Estate Planning Tools for Families with Children with Special Needs

Posted by Cheri Dorsey in Advance Directives, Beneficiaries, Estate Planning, Guardianship, Powers of Attorney, Special Needs Planning, Trusts
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Parents and guardians of children with special needs are keenly aware that they must take extra precautions to ensure that their child will continue to live happy, healthy, and fulfilling lives after the parent or guardian passes away. To imagine a child with special needs carrying on without their current support system can be difficult and emotional for parents and guardians, but proper estate planning can help smooth the transition.

In honor of Autism Acceptance Month, we are sharing some essential estate planning information and options for families with children with special needs.

Get Your Documents in Order

As you are likely aware, children with special needs require different levels of care depending on their age, abilities, and strengths. The individual child’s specific needs will continue to change meaning that flexibility and planning for change are key considerations when planning for the passing of a parent and primary caregiver. Regardless of the level of care required for a special needs child, parents should make sure that the following documents are in order and up to date:

A Last Will and Testament that outlines how your assets will be distributed after you pass and who will oversee the process is often critical. If your child with special needs is under the age of 18, your Will should also include a clause naming who you want to act as guardian for your child while they are a minor. While the appointment of a guardian is ultimately a decision for the Court, a provision in a parent’s Will is often favored if not immediately followed.
A durable power of attorney that outlines who will make certain legal and financial decisions regarding your child and/or an appointment of “standby guardian” naming someone to other legal and medical decisions on behalf of a minor child are important documents if you are incapacitated. You can also add specific instructions to your own medical power of attorney which outlines the extent to which your child is informed of your condition if you are ever hospitalized or incapacitated, and how or whether you would want your agent to arrange visitation during your incapacity.
For special needs children over the age of 18, depending upon their abilities and understanding, you may want to discuss having your child create a power of attorney, an appointment of healthcare agent, and an advanced directive to protect their interest and preserve their rights. Supported decision-making agreements are gaining prominence in many states, and the Maryland legislature is currently considering adopting similar legislation to recognize these agreements.
A letter of intent outlines your child’s current needs (including their medical, social, and educational needs), the key people in their life, any goals you and/or your child currently have for the future, and how you would like for care to continue for your child in the future. While this letter is not legally binding, it is an important tool that communicates your intentions and expectations to future caregivers and should be revised as circumstances change.

You will also want to collect important documents for your child and store them in a safe and accessible place such as any legal forms of identification – including state ID, passport, birth certificate, and social security card – medical records and diagnostic information, any educational documentation from an Individualized Education Program (“IEP”), and any information and/or decision letters on benefits programs which your child receives or may be entitled to in the future.

Consider a Special Needs Trust

Consider what it would take for your special needs child to receive the highest quality of life possible after you pass. A special needs trust may be able to help you reach your goals and guarantee long-term support for your special needs child while protecting the assets from creditors and preserving your child’s right to receive benefits that are subject to or determined by income-level or asset-based testing.

A special needs trust is commonly created to provide future financial security and cover the cost of expenses that fall outside the scope of any state and federal benefits that your child might receive now or in the future. Special needs trusts can hold all manner of financial assets, property, and life insurance policies which can be used for your child’s benefit to whatever extent their needs are not met by any public benefits they may receive.

Special needs trusts are not owned or operated by the child, and instead require a Trustee to manage and monitor the distribution of assets. In addition to trusted relatives and attorneys, non-profit organizations with experience caring for children and adults with special needs are often chosen to act as Trustees in these situations. There are several options that may be available to you and/or your child to protect your child’s finances and any eligibility for benefits.

Explore Other Options

Parents and guardians who wish to forego the creation of a special needs trust, especially when their child has greater cognitive and social skills or abilities, may plan for their special needs child to receive an inheritance directly. However, knowing that circumstances can change, it is important to remember that while your child may not be eligible for certain public benefits now, it does not mean that they would not need these resources in the future, and a child with special needs who receives a large inheritance or financial gift outside of a trust may struggle to qualify for certain public assistance benefits at a later time, such as SSI and Medicaid.

Parents and guardians also at times consider leaving their estate to a neurotypical sibling of a special needs child with the understanding that the sibling will become the primary caretaker. While entrusting the care of a special needs child with a responsible sibling may protect your special needs child’s eligibility for public assistance benefits, the sibling may not be in the best position to manage the assets. Additionally, leaving the assets to one child outright means that the inheritance may be subject to creditors or your neurotypical child may have other financial concerns that could jeopardize the assets.

Schedule Time With an Estate Planning Attorney

To learn more about a special needs trust, as well as other options for long-term care and planning for a child with special needs, consult with an experienced estate planning attorney. The right estate planning attorney can help families determine whether a special needs trust is the best option for their current needs. An estate planning attorney can also provide advice on whether the trust should be established as revocable or irrevocable, depending on factors such as income tax and control over asset distribution.

Your child deserves the comfort of knowing that their needs will be met and their wishes respected after you are gone, even if the prospect of losing you is difficult to accept. Now is the time to make the proper preparations for whatever the future may hold, both for the sake of your child and your peace of mind.

At Sessa & Dorsey, we consider the bigger picture at hand and advise our clients on the best estates and trusts for their specific needs and desires. If you have questions, please contact us at (443) 589-5600.

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