Special Needs Trust
My child has special needs. How will I provide for her after I’m gone?
Estate Planning Tips If You Have a Special Needs Child
The thing I hear most often from parents of children with special needs is “What is going to happen to my child when I am gone?” If you have a child with special needs, you probably have the same worries about what will happen to your child when you are gone. One way to address these concerns is by meeting with an attorney knowledgeable about special needs law. The attorney can draft an estate plan that will address some of your concerns about your child’s future. If you have a a child or family member with special needs, the following tips can help you develop an estate plan that will ensure that your disabled loved one is taken care of after you have passed away.
Tip 1: Set up a Special Needs Trust
Leaving money to someone with special needs can jeopardize their eligibility for some public benefits they may rely on. A Special Needs Trust is drafted to keep funds separate from the assets of the special needs child and protect public benefit eligibility. The Trust is designed to meet the need for things that are not available from public assistance such as education, recreation, travel and special equipment such as wheelchairs and vans with lifts.
The Trust can be created by a parent or other family member either as a stand alone document or as part of a Last Will and Testament. The disabled individual may be able to create the trust him- or her-self as well. An attorney that practices in special needs law can advise you on the type of Special Needs Trust that would be most appropriate for your circumstances.
Tip 2: Coordinate Planning with Other Family Members
A carefully developed plan can be sabotaged by a well-meaning relative who leaves money directly to the child with special needs. If a trust is created for the benefit of the child, grandparents and other family members should be told about it so that they can direct any bequest to that child through the trust. Grandparents who are worried about the cost of long-term care should also be made aware that, in certain circumstances, they may be able to contribute to a special needs trust for a grandchild without affecting their own future Medicaid eligibility.
Tip 3: Carefully Consider Your Options When Choosing a Trustee
The Trustee of the Special Needs Trust will be making important financial decisions for your disabled child when you are gone. Therefore, it is important to carefully consider the trustee you designate.
Many people want to name a family member as Trustee. However, this can be problematic if the family member does not have the expertise to manage the trust.
One alternative is retaining the services of a professional trustee who has experience managing special needs trusts. If you are concerned about an outsider making decisions about your loved one, you can include a “trust advisor” who is responsible for instructing the trustee on the beneficiary’s needs.
Another alternative (for smaller trust funds, where a professional trustee may not be the best option) is a Pooled Trust, such as the one administered by the Arc of Indiana
or The National Foundation for Special Needs Integrity.
Tip 4: Make a Plan for Funding the Trust
Many families choose to have a life care plan designed for their child to estimate the cost of the child’s care over his or her lifetime. This amount can be used to determine how much to put in the special needs trust. Many families purchase life insurance policies to provide sufficient funds for the trust.
Tip 5: Name a Guardian in Your Will
While naming who will be the guardian of your child is important for anyone with minor children, it is more so for parents of a disabled child. Deciding on the right guardian can be difficult due to the additional care needs of your disabled child. As parents, it is important to make these kinds of determinations while you can instead of relying on other people to make these decisions after you are gone. You should name a guardian for your child in your Last Will and Testament as this is the document that will be looked to in determining your wishes concerning appointment of a guardian over your disabled child after you are gone.
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