Special Needs Estate Planning
If you currently provide care for a child or loved one with special needs (such as mental or physical disabilities), you must have contemplated with concern about what may happen to them when you are no longer able to provide and care for them.
Creating a thoughtful Estate Plan is an important set in creating a secure future for your loved one with Special Needs.
At Hooper Law Office, we take this responsibility seriously and work with clients to design a holistic Special Needs Estate Plan that will consider the mental, emotional, physical and financial needs of their loved one. Over years of practice in this unique area, we have found that this is best done by breaking Special Needs Estate Planning into three distinct components: Plan, Practice and Protect.
Plan: Creating a Plan for Your Loved One With Special Needs
The first step in securing your loved one's future is to create a thoughtful, written plan that will share your wishes for their care in the future as well as provide the means for your loved one to afford the care plan that you have created. This is done through meeting with an attorney with significant experience in Special Needs Planning, to design a thoughtful strategy. This strategy is then memorialized in Estate Planning documents and a Letter of Intent which will be used to enforce your plan.
Legal Estate Planning Documents for Parents of Children with Special Needs
A complete Estate Plan will include a document directing assets after death to protect a child with special needs, commonly either a Will or a Trust. Documents planning for the possible incapacity of a caregiver, are also needed, which should include at least:
- Financial Power of Attorney
- Medical Power of Attorney
- Living Will
- HIPAA Authorization
All must be reviewed by competent legal counsel every 3 to 5 years.
Remember, these documents are the tools that are used to communicate and execute the strategy you and your Estate Planning Attorney have created for your loved one. The documents are not the plan, they are simply how the plan is communicated and executed. In order to adequately plan for your loved one, it is crucial to work with an attorney who understands the needs and legal intricacies facing those with Special Needs and their loved ones. They will be able to successfully guide you in the process while avoiding pitfalls.
Does Inheritance Affect Social Security Benefits?
While you can certainly provide that they receive money and assets, such a bequest may prevent them from qualifying for essential benefits under the Supplemental Security Income (SSI) and Medicaid programs. However, public monetary benefits provide only for the bare necessities such as food, housing, and clothing. As you can imagine, these limited benefits will not provide those loved ones with the resources that would allow them to enjoy a richer quality of life. But if parents leave any assets to their child who is receiving public benefits, they run the risk of disqualifying the child from receiving them. Fortunately, the government has established rules allowing assets to be held in Trust, called a “Special Needs” or “Supplemental Needs” Trust for a recipient of SSI and Medicaid, as long as certain requirements are met.
What Is A Special Needs Trust?
A Special Needs Trust is an essential component of any special needs plan. More specifically, a Stand-Alone Third-Party Special Needs Trust protects the financial and property assets that you pass to your child with special needs. This can be funded during their lifetime to protect assets from your own liabilities, such as accidents and long-term care, or it can be funded after your death or both. This also gives family and friends a beneficiary to name in their own estate plans that may include your child with special needs.
Our law firm can help you set up a Special Needs Trust so that government benefit eligibility is preserved while at the same time providing assets that will meet the supplemental needs of the person with a disability (those that go beyond food, shelter, and clothing and the medical and long-term supports and services of Medicaid). The Special Needs Trust can fund those additional needs. In fact, the Special Needs Trust must be designed specifically to supplement, not replace public benefits. Parents should be aware that funds from the Trust cannot be distributed directly to the disabled beneficiary. Instead, it must be disbursed to third parties who provide goods and services for use and enjoyment by the disabled beneficiary.
The Special Needs Trust can be used for a variety of life-enhancing expenditures without compromising your loved ones’ eligibility such as:
- Annual check-ups at an independent medical facility
- Attendance of religious services
- Supplemental education and tutoring
- Out-of-pocket medical and dental expenses
- Transportation (including purchase of a vehicle)
- Maintenance of vehicles
- Purchase materials for a hobby or recreation activity
- Funds for trips or vacations
- Funds for entertainment such as movies, shows or ballgames.
- Purchase of goods and services that add pleasure and quality to life: computers, videos, furniture, or electronics.
- Athletic training or competitions
- Special dietary needs
- Personal care attendant or escort
Special Needs Trusts are a critical component of your Estate Planning if you have disabled beneficiaries for whom you wish to provide after your passing.
Generally, Special Needs Trusts are either stand-alone trusts funded with a separate asset like a life insurance policy or they can be a sub-trust in your existing living trust.
Special Needs Letter of Intent
In addition to ensuring your child has the means to afford their care and lifestyle, you possess significant information about your child and their needs. This information will be invaluable to those who will care for your child in the future. For this reason, we work with clients to capture this important information through a Letter of Intent.
A Letter of Intent is a document that contains your collection of important information, goals for the future, directions to caregivers, historical facts, and how you see your plan working. An example of what a typical day looks like in your child’s life is also helpful to include.
Learn More about Planning for a Loved One with Special Needs
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Protect: Guardianship and Alternatives to Guardianship for Persons with Special Needs
Guardianship is the process you can use to remove your child’s legal ability to manage his or her own financial and medical needs. But, Guardianship is not the only option available to guide your loved one in their decision making. Below is an image depicting various options for
Always consider the alternative of Power of Attorney documents for a child with legal capacity.