An estate plan is a living document, and it can feel just as complex as any other living thing. It is a multi-faceted way to address your values, your legal and medical wishes if you become incapacitated, what will happen to your assets when you die, and so much more.
If you have a spouse, child, or loved one with special needs, your estate planning documents play an essential role in his/her long-term care plan.
Take Extra-Care When Creating an Estate Plan for Special Needs
When a client comes to us and they are the primary care providers for someone with special needs, we start right there. The steps required to address all of the potential outcomes, and to ensure your loved one will be safe, loved, and provided for becomes our top priority.
For many clients, establishing a plan to take care of a special needs dependent is the starting point; once that plan is in place, we can work to meet the rest of your estate planning needs and wishes.
There are several steps you should take to begin moving forward with estate planning for dependents with special needs or care requirements.
Understand the estate plan’s purpose
Obviously, this point is specific to your loved one’s special needs or situation. However, there are several, general points included in most estate plans designed to provide for another’s care:
- Lifetime money management to accommodate housing, care, daily living expenses, spending money, medical insurance, and equipment, etc.
- Protect his/her ability to remain eligible for relevant public funds and services if that is important to you (especially if the dependent’s relationships, friendships, and sense of community are established via a public service, residential care, activities, etc.)
- Making a plan to accommodate “what ifs” in case those aforementioned funds and services cease to exist or change their parameters in the future
This requires big-picture, long-term thinking, and planning. Established attorneys with experience in special needs estate planning can be a tremendous help. We help clients consider scenarios we’ve seen from experience, that you may not think about or plan for otherwise.
Have a family discussion
Once you’ve established a clearer purpose, you should have a discussion with the immediate family, extended family, and other relevant helpers, caregivers, or care providers. While the overlying goal is the long-term care plan for your loved one, there are multiple aspects associated with that.
- What are your wishes?
- If your loved one can speak for him/herself – what are his/her wishes?
- What role do you see others playing in your dependent’s long-term care?
- What can others unequivocally commit to and honestly let go of?
- Who will be the trustee? Choosing your trustee(s) is always an important consideration, especially so if someone else’s well being is wholly dependent on the trustee’s ability to do the job well when the time comes.
From there, you can create a more realistic and comprehensive estate plan with your estate planning attorney.
Review the estate plan regularly
It is always important to revisit your estate plan on a regular basis, adjusting it to meet where you are at in the current moment. Life changes pretty quickly, and outdated estate plans are confusing, less efficient to settle, and more apt to be challenged in court. Therefore, if your estate plan includes providing for someone else, review it annually without fail to ensure the provisions you’ve made are still resonant, and that the people, places, and accounts you’ve established for them are still relevant.
Evaluate whether you need to take “drastic measures” or not
Sadly, there are public funding loopholes that can stymie the wishes of those with a more modest estate – which accounts for the large majority of the American public. As a result, some families take more drastic measures to protect the ability of their special needs loved ones to receive public benefits.
We call them “drastic measures,” because on paper they seem extreme, but the end-goal is a heartfelt and sincere intention to ensure our loved ones get the best care possible.
This could include things like:
- Disinheriting the person with special needs. If you set up a trust/fund for the individual, you could prevent him/her from qualifying for public funds or services s/he needs. By disinheriting the individual, you may actually put him/her in a better position to receive certain benefits.
- Passing the entirety of the estate to siblings. If you can implicitly trust the intention of siblings or other family members, you have the option to pass the entirety of the estate to them. In this case, there are very clear guidelines around what the care expectations are for your child or loved one with special needs.
- Leave him/her his own inheritance. This can be extreme if the amount may compromise the individual’s ability to receive public funds. That said, if you’re confident that the inheritance and established care plan supersedes anything else that would be possible down the road, this may be an option. This can also be risky if your loved one’s condition makes him/her less capable of making responsible financial decisions – or if a medical diagnosis means s/he may experience cognitive impairment later on.
Learn about a Special Needs Trust
Just as there are trusts designed specifically for charities or tax benefits, there are Special Needs Trusts designed specifically for that purpose. A properly drafted special needs trust should serve as an “and” rather than an “or” when it comes to balancing your loved ones need for financial protection in collaboration with public services or funding options.
These trusts have limitations in that the individual and/or the trustee can only withdraw so much money at any given time, to respect the financial parameters by which public assistance is granted.
Special needs trusts can be set up to be activated upon your death or they can be established while you’re still alive, in which case they live under the living trust umbrella. This option offers the benefits of:
- Avoiding probate
- The creation of a trust that allows others’ contributions such as grandparents, aunts/uncles, or siblings as they begin to work and earn money of their own
- The ability of the established trustee to “practice” and learn about how the trust will work if/when you are no longer the administrator.
Your estate attorney will also discuss whether it makes more sense for your Special Needs Trust to be revocable or irrevocable, each offering its own pros and cons.
Would you like to begin a conversation about how to begin estate planning for dependents with special needs? Contact us here at Tseng Law Firm. Our consultations are always no-obligation. Clients have the option to work on a fee-based level to become educated around estate planning and special needs trusts, knowing we’ll be here for you whenever you are ready to begin drafting yours.