Top 5 Estate Planning Tips for Parents of a Special Need Child
Developing a family plan in order to protect assets is vital in order to ensure a minor with special needs will receive government assistance. Families are often unaware of mistakes they are making or steps they have neglected to take when developing a family plan. It is important to follow these steps of what to do and mistakes to avoid when planning for a special needs child.
1. Form a Letter of Intent
It is important that parents draft a letter of intent to assist the trustee of the special needs trust in how to best execute the responsibilities and benefits to the child. A child with special needs often has daily needs and instructions that should be detailed in order to ensure they are properly cared for. This is often helpful if a caregiver needs to step in to help care for the child and needs to manage a child’s day to day activities. There are many sample letters of intent available, however an attorney can assist with this when developing a special needs trust as well.
2. Establish a Special Needs Trust
Although there are many options and approaches to planning for a child with special needs’ future, establishing a special needs trust is vital in order to protect their well-being and assets. If a child has available assets that can be assessed, this will affect their ability to obtain government benefits. Therefore, it is important that assets are allocated to a child’s established special needs trust, not the child individually in order to maintain their eligibility to receive government benefits. This type of trust can be established as a stand alone, or integrated into a parent’s will if the parent states the special needs trust, not the child individually, as the beneficiary. Choosing a trustee is also a decision that should be made carefully as they will have complete discretion to make distributions.
3. Remove child’s name from assets
The primary purpose of establishing a special needs trust is to ensure that your child will remain eligible to receive government benefits. This eligibility is based on a child’s available assets, therefore it is imperative to remove their name from any assets they have or will be made available to them in the upcoming future. A special needs trust allows the child to maintain their benefit of such assets however these assets are now held in a secondary source for the beneficiary, guarding them from denied eligibility of government benefits.
4. Consider a Life Insurance Policy
It is important to assess your financial situation and what you project the future needs of your child will be in order to maintain optimum health and well-being. Sometimes obtaining a life insurance plan is necessary in order to ensure your child will have adequate assets upon your death. An attorney can be helpful in evaluating and developing a plan that will optimize your family’s needs. If you decide to establish a life insurance policy and allocate a portion of the policy to your child, be sure the special needs trust is stated as the beneficiary, not the child independently.
5. Obtain Guardianship of Adult Special Needs Child
Often times a child with special needs may not be able to properly make decisions regarding their medical and financial needs. As a parent you should apply to be the legal guardian of their child in order to ensure you have the discretion to assist in their decision making once they turn 18. Without an established legal guardianship you will have no rights to make decisions for their well being on their behalf.
As an important stage in developing a plan for caring for a special needs child, and because each state differs in their requirements, you should consult with an attorney to make sure planning is done in the best and most efficient way possible. A successor guardian may be necessary as well to confirm a guardian to care for your child should something happen to you. The process of establishing a legal guardianship may be lengthy so it is best to begin the process as soon as possible.