At its heart of estate planning for beneficiaries with special needs is the special needs trusts (SNT). SNTs allow you to provide your beneficiaries with an inheritance while allowing them to maintain eligibility for public benefits they need. Assets in SNTs do not count toward the asset limit imposed by government programs. You can choose a Trustee to manage the inheritance for your child and make distributions to supplement your child’s benefits. Below are five things to consider to provide peace of mind when you have a disabled beneficiary.
1. Create a Special Needs Trusts (SNT). Parents and grandparents can create trusts for their special needs children or grandchildren with the assistance of an estate planning attorney with expertise and experience in planning for beneficiaries with special needs. This is preferable to leaving money directly to the beneficiary because SNTs provide long-term management of the inheritance you leave to disabled beneficiaries while allowing them to qualify for needs-based government benefits. Special needs trusts can pay for and supplement medical and travel expenses, entertainment, pet care and other expenses that can enhance a beneficiary’s quality of life especially when you are no longer around. You would name a Trustee to manage funds in the Trust. The person you name as Trustee could be a professional or a trusted family member.
2. Learn About the Types of SNTs. First-party trusts hold assets the beneficiary owns, for example, from inheritance or lawsuits. When the beneficiary dies, the funds remaining in the trust must be used to reimburse the government for services the beneficiary received. Parents with a disabled child often establish third-party trusts. These trusts are created and funded by someone other than the beneficiary. The advantage is that any funds left when the beneficiary dies can be distributed to contingent beneficiaries such as other siblings. Special needs trust assets do not have to pay the government for services received.
3. How Much Money Do You Leave for a Beneficiary? The amount a child needs depends on a family’s needs and lifestyle and a child’s abilities. Housing can be a large unknown. Group homes may require purchase of a condominium unit in a building with services for special needs, and monthly costs will apply for food, utilities and staff. Families may also want to budget eating out weekly, technology (for example, an iPad every couple of years) or gym memberships. When parents die, costs increase because a social worker must be paid to coordinate care and advocate for the beneficiary. Another consideration is legal fees. Family members who serve as the sole Trustee of a special needs trust should consult attorneys to guard against actions that may jeopardize benefits.
4. Appoint a Guardian and/or Conservator. When special needs beneficiaries need to have a legal guardian and/or conservator, a probate court proceeding is required. A guardian for a beneficiary with special needs is responsible for decisions about medical care and living arrangements. A conservator is responsible for your beneficiary’s property and finances. Any person serving as a guardian or conservator should name successor guardians and conservators in their Will. A court will need to appoint the guardian named in a Will to make decisions for your child. Responsibilities may include those below, so great care should be taken in deciding who to appoint to these important positions.
- Applying for public benefits including those from Social Security
- Advocating for your child’s rights and best interests
- Safeguarding your child’s finances and consulting with physicians
- Making decisions regarding treatment and placement
- Releasing medical records for Social Security and health insurance
5. Write a Letter of Intent. Parents of children with disabilities should write letters of intent. A letter of intent provides Trustees, guardians, advocates and caretakers guidance about your child’s abilities, routines and interests and your child’s likes and dislikes. The letter should include at least the following:
- Education – regular and special education needs, services, programs and providers
- Final Arrangements – cremation or burial; family plots; religious services and clergy
- Residence – group home or community preferences, size and arrangements for a child
- Healthcare – doctors, therapists and hospitals; frequency and purpose of appointments, medications taken in the past and currently and whether they worked
Keep these things in mind when thinking about your family member with special needs and consult with estate planning attorney who has expertise in special needs planning to advise you about these important matters.
Natalene B. Ong, Esq. is an estate planning attorney at Samuel, Sayward & Baler LLC, a law firm in Dedham that focuses on advising clients in estate planning, special needs planning, estate and trust administration and elder law. For more information, visit www.ssbllc.com or call (781) 461-1020. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney.
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