and easily

Action Plan

I can sleep much better at night knowing that our financial documents and other important personal files can be recovered should we have a data loss.

Are you backing up your files? How often and by what method?

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I haven’t done a comparison of Money to Quicken, as I know many people use Quicken, but some of these concepts should work for both.

Microsoft Money Tips

1. Keep family members that file taxes separately in a separate money file. We keep our file separate from our kids. I also created separate files for each family account that I manage.
2. Use a strategic naming convention for accounts so you can see important information at a glance. Ours is bank name, person, business or personal use, account name, (authorized user or joint account holder). For example:
   1. FIA M Fidelity 529 (Mr. Dupaix AU)
   2. Chase D Business Rebate
   3. ING M auto maintenance fund
3. Use the flag feature. Anytime I run across something unusual, I flag it for later.
4. Don’t waste time using software for things it doesn’t do a good job at. I create Excel spreadsheets to do things the program can’t do. Creating our dollar plan, keeping a year end to-do list, keeping the 0% offer end dates and many more all reside outside Microsoft Money.
5. Create a list of favorite accounts and favorite reports. I have our main accounts we use daily easily accessible and our monthly net worth report. Once you customize the report, save it.
6. Create accounts for online cashback programs. Since many of these do not cash out until you hit $10 or so, it’s easy to see which ones need more money.
7. Under assets, list each life insurance policy. Record the value as zero, but put the face value as the account number. This eliminates the need to track them elsewhere and you can see if you have enough coverage each year with a quick glance.
8. Turn off any unused functionality in the options to make it run faster.

Which Version Do I Use?

I used Microsoft Money 2004 successfully for over 3 years. I briefly used the 2005 product 3 years ago, but I uninstalled it after I found it was inferior to the 2004 product. Last fall when the online updating for ticker symbols stopped working I was forced to update to a new year. I purchased the Microsoft Money Plus Home and Business version of Money Plus 2008 and I’ve been pleased with it.

Microsoft Money Troubleshooting

Whenever I get stuck trying to perform a function I visit the usenet group for Money users or the unofficial FAQ. It’s a great resource and has an extensive archive that I can usually find my solutions in.

Feel free to add any tips that I missed!

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© My Dollar Plan

Replacing all the forms and data with one list makes the process quick and easy. Here’s how I organize our tax work from beginning to end.

Make a Master List. The easiest way to begin organizing for tax preparation is to pull out your return from last year. Look at all the companies, forms and statements that you reported on and make a list.

Here’s an example list from my taxes last year:

• W2
• Interest 1099-INT
• Dividends 1099-DIV
• Capital Gains
• K-1
• Schedule C
• State Tax Refund
• IRA Distributions 1099-R
• Student Loan Interest Deduction
• Energy Credit

Itemized Deductions

• Mortgage Interest
• State Taxes
• Real Estate Tax
• Investment Interest Expense
• Charitable Donations – Cash
• Charitable Donations – Goods

State Deductions

• 529 Contributions

For each line I list the companies or banks that I’m expecting a statement from. For example:

• W2
  • Company 1
  • Company 2
• Interest 1099-INT
  • Bank 1
  • Bank 2
  • Bank 3

Adjust the master list. Add new companies and review the list for any companies you no longer have a need to report on. The first year you make the list it takes a little longer. Next year it will be fast, just pull out this year’s list and make adjustments.

I keep a running list of new companies and new strategies that will have tax consequences throughout the year; I can then quickly add them to the list at tax time.

Check off each company. As tax documents start arriving in the mail, check the company off on the list. It’s a quick way to see if you have all the documents needed to file.

Cross check numbers. I print one of the tax transaction spreadsheets from Microsoft Money. Review each form and cross-check the numbers with those on the spreadsheet. This helps to spot errors and get them resolved if needed.  

Enter Data. Once I know I have all the forms and all the data is correct, I can quickly enter the information in TaxCut.

File.

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We Were Right

I located the paperwork which clearly stated that any balance transfers posted before 11/14/2007 would receive 0%. The bill shows the balance transfer posted on November 13 so I assumed it wouldn’t be a problem. He spoke with customer service and explained the situation. After a couple transfers he got someone who agreed that they would fix it. Whew!

Security

The only hurdle was that they wanted the security code on the card to verify his identity. Unfortunately, since we are on vacation, we don’t have the card with us. (We had the paperwork because I brought some papers with me to enter into Microsoft Money.) When my husband explained we wouldn’t be back for two weeks they agreed to fix the charge without the card.

I understand why they need the card for security reasons, but I would find it highly unusual for a thief to call and ask to have their balance transfer interest rate fixed! Speaking of thieves, I did have a card number stolen recently, but more about that later.

Action Plan

While it all worked out in this situation it is a good reminder to make absolutely certain of the terms before completing a transfer. It seems like too often the companies computer systems don’t jive with the offers that they send out.

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© My Dollar Plan

That’s what readers wanted to know when I started to describe some of the details of our accounts. I’ll highlight my various strategies in a series of upcoming articles, this being the first.

I track most of the information in Microsoft Money including credit limits and account numbers. However, I have lots of doublechecks and information stored elsewhere to make the process efficient.

Bill Pay Strategies

When running a $200,000 credit card arbitrage plan, it’s important to keep the bills paid. Here’s some of the strategies that I use:

• All regular bills are set up on autopay, including the mortgage.
• I do not use ebills, but rather paper statements. Because not all the companies allow ebills it was becoming more work to track some in paper and some electronically. Therefore, I switched to all paper. It’s not environmentally friendly, but it is organizationally friendly.
• I stack up all the bills I receive throughout the week and pay them all at once. (FIA makes it easy to pay multiple bills quickly).
• I pay bills weekly, usually on Fridays.
• All bills are paid with my FIA credit card to enable an extra month of float and to simplify my checking account.
• Each credit card at 0% is paid the amount due plus $10 rounded up. (For example a $117 minimum payment becomes $130).
• Once each bill is paid, I enter it into Microsoft Money when I get around to it.

Safety Checklist

I have a list in excel of all bills and the approximate day of the month the bill is due. I delete them as I pay them. This is not really necessary, but it’s a doublecheck to make absolutely certain that I don’t miss a due date and it only takes a few extra seconds.

Here’s what this spreadsheet looks like:

Anti-Filing System

Filing isn’t really all it’s cracked up to be. I used to file all my paperwork by account in neat little folders in a file cabinet. However, that started taking up too much time…. so now I just take all the papers for the the year, stuff them in a bankers box and put them in storage. I rarely have to go back and dig out papers over a year old, so it’s saved me quite a bit of time. The exception is tax papers; all of which are filed neatly by year.

Action Plan

I keep an excel spreadsheet dedicated to various aspects of my finances that don’t fit nicely into the Microsoft Money program. I’ll work on putting together more examples of the other spreadsheets that would be beneficial. In addition, see how I’ve made Microsoft Money more efficient for my finances.

How do you stay organized?

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Special Needs Trust

Special needs trusts, or supplemental needs trusts, provide the means to care for a disabled child (or adult) after the parents or guardians have passed away. It holds money that would typically be provided to children through an inheritance or through a lawsuit settlement. It also shelters money so the disabled individual cannot be taken advantage of financially.

Why It Is Important

To be eligible for SSI, an individual must have limited resources (including cash, savings, stocks, land, vehicles and life insurance policies), which is defined as $2,000 for an individual or $3,000 for a couple. A house and one vehicle are excluded, as are special needs trusts.

Many parents would agree that you currently give your disabled child a better quality of life than $2,000 could provide. You don’t want their quality of living to decline after you are gone. However, leaving an inheritance directly would jeopardize the SSI and Medicaid benefits. Without these government programs, the individual would be worse off financially even after receiving the inheritance.

A special needs trust is created to keep the disabled individual eligible for government assistance and provide a quality of life consistent with what they received when their caregiver was alive.

Our experience

Here’s some of the things I learned when we had the trust made.

• The trust cannot be created by the individual, so we created it for him.
• We worked with a lawyer to create the document. We were not willing to take a risk disqualifying him from SSI or Medicaid, so a do-it-yourself document from the internet was out of the question.
• There was another option about pooled trusts, but the remaining money would be distributed to a non-profit organization or the State. We did not look into this option, as we wanted the proceeds to be passed onto another family member when he dies.
• The trust names the current and future trustees and beneficiaries. The future beneficiaries do not need to be disabled. The trust dissolves upon his death and pays the proceeds to the beneficiaries directly (or creates additional trusts for the children under 25).
• The trusts are designed to provide money that focuses on quality of life above and beyond basic needs. The money can be used for special outings, vacations, and special interests such as a music class. It cannot be used for food, clothing and shelter.

Creating the trust was actually a simple process. We met a couple times with the lawyer to discuss options and learn about it. The hardest part was selecting the trustees and beneficiaries. Taking the first step to set up a meeting was half the battle.

Other considerations

• In addition, you need to notify and work with other family members who might have wills. Name the trust as a beneficiary and not the individual.
• The trust needs an EIN to file tax returns.
• For the applicable law, see Social Security Act: Section 1917(d)(4)(A).

The Simple Dollar recently had an article Setting My Own Personal Finance Goals where a reader asked about a special-needs trust. Our experience should help that reader get started. 

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Blogging Away Debt

Consumerism Commentary

Moolanomy

Punny Money

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