What Do You Need To Think About in Your Estate Plan For a Special Needs Beneficiary

mother teaching her special needs daughter

If you are a parent, grandparent, or loved one who cares for someone with special needs, you should consider your estate planning. Many aspects of your estate plan could impact a special needs beneficiary. When an estate plan involves a special-needs beneficiary, there is more to the process than document drafting skills. The process will require navigating the confusing aspects of government benefit eligibility.

Envision the Life You’d Like Your Loved One with Special Needs to Enjoy For Your Estate Plan

Thinking about your loved one with special needs living his or her life after you’re gone can be emotionally challenging. However, it’s an essential step in the estate planning process. As the caretaker of an individual with special needs, you know what your loved one needs to thrive. As you contemplate your estate plan, consider where your loved one will live and who will make sure he or she is happy and taken care of on a day-to-day basis. You should also consider what services will be available for your loved one and how your loved one will pay for these services.

Evaluate How You’d Like to Divide Your Assets Among Your Children

After you’ve spent time considering the ideal life you’d like your loved one with special needs to enjoy after you’re gone, you can begin developing your estate plan. As a parent, if you have more than one child, you must consider how you would like to divide your assets among your children. Parents often think that giving a larger share or an entire inheritance to their other children and expecting that they will care for their special needs sibling is a sound strategy. However, even with the best of intentions the other kids may run into challenges living up to that expectation as their inherited funds are exposed to their creditors, potential divorce settlements, lawsuits or other unexpected issues. 

A better approach is to consider allocating some funds into a purely discretionary special needs trust for your child with special needs. Sometimes parents feel bad about allocating more assets for their children with special needs than their other children. However, you are not required to treat each child equally. It’s common for parents of a child with special needs to set aside all or the majority of their state for the child who will need more assistance, especially when other children lead productive lives. Making these decisions is never easy for parents, and the compassionate attorneys at Surprenant & Beneski, PC, can help guide you through these decisions by helping you understand all of your options.

Consider How to Protect Your Loved One Financially After You’re Gone

When one of your beneficiaries is an individual with special needs, how you provide them with your assets is important. For example, if you name your loved one as the beneficiary of your retirement plan and IRA or give them all of your assets outright through your will, you could hurt them in the long run. Receiving significant assets could make them ineligible for important government benefits, such as MassHealth and Medicare benefits. 

Your Child May Need His or Her Own Estate Plan

In addition to creating your own estate plan, it’s also important to consider that your child with special needs may need his or her own estate plan. It’s beneficial for your child to have a general power of attorney, a HIPAA release, an advance directive, and possibly a simple last will and testament. It’s crucial that you don’t inadvertently give your child assets after your death that could disqualify them from their own benefits. 

Creating a special needs trust is one of the best ways to provide your loved one with assets without disqualifying him or her for benefits. Your loved one can use the assets in the trust for expenses that aren’t covered by their benefits, such as travel expenses, entertainment, education, and more.

Take Time to Appoint a Trustee You Trust for Your Child’s Special Needs Trust

When creating a special needs trust, you must appoint a trustee to manage the assets for your child with special needs. Choosing someone you trust is essential because the trustee will manage the trust. You may want to name a professional as a trustee or co-trustee. If you name a family member, you may want to designate a trusted advisor who can help with investment decisions.

What Will Happen If You Become Incapacitated?

Many parents of children with special needs are super moms and super dads, working hard to ensure their children have the educational, social, and other opportunities they need to thrive. Thinking about becoming incapacitated as a special needs parent can be overwhelming. However, planning for your child with special needs to be cared for if you become incapacitated is essential. Creating a letter of intent can help a new caregiver provide your child with the type of care he or she needs. The letter can include your child’s unique likes, needs, dislikes, preferences, and other important information. 

You may want to consider including a provision in your financial power of attorney that allows your agent to make discretionary, non-support distributions for the benefit of your child. You may even want to allow your agent to establish and fund a trust for your child. If you need nursing home care, you may want to authorize your agent or create a sole benefit trust for your child with a disability. Making transfers to this kind of trust can help a parent qualify for MassHealth eligibility while protecting their assets for their child with special needs. 

Discuss Your Estate Plan with an Experienced Southeastern Massachusetts Attorney

At Surprenant & Beneski, PC, we have an in-depth understanding of all the factors that could impact a special needs beneficiary. We will help you understand all of your options so you can make informed decisions about your estate plan with your loved one’s special needs in mind. Contact us today to schedule an initial consultation.