There are unique planning requirements for family members who have special needs.
Here are some tips to consider when planning for a loved one’s special needs.
Avoid disinheriting the special needs beneficiary. Many disabled persons receive public benefits to provide for basic needs like food, shelter and/or medical care. Often, families have been told to disinherit the person with special needs in an effort to preserve their entitlement to benefits, and, instead, give that share to a sibling to use for the disabled person’s needs.
Unfortunately, if that sibling becomes incapacitated or dies, that money will not be available to help the surviving special needs person.The best solution is to create a special needs trust to hold the inheritance of a special needs beneficiary.
Procrastinating can be costly. When planning for a beneficiary with special needs, it is critical that families plan early and use a special needs trust. Otherwise, assets that are inherited outright may disqualify the beneficiary from receiving needed benefits. Even worse, the inherited assets may be required to repay the state for the assistance provided.
While these pay-back provisions are necessary in certain types of special needs trusts, an attorney who knows the difference can save families money by helping them avoid a costly mistake.
Do not ignore the special needs of the beneficiary when planning. A properly designed special needs trust promotes the comfort and happiness of the special needs beneficiary without sacrificing eligibility for benefits. A sufficiently funded trust can provide for medical expenses, education and necessary equipment, like a handicapped-accessible vehicle. The trust can also provide for other self-esteem and quality-of-life enhancing expenses like the sorts of things parents currently provide.
Choose a trustee wisely. Families or loved ones who create a special needs trust may choose a team of advisors and/or a professional trustee to serve. It is crucial that the trustee is financially savvy, well-organized and ethical.
Invite others to contribute to the special needs trust. A key benefit of creating a special needs trust now allows others, like grandparents, to name the trust as the beneficiary for their own estate planning.
Avoid relying on siblings to use their money for the benefit of a special needs child. Many family members rely on their other children to provide, from their own inheritances, for a child with special needs. However, that solution will not protect a child with special needs indefinitely.
The assets handled by a sibling outside of a special needs trust could be lost to a lawsuit against the sibling or if the sibling divorces. If the sibling dies or becomes incapacitated, there are no built-in mechanisms for handling those finances for the surviving special needs child.
A properly drafted and funded special needs trust can ensure that special needs beneficiary has sufficient assets to provide care throughout the beneficiary’s lifetime. Reach out to an attorney well-versed in special needs planning to learn your options.
Kara Gansmann is an attorney in the Wilmington office of Cranfill Sumner & Hartzog LLP, where her practice encompasses elder law and estate planning. Kara advises individuals and families with estate planning needs and asset protection tactics. In this role, she strategizes with clients to preserve assets for long-term care and to leave legacy gifts to family members. Kara works with elderly clients in need of Medicaid crisis planning and Medicaid applications. As part of her practice, Kara drafts wills, trusts and powers of attorney. In the courtroom, Kara represents clients in the administration of estates, guardianship/incompetency proceedings, and guardianship administration. Kara also litigates estate and trust matters, including will caveats, the modification or termination of trusts, and litigation arising from estate documents or fiduciary roles. She is a member of the North Carolina Bar Association Elder Law and Special Needs Section and serves as co-chair of the CLE Committee for that section. Kara also serves as a liaison between the North Carolina Bar Association Elder Law and Special Needs Section and the North Carolina Bar Association Estate Planning and Fiduciary Law Section.
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