Special needs planning is designed to provide a secure financial future for individuals with disabilities, both children and adults. It involves understanding government benefits, various disabilities and diagnoses, estate planning laws specific to special needs, and strategies to fund special needs trusts.
This type of planning is essential for families with disabled children who receive governmental benefits such as Medicaid or Supplemental Security Income. It helps protect their assets from being disqualified by these means-tested programs.
Guardianship
Guardianship is a legal process that allows people to take care of an incapacitated individual who is unable to communicate and make decisions about their physical, emotional and financial health. A guardian is usually appointed by the court and is subject to court supervision.
Parents of children with special needs may need to consider guardianship if the child is no longer able to make important medical or residential decisions for themselves. The parents must then petition the court to become guardians of their child.
The process of obtaining guardianship for a person with disabilities is complicated and can be expensive. However, it is a crucial part of providing for the individual in the event that their parents are no longer able to provide for them.
A special needs planning lawyer can help you choose the best type of guardian for your loved one and ensure that the guardianship is properly set up to protect their assets from being declared incompetent by a court. A guardian can be a family member, close friend or professional caregiver.
Wills
Whether your child has autism, cerebral palsy or other special needs, you want to do whatever you can to help them live the best life possible for as long as they can. Putting a plan in place is the most effective way to do that.
A Will is one of the most important parts of an estate plan. It determines how you distribute your assets after you die, who receives what, and who will be responsible for your care.
It also determines how much money your beneficiaries will be able to receive through means-tested government benefits like SSI and Medicaid.
If your family member is receiving those benefits, it is extremely important that your Will have a stand by Special Needs Trust to ensure your bequest will not disqualify them from their benefits. A special needs planning attorney can assist you in creating this important legal tool.
Trusts
Trusts can be a useful financial planning tool when you want to provide for your disabled family members. They can help you maintain your loved one’s SSI and Medicaid benefits while also providing funds for their care.
There are two basic types of special needs trusts: First-party and Third-party. The main difference between the two is whether they’re funded by first-party money (like a personal injury settlement or an inheritance) or third-party money (like your own assets).
When you use third-party trusts, the government is not entitled to repayment for any of the funds in the trust. It can be a great planning device for people who have larger sums of money like an inheritance or a personal injury settlement but don’t need to repay the government.
The best way to determine if you need a special needs trust is to speak with an attorney who is experienced in this area of the law. An attorney will be able to explain the state-specific laws and regulations that govern these kinds of trusts and ensure that your documents are drafted properly.
Insurance
Insurance can be a critical tool in planning for special needs. It can help pay for the care of a loved one with disabilities when the parent or guardian is no longer able to provide it.
Whether it’s life insurance or disability income insurance, it can be a way to ensure your special needs individual has coverage should something happen. Term and permanent life insurance is available, but it’s important to know what type of policy your family should buy.
You should always discuss the pros and cons of your options with a financial planner. You’ll also need to discuss how much coverage you need.
Often, a parent with a disabled child will purchase life insurance as a way to fund a special needs trust that can benefit the individual after the parent’s death. This is a great option for families of any income level to ensure their loved one will have the financial support they need when they need it most.
