Planning for children with special needs
Estate planning requires specialized planning when you have a child with special needs. Looking to the future as to how your child will be able to function in the world as they age is particularly tricky to assess. What is the child’s long term prognosis and what type of care is anticipated to meet their needs? What kinds of medical breakthroughs may occur that change their playing field? What government programs will they be eligible when they turn 18 and are those programs likely to still be in place when they need them? How will the parameters of the estate plan change when a child turns 18 and may want (and be legally able) to make some decisions on their own?
It is a daunting proposition for the parents or guardians who desire to set up the best plan possible for their special needs child. Are they able to express their needs and wants regarding their care? Most state laws mandate the fiduciary in charge of a special needs child’s care allow their participation in the process as much as they are able. To what degree can they adequately manage activities of daily living like eating, bathing, and dressing by themselves? Is the child deemed capable in the future of being employed outside of the home? Can they ride a bus to work? Is outside care such as an assisted living facility likely? Is the family capable of providing income and assets for their future well-being?
Flexibility is the key to success when creating an estate plan. What is set up now might need to be tweaked in the future due to unforeseen changes in a special needs child’s abilities, desires, or changes in government assistance programs. Government assistance may not be required if there are sufficient assets that can be paid out in a discretionary trust throughout the child’s life at the direction of the appointed trustee.
If your child is likely to receive government benefits a special needs trust is a good strategy as the trust can supplement what is otherwise provided by government benefits. It is crucial that the special needs trust is drafted to ensure the child does not become ineligible for their government benefits. In the event it is not possible to predict whether a child will be eligible for government benefits, an already established trust can give its trustee the ability to create a special needs trust at the time of their last surviving parent’s death. Whether or not a trust is funded now or left empty until the death of the parent when money can flow into the trust from the estate, another trust, or life insurance policy is a matter of preference.
Some parents opt not to create a trust for their special needs child and completely disinherit them so that government benefits can solely support the child. The absence of explicit financial support directives for a special needs child can have lasting negative impacts on the child’s financial and emotional well-being. Happily, most parents of special needs children try to overcompensate for their child’s future rather than take the approach of providing no aid whatsoever. Establishing a framework with legal documents that define the rest of a special needs family member’s life will help ensure that family member is taken care of financially and medically.
If you have any questions or would like to learn more about how to protect a loved one with special needs, please don’t hesitate to reach out.