Here are three reasons why estate planning for a special needs child is crucial.
1. These children have more needs. They may require special treatment, therapy, housing, education, equipment, in-home care, etc.
All of these services can be very costly, and the need for this care may extend throughout the child’s lifetime.
2. While some alternatives may seem attractive, estate planning is the only way you can provide for your child without jeopardizing the child’s eligibility for government and private benefits.
For example, many social benefits can be lost if the child has large assets. This leaves parents with a dilemma – give the child assets and hope it is enough to meet the child’s needs, or basically leave the child with very little in order to retain eligibility.
We can help with this problem by creating a Special Needs Trust (SNT). This trust allows parents, grandparents or guardians to provide funds for a special needs child without effecting the child’s eligibility. We can help you create such a trust and appoint Trustees. In the event of your death or incapacity, Trustees manage the assets you place in the Trust for your child’s benefit.
You may act as Trustee while living, and thus you have complete control over the child’s finances. In the event of your death, your Successor Trustees will step in to supervise the child’s finances. This can eliminate the chance of a court appointing a guardian you don’t know.
You are the one who decides who the Successor Trustee will be and you can ensure that it is someone you trust. This can be a friend, relative, or you may appoint a financial advisor to serve as Trustee.
You will need to work with your attorney on this to set up specific instructions for Trustees. The law requires them to comply with these instructions.
Best of all, the SNT will preserve the child’s eligibility for benefit programs.
3. You need to protect your child’s financial interests today as well as in the future, when you may no longer be there.
Naming a Beneficiary
Another issue arises when you have named the disabled child as a beneficiary of your insurance policies, qualified pension plans, stocks, and other financial instruments.
Sadly, this may not achieve your intended purpose.
Neither the financial institutions nor the probate courts will give that money to a minor child. Instead, the money will be given to a guardian to hold in trust for the child.
Further, if the parent hasn’t appointed this guardian, the court will do so, and it’s likely you would not have chosen the same people to act on behalf of your child.
The process of planning for the needs of a special child demands a complex set of decisions and plans.
Each consideration is part of the complications anyone can expect with the process.
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