Special Needs Planning – Part 1
11/3/2010 @ 11:19:AM By Moynihan_Lyons
There are unique planning requirements for families with children, grandchildren or other family members (such as parents) with special needs. However, a lot of misconceptions exist in this area that result in costly mistakes in planning for special needs beneficiaries.
In this post we will cover the three most common mistakes related to special needs planning.
Disinheriting the child. Many disabled people rely on SSI, Medicaid/Medi-Cal or other government benefits to provide food and shelter. Some parents may have ben advised to disinherit their disabled child – the child who needs their help most – to protect that child’s public benefits. However, these benefits rarely provide more than basic needs. Also, this “solution” does not allow the parent/s to help the child after the former becomes incapacitated or is gone.
When a child requires, or is likely to require, governmental assistance to meet his or her basic needs, parents, grandparents and others who love the child should consider establishing a Special Needs Trust. This tool can protect public benefits and care for the child during the client’s incapacity or after the clients’s death.
Procrastination. Because none of us knows when we may die or become incapacitated, it is important that you plan for a beneficiary with special needs early on, just as you should for other dependents such as minor children. However, unlike most other beneficiaries, a child with special needs may never be able to compensate for a failure to plan. A minor beneficiary without special needs can obtain more resources as he or she reaches adulthood and can work to meet essential needs, but a child with special needs may never have that ability.
Failure to coordinate a planning team effort. Ideally, an elder law attorney experienced in special needs planning should be a key member of the client’s planning team. Other important members of this group are: (a) a life insurance agent who can ensure that there will be enough money to maintain the benefits for the special needs child, (b) a CPA who can advise on the Specials Needs Trust’s tax return; (c) an investment advisor who can ensure that the trust’s funds resources will last for the child’s lifetime; (d) any other advisors (such as a care planning expert, if needed) that may support the goals of the trust going forward.
Posted Under: Estate Planning, Special Needs Trusts, Trust Administration
Tags: , Planning, Special Needs, Special Needs Trust