Estate Planning for Children and Adults with Special Needs

October 4th, 2023 by Legacy Wealth Planning

As you go through life, planning for life’s unpredictability is essential. If your family has children or adults with special needs, estate planning for their future care becomes vital. Estate planning for them is unique as it needs provisions in the plan to help ensure their independence and ongoing care when you are no longer around. Estate planning isn’t just about cash and properties; it’s also about ensuring your loved one can maintain the same quality of life in your absence.

Estate planning for a child or adult with special needs takes research and legal and financial professionals and should focus on what the child can do versus not do as they age. Everyday things to consider in estate planning for a child or adult with special needs include:

  • Will they live independently or need around-the-clock care in a facility?
  • Will they be able to work at least part-time?
  • Is Medical Assistance or Medicaid likely to cover them as adults, or will the parent’s private medical insurance?
  • Should a guardian be named now and again after they become an adult?
  • Is an estate plan covering care the best option for care directives?

As you start estate planning for your special needs family member, here are some things to consider:

1.  Assessing individual needs. Your assessment must consider what they can and cannot do now.
Considering living arrangements, medical needs, and long-term support systems is crucial. You must address your loved one’s needs to help ensure they can lead a fulfilling life even when you aren’t around to provide for them.

2. Understanding the resources available. It is essential to know what government benefits are available and the private resources you can allocate for their future care —for example, knowing if your private health insurance will cover ongoing medical expenses or if government programs will cover them.

Children with special needs can receive Supplemental Security Insurance (SSI) benefits when they turn 18, which assists with housing, utilities, and food if the child’s assets are under $2000, even when living with their parents. Often, parents use this benefit as part of their monthly budget for caring for them. However, SSI benefits go away if they have a job earning over $2000 a month or are the beneficiary of a fund set up for their care with a value exceeding that limit.

3. Drafting legal documents. Often, families with a special needs family member draft a Special Needs Trust since it can safeguard their independence without interfering with their eligibility for public assistance. Working with a legal professional specializing in special needs planning would be best to help ensure you aren’t overlooking anything critical.

A Special Needs Trust provides for your loved one without risking their eligibility for government benefits. Instead of directly depositing money into their accounts, the Special Needs Trust pays for goods and services for their care. Think of the Special Needs Trust as where you leave instructions on spending money to help purchase what is needed for their care.

4. Appointing a trustee. This person or institution will work to uphold your loved one’s interests, manage the trust, and dispense the funds according to your instructions. It’s also crucial that the trustee knows your loved one and checks on them to ensure they are well cared for.

Estate planning for children and adults with special needs can be challenging because it’s often a labyrinth of legal documents, strategic planning, and emotional decisions, and it takes time. Be thoughtful in preparing your estate plan because it’s for someone you care about that relies on you for their well-being. Financial, insurance, and legal professionals can help you prepare the estate plan and financial assets you leave behind to care for your special needs family member.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by Fresh Finance.

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