Special Needs Planning
Protecting Your Loved One With Special Needs Planning
Planning for the care and financial support of family members with disabilities is paramount to ensuring their future is protected and their needs are met throughout their lifetimes. Planning can take different shapes depending on the disabled loved ones’ ages, benefits, and the types of support they need.
At Legacy APC, we often have clients contacting us with the following situations:
- Parents have a minor child with special needs who is turning 18. In this case, the parents need to be appointed as guardians or conservators to maintain decision-making authority for their child's medical and financial needs.
- A loved one who experienced an accident or injury and was granted a monetary award which needs to be preserved in a special needs trust to qualify for government benefits.
- A loved one went through a life-altering health event that caused their permanent disability.
- Family members need to preserve the quality of life and financial support for minor children who were born with or acquired a disability at a young age.
- A parent caretaker wants to ensure their adult child's special needs continue to be met after they pass away
Exploring the Benefits of a Special Needs Trust: Securing Your Loved One's Future
Regardless of the circumstances, when it comes to planning for the future of a loved one with a disability or special needs, a Special Needs Trust (also known as a Supplemental Needs Trust, or SNT) can be an invaluable tool. It allows individuals with disabilities to receive financial support without jeopardizing their eligibility for government benefits, such as Medi-Cal or Supplemental Security Income (SSI). Additionally, a Special Needs Trust provides a reliable source of funds to enhance the quality of life for your loved one.
Using a Special Needs Trust, families can set aside funds to be specifically used for:
- Their loved one's unique needs
- To pay for medical expenses and therapies
- Educational costs
- Housing
- Transportation
- Other essential needs not covered by public assistance programs
This type of trust offers peace of mind by appointing a Trustee who will manage and distribute the funds in accordance with your instructions. With this management technique, you can be assured that your loved one's financial well-being will be protected even after you are no longer able to provide care yourself.
First-Party, Third-Party & Pooled Special Needs Trusts
Depending on the circumstances of the disabled individual and from whom the funds are coming, your Special Needs Planning Attorney could recommend either a first-party, third-party, or pooled Special Needs Trust. All three are designed to manage funds and resources for the benefit of the person with special needs to preserve their public benefits.
First-party and pooled Special Needs Trusts hold the assets that belong to the trust beneficiary, while a third-party Special Needs Trust holds assets that were funded by a third party and that never belonged to the individual with special needs.
There are some advantages to choosing a third-party trust, such as allowing the person with special needs to:
Be the beneficiary of life insurance and receive benefits from retirement accounts
Be protected against government reimbursement for Medi-Cal benefits
Avoid court-supervision while the donor is still alive
Avoid beneficiary age-limit issues
Own real estate and investments
However, one disadvantage is that assets of a third-party special needs trust cannot be commingled with any of the beneficiary’s assets. Even so, most families wanting to support a family member with special needs should strongly consider a third-party trust. Our estate planning attorneys will discuss this and other options with you.
Exploring Conservatorship & Guardianships
Parents of minor children with special needs face the need for legal representation at various stages of their lives. This may be to:
- Preserve their rights and decision-making authority as their child reaches 18 years of age. This may be achieved through powers of attorney, guardianships, or conservatorships.
- Designate temporary and permanent guardians for their child with special needs, should the parent(s) become disabled or pass away. These designations should be part of the parents’ Last Will & Testament.
- Plan for and protect their child’s financial future with a special needs trust.
Remember, a conservatorship is a court process during which someone is named as a conservator. As a conservator, they obtain the right to make decisions on behalf of an individual who has experienced a disabling event and cannot make decisions on their own. If someone has a disabling event and has not done any incapacity planning or established powers of attorney, they may find themselves in court.
Creating Your Custom Tailored Holistic Estate Plan
Planning for the future of your loved one with special needs starts with planning for your own future and passing. Special needs planning should be a part of your estate plan, not handled separately.
It’s best to keep all documentation about special needs planning and your estate plan together. Why? Depending on your age, the age of your loved one with special needs, and the changes in your assets, you may find it critical to update your estate planning documents at multiple stages of your life. Having everything in one place will make doing so much simpler.
A holistic estate plan that includes special needs planning will help you:
- Select an agent to make health care and financial decisions on your behalf should you become temporarily or permanently disabled
- Select an appropriate guardian for your child if something should happen to you
- Avoid Probate at death
- Determine who the best person is to become your Successor Trustee and manage your trust assets and any remaining inheritances
- Choose who and how your assets will be distributed to your beneficiaries, including setting up a special needs trust for your loved one's benefit
- Protect your children with special needs from being disqualified from public benefits
How the Special Needs Planning Attorneys at Legacy APC Support Your Family
Parents who have children with special needs are often concerned about how their loved ones will be properly cared for after they are gone. Our team at Legacy APC understands that you want to do what’s right for your children. We’re here to provide guidance and counsel on how to best ensure your children’s continued care while preserving benefits, minimizing taxes, and protecting their inheritance(s) from other creditors.
You don’t have to shoulder the burden alone. We are here to provide ease, peace of mind, and experienced planning advice you can trust.
