Understanding the Importance of Special Needs Planning

Planning is paramount for a family with a member who has special needs. This cannot be stressed enough. In addition to the day-to-day planning (education, socialization, encouraging independence, medical needs, etc.) extensive preparations are necessary when planning for the financial future of the disabled family member. Distinguishing the various forms of public benefits a disabled individual may be receiving or become entitled to is incredibly important.

Most families with members with special needs express that they want the disabled individual to live as independently as possible. From my experience working with families who are planning for a member with special needs, they understand that one day they may not be able to support their loved one, whether it be financially, emotionally, or physically, so being prepared with a well-drafted estate plan can be vital. But what happens when a family member becomes disabled later in life?

Planning for the Unexpected: Incapacity

Disability or incapacity can happen to anyone, at any time. This is a frightening thought, though this post is not meant to scare anyone, simply to make the reader think.

One of the best ways to be prepared for an unexpected incapacity, in my legal opinion, is to have well-drafted, up-to-date power of attorney documents in place. These documents will allow someone you trust to step in and make decisions for you without the need for court involvement. These documents ensure that someone is legally able to see that your bills will continue to be paid, you will be somewhere where you can receive the care you need, and medical decision can be made on your behalf. To learn more about power of attorney documents, please click here.

Protecting Assets in the Trust

99 times out of 100, when you speak with someone regarding their estate plan and they tell you they have a trust, they have a Revocable Living Trust. This is the standard trust that says ‘when I die, I want my assets to go to X, Y, and Z equally (or something to that affect). However, this type of trust does not provide any protections if Z becomes incapacitated and entitled to receive government assistance, such as Medicaid or Social Security Disability.

In order to provide protection for these types of benefits, a trust must be purely discretionary. This means that the trustee retains all power over the assets and distributes them only in ways that will protect the beneficiary’s government benefits. Since we cannot always know when someone will become incapacitated, I always incorporate a clause in my Revocable Living Trust known as a sub-trust. This sub-trust is a separate trust that catches the assets of a disabled beneficiary and holds them under discretionary terms, ensuring protection of any government benefits.

While this is not a novel concept, it is not typically practiced. This is an example of the many ways I go above and beyond to protect my clients and their families. I try to plan for as many possible scenarios as I can, anticipating possible changes in the future to avoid having to make multiple changes and amendments.