For the parents of a child with special needs, estate planning takes on a heightened importance. Simply including your child as a beneficiary in your estate plan will not suffice when your child has special needs because direct gifts could jeopardize eligibility for much-needed assistance programs such as Medicaid and Supplemental Security Income (SSI). The special needs planning attorneys at Kulas & Crawford offer the following tips for planning ahead within your estate plan for the day when you are not here to care for your child yourself:
- Create a Letter of Instructions. This is a letter that typically includes important information not contained elsewhere in your estate plan. You may use it to inform and guide Trustees, Guardians, and others involved in the care of your child about his or her functional abilities, routines, interests, and likes and dislikes. Nothing contained in a Letter of Instructions is legally binding; however, it can be extremely helpful in your absence.
- Set up a Special Needs Trust also referred to as a “Supplemental Needs Trust,” or simply an “SNT,” this is a specialized type of irrevocable living trust that allows assets contributed by family members and friends to pay for goods or services that are in the beneficiary’s best interest, while also maintaining the beneficiary’s eligibility for means-tested government assistance programs, such as Medicaid and SSI.
- Provide Guidance to Caregivers. Use the language in your SNT along with your Letter of Instructions to provide guidance to the Trustee concerning how you envision supplementing your family member’s care as well as how you would like distributions to be made. For example, you may authorize the hiring of caregivers or healthcare workers along with financial managers.
- Avoid Court Intervention. Ideally, the plan you create for your child will operate without the need for court intervention which can be costly and can seriously interfere with your wishes. One way to avoid court intervention is to ensure that your SNT is created now while you are alive, not as a testamentary trust.
- Use Care When Choosing Funding. Work with your estate planning attorney when deciding how to fund your SNT because certain types of funding can be more advantageous to your overall estate plan than others.
- Choose the Right Trustee. Do not just choose a spouse or other family member without taking the time to consider the skills and characteristics needed of a Trustee. Your Trustee will effectively be the CEO of the plan you set into motion for your child after you are gone. He or she will make numerous important decisions and will hold the proverbial purse strings so be sure to choose wisely. You may even wish to consider a professional Trustee.
- Make Sure other Family Members Are Aware of Your Plans. More importantly, make sure other family members do not leave direct gifts to your child in their own estate plans. Your estate planning attorney can explain what language family members need to use to divert gifts into the SNT you create. Any direct gifts that are overlooked could derail all your hard work by causing your child to lose eligibility for much-needed benefits.
- Review Your Entire Estate Plan. Make sure that your child’s special needs are taken into account throughout your estate plan. Specifically, make sure that your child is not a beneficiary on any retirement plans, life insurance policies, or is set to inherit directly from your estate in any other way. The goal is to divert all inheritance to the SNT so that your child can retain eligibility for assistance programs while also benefitting from the inheritance you leave behind for him/her.
Contact Special Needs Planning Attorneys
Please join us for an upcoming FREE seminar. If you have additional questions or concerns about special needs planning for your child, contact the experienced special needs planning attorneys at Kulas & Crawford by calling (772) 398-0720 to schedule an appointment.
