Special Planning for Special Needs, Part I
Families who have children with special needs have very little exposure to the legal issues that surround planning for these children. Just as with any type of estate planning, unless we take control and make our own plan that fits our unique family circumstances, the state has its own backup plan for our families. And often, it's not what you would have wanted.
"Who will care for my loved ones when I'm gone?" is something every parent worries about. But for parents of special needs children, this worry can be even more acute.
For families of special needs children, planning for the future involves thinking about a lifetime of care like: where the child will live, if they will have adequate financial resources to support themselves, and who will be involved in their day-to-day care. Answering questions like these requires a comprehensive planning process called Future Care (or Special Needs) Planning.
Identify the Need for Future Care Planning
If your child is an adult with disabilities, you probably have a pretty good idea of both your child's abilities and what kind of assistance they will need. If your child is able to support themselves (including housing, health insurance, and basic needs), you may not need to engage in Future Care Planning, or may need it on a more limited scale. On the other hand, if your child is not self-sufficient, you'll need to put in place a comprehensive plan for their future care.
If your child is particularly young, you might not yet have an idea of whether your child will be self-sufficient as an adult. The best course is to make a plan now, building in contingencies to deal with the "what if" scenarios.
If you have a special needs child, the most important thing to consider when determining whether to engage in Future Care Planning is whether your child is going to be able to support themselves as an adult. If the answer is no, then you need to put in place a plan that will ensure your child will be taken care of for the rest of their life. Such a plan may include a Special Needs Trust, also called a Supplemental Needs Trust.
What Is a Special Needs Trust?
Public benefit programs, such as Supplemental Security Income (SSI), Medicaid, and Section 8 housing assistance, can provide basic necessities for persons with disabilities. But these benefits are what is called "means-tested," which means that a person is not eligible to receive these benefits if their income and assets are above certain limits.
Once a child turns 18, his or her income will be used to determine eligibility for these benefits. Too much income or too many assets will lead to the reduction or loss of these important benefits. But, funds paid into a properly drafted Special Needs Trust will not be counted as income, allowing the disabled individual to continue to receive public benefits. The funds in the Special Needs Trust are used to pay for things beyond the basic needs of housing, food, and medical care (such as schooling, vacations, home companions, electronics, custom wheelchair, or massage therapy), often resulting in a greatly improved quality of life.
Next week, I'll continue this discussion and talk about a very important distinction between the two main types of Special Needs Trusts and why it is critical that you know the difference.