Preparation is key when planning for a child with special needs. While estate planning is important for all parents, those with special needs children face unique considerations. These children may rely on you throughout their lives, making it crucial to understand and document how to meet their emotional, physical, and financial needs. Proper planning allows you to empower your special needs child even after you die or become incapacitated.
Major Considerations in Your Estate Plan
- Guardianship: Who will care for your child if you’re not there?
- Financial Needs: How will you meet your child’s financial needs in your absence?
Naming Legal Guardians For a Lifetime of Care
The first step is to name both short-term and long-term legal guardians. These trusted individuals will take custody of and care for your child in the event of your death or incapacity. If your child’s independence isn’t possible, your parenting responsibilities will extend beyond their adulthood.
Our clients find relief by naming legal guardians, knowing trusted people will care for their child. We create unique plans where guardians receive instructions designed to provide the same level of care that you would. For example, we can design plans that ensure guardians are engaging in activities your child enjoys, such as weekly outings to dinner and the movies. Without written instructions, such activities might be neglected if you are not there.
For guidance on selecting legal guardians and creating detailed care instructions, consult with us as your estate planning attorney.
Providing For Your Child’s Financial Future: Special Needs Trusts
Beyond naming legal guardians, you must provide financial resources for your child to live the life you desire for them. This can be challenging, as directly leaving money to a child with special needs might disqualify them from essential government benefits like Medicaid (MassHealth) and Supplemental Security Income (SSI).
A “special needs trust” can hold assets for a disabled child without affecting their public benefits eligibility. The rules for these trusts are complex, so it’s essential to work with our trusted attorneys to create an appropriately structured special needs trust for your child’s specific situation.
Setting Up the Trust
A third party must manage funds from a special needs trust, as they cannot be distributed directly to your child. Initially, you will likely be both the Grantor (trust creator) and Trustee (manager), with your child as the Beneficiary. You must then name a Successor Trustee to manage the trust upon your death or incapacity. To avoid conflicts of interest and overburdening the guardian, consider naming someone other than your child’s legal guardian as a Trustee.
Consider naming multiple Successor Trustees, which can include a trust company, bank, or professional fiduciary, as backups. There are two ways to set up a special needs trust:
- Within a Revocable Living Trust: The special needs trust arises upon your death, funded by assets in your living trust.
- Standalone Trust: This option allows the trust to receive and hold assets immediately, useful if relatives wish to make gifts sooner.
Ensure the trust has sufficient funds to last throughout your child’s life. Common methods include naming the trust as a beneficiary of your life insurance policy or encouraging family and friends to make donations or include it in their wills.
The Trustee’s Role
Once funded, the Trustee must use the trust funds to support your child without jeopardizing their eligibility for government benefits. This requires a thorough understanding of benefit eligibility and compliance with legal requirements. The Trustee is also responsible for managing taxes, keeping records, investing trust property, and staying attuned to the beneficiary’s needs.
Given these responsibilities, it may be wise to appoint a legal or financial professional as Trustee or Co-Trustee. Alternatively, we can advise your personal Trustee on managing the trust effectively.
Your Trusted Source for Special Needs Planning
For parents of children with special needs, our team at The Parents Estate Planning Law Firm offers trusted guidance in creating special needs trusts and other estate planning vehicles. We offer strategies tailored to your family’s unique needs, ensuring your child receives financial assets for a rich quality of life without losing government benefits eligibility. We also assist in appointing legal guardians and Trustees to ensure your child is protected and provided for as you wish. Contact us today to begin planning for your child’s future.
