30 Jun Estate Planning for Families with Special Needs Children

Estate planning is a vital process for every family. But it is especially important for families with special needs children, because they face unique challenges. Careful planning can help you provide for your child’s future in the best way possible, and ensure they stay eligible for the benefits they need. Here’s how to begin the estate planning process when you have a special needs child.

Special Needs Estate Planning: Five Essential Steps

Step 1: Establish a Special Needs Trust

Whether your child is a minor or an adult, leaving them an inheritance will give you peace of mind about their financial protection after you’re gone. However, leaving money to your child outright can actually disqualify them from receiving important government benefits. 

Medicaid, Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP), and other benefits require a low income to qualify. If you leave a special needs child an inheritance, it could put them over the limit.   

You can provide for your child without affecting their income by leaving their inheritance in a Special Needs Trust (SNT). Anyone can establish a special needs trust, including someone with a disability. However, they must establish the trust before its beneficiary turns 65 years old. 

The assets in the SNT are controlled by a trustee, who will distribute them to the beneficiaries according to the grantor’s wishes. However, the funds can only be used for things that can not be paid for with government benefits. According to federal law, the assets in a Special Needs Trust cannot be used to pay for food or shelter without incurring a penalty. 

Step 2: Choose the Right Trustee

It’s crucial that you choose a trustworthy trustee who can manage and sustain the Special Needs Trust on behalf of your child. Before choosing a trustee, you should explain to them what it means to oversee a trust, as well as how misusing the funds can put your child’s benefits at risk. 

Most people choose a parent or sibling as trustee. But an experienced attorney, a trusted financial institution, or a non-profit organization that assists people with special needs are also good choices. 

Step 3: Designate a Guardian and Caregiver

In addition to financial support, you also need to consider your child’s health and wellbeing after you’re gone. If your special needs child is a minor, you must write a will that designates a guardian and/or caregiver. 

Choose someone who understands your child’s specific needs and who respects your values to ensure your child will get the care, support, and advocacy they need. If you wish, you can also appoint a guardian or caregiver for a special needs person of any age.

Step 4: Name Your Power of Attorney

As the parent of a special needs child, you likely already know about power of attorney, and you might even be one yourself. But it’s very important to appoint your own financial power of attorney (POA) to protect your child if you die unexpectedly. 

Because a financial POA is legally authorized to make financial decisions on your behalf if you die or become incapacitated, you can dictate that they use your funds to care for your child. A POA can even create and fund a Special Needs Trust using your assets.

Step 5: Regularly Review and Update Your Plan

Estate planning isn’t a one-and-done task. It’s essential to review and update your estate plan regularly to account for any changes in your or your child’s circumstances, financial needs, or legal requirements. 

Revisions can include updating beneficiary designations, trustee appointments, guardian or caregiver designations. You might also need to make a few adjustments to account for changes in government benefit programs. Your estate planning attorney can help you with all of these tasks, and advise you on the best steps to take to secure your child’s future.

Arizona Special Needs Trust Attorney

Estate planning for families with special needs children requires careful consideration, so it’s a good idea to consult a qualified professional. The Phelps LaClair team has over 40 years of experience creating and managing Special Needs Trusts and helping Arizona families protect the ones they love. If you’re interested in setting up a trust, give us a call at 480-892-2488 to schedule a free consultation. 

Images used under creative commons license – commercial use (6/30/2023). Photo by Nathan Anderson on Unsplash