Are you the parent of a special needs child or the caregiver of a family member with special needs? Are you concerned about their future should something happen to you leaving you incapacitated, or ever what might happen following your passing? These are not uncommon concerns, even for those who are not parents. Even if you are a loved one with a family member who has special needs, these concerns are ever-present. What is going to happen? What can we do to prepare?

Special needs planning is a phrase coined for those who are unable to care for themselves. The reasons for their inability to care for themselves include children born with special needs, individuals who have developed mental illness, someone who has suffered from a paralyzing accident, or for elderly people who develop Alzheimer’s disease or dementia. All of these issues, as well as many others, require a plan to be put into place by their loved ones or their caregivers.

Special needs planning sometimes involve providing funds to your family member by means of an inheritance. While these plans are put into place with good intentions, it is often a bad idea. Why? The heirs are often met with financial difficulties as result of these inheritances. Meet with an estate planning attorney to help point you in the correct direction, as well as provide asset protection and financial security for your loved one.

Leaving a lump sum of money, like a life insurance policy for example, to your loved one is the easiest option. However, this is a big mistake. You will be putting their benefits, such as Medicaid, in jeopardy. They will not be able to make attempts to qualify for benefits again until all the funds left to them have been depleted. This is not a savory situation for anyone to be in.

When working with your estate planning attorney, they will help you utilize planning tools that will best serve your family member, as well as everything and everyone else involved on your estate. You must look at the entire picture, to include incapacity planning and who will take over guardianship for your loved one if you are their primary care. There are a lot of things to take into consideration, and as life goes on things are going to continuously change. Be sure your estate plan, including all special needs planning, reflect every change and is up to date at all times.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

If you’re child has problems, has become the black sheep of the family, or has other issues, you may think about disinheriting him.  However, disinheritance has life-long affects on this child, his siblings, his children (your grandchildren), your spouse, and your family as a whole.  You may not realize it, but disinheritance is a shocking and earth-shattering measure.  After all, money equals love in our psyches; and, your entire family may be pulled apart.

Governmental Assistance

Have you been thinking that you need to disinherit a special needs beneficiary because he is receiving governmental assistance?  You’re right that an outright inheritance will likely disqualify him and your assets will go down the drain; however, an inheritance in a special needs trust will not disqualify him.  Your assets can be used to pay for things above and beyond what the trust would pay for.

Addictions

Have you been thinking that you should disinherit your drug (gambling, alcohol, sex, etc.) addicted child?  You’re right to worry because an outright inheritance could make the addictive problem worse or even kill him.  Instead, pass assets to a trust for the benefit of your child; name an independent professional trustee who can distribute assets to help, but not hurt, your beneficiary.

Bad Marriages

Are you concerned that your daughter’s no good husband or your son’s greedy wife will get his or her hands on your assets if you pass them along.  With divorce rates at 50%, you have a right to be concerned.  However, you can pass assets in a protected trust that is accessible only for your child’s needs, not a spouse’s.  If the spouse isn’t good to your child, he or she gets nothing.

Estranged Children

If your child is estranged and you have no contact, it’s understandable that you may consider disinheritance; however, realize that this will have a life-long effect on your child and all of his relationships, including those with his siblings, children (your grandchildren), and your spouse.

If you’re going to go ahead with the disinheritance, tell your child during your lifetime and explain why.  Sometimes the relationship is healed because the lines of communication are opened and because the child gets a financial wake-up call.

In other cases, your child will know why you’re making the disinheritance decision and know that it’s your decision, not his siblings’ decision.

There are many alternatives and you may not have to disinherit a child.  If you are being challenged by one of your children, consult a qualified estate planning attorney.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

If you are the parent of a disabled child, or if you help  support a loved one with special needs, a special needs trust can be an effective – even essential – tool. Special needs trusts help to ensure that your loved one’s Medicaid or Supplemental Security Income won’t be jeopardized by an inheritance or, in the case of a disability caused by someone else’s actions – by a personal injury settlement.

Strict Rules

In order for a special needs trust to protect a disabled person’s benefits, the trustee appointed to manage the trust has to follow some pretty strict rules. Trust funds can only be used for specific purposes, and failure to follow the rules can mean that a beneficiary loses much-needed public benefits.

Who Should Serve as Trustee?

When you have a family member or friend who is trustworthy, capable of effectively managing a special needs trust, and willing to do so, there’s not much to worry about. But what if no one close to you fits that description? Often, families choose an institution, like a bank, to serve as trustee. This works out well for many families, but for some, the administrative costs can be too high or the trustee can seem less-than-responsive.

How a Pooled Trust Can Help

In this situation, a special kind of trust, called a pooled special needs trust, can be an effective option. A pooled special needs trust is run by a nonprofit organization, with a board of directors made up of volunteers. It’s called a “pooled” trust because the funds of several different beneficiaries are combined to provide for greater investment potential. However, even though trust funds are pooled in this manner, each beneficiary has a separate, individual sub-account.  A pooled special needs trust can offer a number of advantages, including:

• Lower administrative costs than a traditional institutional trustee
• Administration of trust assets by people who are knowledgeable about the special needs trusts, and sensitive to the unique needs of their beneficiaries.
• Often, there’s no minimum required contribution

Which type of special needs trust is right for you and your family? A qualified estate planning attorney can help you determine this.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

Think about all the details you know about your child and his or her life. As the parent of a child with special needs, there are some things that only you know. And, if you weren’t there, that information would be lost. What impact would that have on your child’s life?

A care plan can ensure that all the important information about your child, down to the smallest detail, is communicated to his or her guardian or trustee. Often done in the form of a Letter of Intent, a care plan is simply a written document that lets your child’s future caretaker know all of your concerns, wishes and desires for your child. What does it include?

It explains your child’s social, educational, medical, emotional, and financial needs. It also lets your child’s guardian or trustee know how capable your child is of taking care of each of these needs on his or her own, and what kind of additional help is necessary. A good care plan paints a detailed picture of your child’s needs and abilities, and can be broken down into categories, such as:

• Family History
• Medical History
• Educational History/Status
• Important Contacts
• Personality
• Daily Routines and Habits
• Personal Preferences

Your estate planning attorney can help you establish a care plan for your child. And, once it’s established, your plan should be updated regularly and stored in a safe place, along with your other estate planning documents.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.

If you’re the parent of a child with special needs, and your child receives government benefits because of his or her disability, then simply leaving an inheritance to your child through your will is not enough to take care of him or her. In fact, planning your estate in this way might do more harm than good.

Why? Because, as you know, your child is only allowed to have very limited assets. So, even if you leave him or her a small inheritance, say, $5,000, your child can lose essential benefits from the government. What happens is that the benefits stop while your child’s inheritance is spent on the things that Medicaid or SSI would normally cover. Then, when the inheritance is spent down, your child’s benefits resume.

What’s the biggest problem with this scenario? With a will, there’s no way for you to ensure that your child’s future involves care and comforts that aren’t provided by Medicaid or SSI. Most parents, during their lifetimes, provide a whole list of extra creature comforts and opportunities for their special needs child. With a will, there’s no way to make sure your child gets all of these “extras” once you’ve passed away.

The solution? A Special Needs Trust. This is a trust that’s established in strict compliance with the law, so that, after you’re gone, your child can continue to receive comforts, education, and other experiences that are above and beyond the basics covered by government benefits. With a special needs trust, your child does not receive a direct inheritance. Instead, the inheritance goes into the trust, and the trustee manages the inheritance on behalf of your child. So, your child can continue to have things like his or her favorite toiletries, extra medical care, educational materials, or vacations.

A word of caution: because of government regulations, you should get the help of an attorney experienced in Special Needs Trusts to make sure your child is protected. These trusts have to follow very specific rules, and one mistake can mean that your child essentially loses his or her inheritance.

The Mendel Law Firm, L.P. is a member of the American Academy of Estate Planning Attorneys.