| All parents have certain considerations which must be | | | | intent. Therefore, it is vital that the trustee be well |
| carefully accounted for when crafting their estate | | | | versed in estate planning law as well as the rules |
| plans. Estate planning however becomes even more | | | | governing the social security administration and the |
| complex and important when mental illness or disability | | | | various state counterparts. The trustee should also |
| impairs their child's ability to care for themselves. In | | | | communicate regularly with the beneficiary and be the |
| particular, parents of special needs children must craft | | | | "point person" coordinating the efforts of doctors, |
| a plan that provides for the children's financial needs | | | | financial advisors, therapists, and government agencies. |
| without disqualifying them for valuable government | | | | The funds in the trust must be prudently spent on |
| benefits. They must also provide a guardian who will | | | | items to enhance government benefits but must never |
| manage the assets left to the children if the children | | | | appear to be replacing them. |
| are unable to manage their own affairs. | | | | Special Needs Trusts |
| Special needs children and their unique estate planning | | | | There are many types of trusts and trust-like |
| requirements present a large and growing market. The | | | | arrangements. However, the special needs trust |
| US Census Bureau reports that 10% of American | | | | stands out as the best option for managing the assets |
| Families have a special needs child with an physical, | | | | of special needs children while preserving the child's |
| emotional, or mental disability. Sixty percent of parents | | | | eligibility for government benefits. Since 1993 Congress |
| expect that these children will never be financially | | | | has allowed individuals under age 65 with special |
| independent. These families will have to bear significant | | | | needs to have trust funds set up with their own |
| financial costs on behalf of their special needs children. | | | | money and still have access to government benefits |
| These costs, associated with housing, basic living | | | | such as social security. These assets usually come |
| needs, and medical care are likely to endure | | | | from legal settlements or inheritances. This is a huge |
| throughout the child's lifetime. What may be most | | | | economic advantage for special needs individuals. As |
| startling is that over 60% of these parents have not | | | | long as the trust assets are controlled by an |
| taken any steps toward planning for the child's financial | | | | independent trustee, the assets are not considered to |
| future. Many have not even written a will. | | | | be owned by the special needs individual and |
| Eligibility for Government Benefits | | | | therefore would not prevent them from qualifying for |
| The consequences of failing to plan for the financial | | | | government benefits. The key here is that the trust |
| well being of a special needs child can be "life altering" | | | | distributions are discretionary and that the trust |
| according to Nadine Vogel Vice President of MetLife's | | | | beneficiary can not simply spend the money at will. |
| division of estate planning for special needs children, | | | | Other Considerations |
| and mother of two special needs daughters. Vogel | | | | Parents of special needs children should also create |
| adds that "It's not about lifetime care, but about quality | | | | detailed documents for finances or healthcare. Known |
| of life." For example: A disabled child, or an adult | | | | as power-of-attorney or healthcare proxies, these |
| disabled since childhood, might be entitled to receive a | | | | documents can empower a parent or guardian to |
| monthly Supplemental Security Income (SSI) check | | | | make healthcare or financial decisions for their adult |
| from the Social Security Administration. This monthly | | | | children in the event they are incapable of making the |
| income could range from several hundred dollars to | | | | decisions for themselves. Without these documents |
| several thousand dollars each month. The effect of | | | | parents may not be able to get timely access to their |
| any inherited assets on the child's ability to receive | | | | children's financial or medical records or take swift |
| State or Federal benefits can be extreme. An individual | | | | action on their children's behalf. |
| could completely loose eligibility for this and other | | | | It's also a good idea to create detailed instructions for |
| benefits, if he or she is left an inheritance as small as | | | | that person who will care for the special needs child |
| $2000 from the death of a parent. Such a result would | | | | once the parent is no longer able to do so. These |
| be disastrous and the total opposite of what was | | | | so-called "letters of guidance" leave specific |
| intended when assets were left to the disabled family | | | | information on the child's diagnosis, treatment history, |
| member. | | | | and medications. Information on the child's likes and |
| Guardian of the Assets | | | | dislikes such as food preferences and favorite past |
| The only way to ensure that assets left for a family | | | | times should also be included. Michael Gilfix, a California |
| member who is unable to manage their own finances | | | | estate planning lawyer writes that the parent knows |
| due to mental, physical, or emotional disability may be | | | | things about their children "that nobody else on earth |
| to place them under the care of a qualified | | | | knows... "This includes little things, like what breakfast |
| professional who will manage and conserve the | | | | food makes them happy or what breakfast food |
| assets for the beneficiary. The key here is selecting | | | | makes them really angry." These quality of life |
| the right trustee. The trustee must walk a tight line in | | | | considerations could mean the difference between a |
| preserving the trust assets, providing for the | | | | basic existence and a lifestyle closer to that which the |
| beneficiary, and maintaining the beneficiaries eligibility | | | | parent would've provided themselves. After all, that's |
| for government programs. Excessive distributions from | | | | what estate planning for special needs children is all |
| the trust could reduce or eliminate eligibility but a | | | | about. |
| trustee who is too frugal would frustrate the parent's | | | | |