Estate planning by parents who have children with special needs involves many challenges, including the following:

  • How do you leave funds for the benefit of the child without causing the child to lose important public benefits, such as Medicaid and SSI?
  • How do you make sure that the funds are well managed?
  • How do you make sure that your other children are not over-burdened with caring for the special needs sibling, and that any burdens fall relatively evenly among the siblings?
  • What is fair in terms of distributing your estate between your child with special needs and your other children?
  • How do you make sure there’s enough money to meet the needs of your child with special needs?

Often, parents of children with special needs try to resolve these issues by leaving their estates to their other children, leaving nothing to the special needs child.  They have a number of reasons for this approach:

  • The disabled child shouldn’t receive anything because she can’t manage money and would lose her benefits.
  • She doesn’t need any inheritance because she will be taken care of by the public benefits she receives.
  • The other children will take care of their sibling.

At our firm, we discourage this approach for a number of reasons.  First, public benefits programs are often inadequate. They need to be supplemented with other resources. Second, both public benefits programs and individual circumstances change over time. What’s working today, may not work tomorrow. Other resources need to be available, just in case. Third, relying on one’s other children to take care of their sibling, places an undue burden on them and can strain relations between them. It makes it unclear whether inherited money belongs to the healthy child to spend as he pleases, or whether he must set it aside for his sibling with special needs. If one child sets money aside, and the other doesn’t, resentment can build that may split the family forever.

The better answer to many of these questions is to engage in special needs planning.  Special needs planning may include commencing a guardianship proceeding if your child with special needs is not capable of executing a power of attorney, living will, and health care proxy.   Special needs planning should also include a discussion about creating a “Special Needs or Supplemental Needs Trust.”

What are these “special needs”? A special needs trust can pay for the kinds of things that a parent would just reach into his or her pocket to cover.

These trusts typically pay for things like education, recreation, counseling, and medical attention beyond the simple necessities of life. The trustee can use trust funds for food, clothing, and shelter, if the trustee decides doing so is in the beneficiary’s best interest despite a possible loss or reduction in public assistance.

Here are some examples of expenses that a special needs trust might cover:

  • Medical and dental expenses not covered elsewhere
  • Special equipment like wheelchairs or specially-equipped vans
  • Therapy or rehabilitation services
  • Training and education
  • Travel, which can include the cost of a companion
  • Recreation and entertainment (summer camp, movies or social events, videos, sports equipment)
  • Electronic equipment and appliances, computers
  • Payments for a companion
  • Legal or guardianship expenses
  • Insurance
  • Burial expenses

For more information about special needs planning in general and special needs trusts, schedule a strategy session with our firm.