Estate Planning For Special Needs

A Will and a Living Trust is not a complete estate plan for thos families who have a loved one with special needs. All too often when it comes to estate planning for a person with disabilities, all that a family does is prepare Last Wills and Testaments. The person with a disability is excluded from direct inheritance and a sibling or other family relative is left with a few dollars to take care of the loved one with special needs.

What Is The Proper Estate Plan?

A proper Estate Plan will not only include planning for your estate but will also create a separate estate for your loved one with special needs, which is designed to provide a comfortable standard of living with maximum government benefits. This usually involves disinheriting the child with special needs in the parents will and trust and leaving that child's share to an Irrevocavble Special Needs Trust, which will manage the resources in such a way that the requirements for benefits will never be violated.

The use of a Special Needs Trust will solve problems, such as protecting government benefits, avoiding probate, leaving sufficient funds, and providing for diginified final arrangements. Proper planning may also help solve family conflicts. By setting a plan in place and writing a letter of instructions, you will leave no doubt as to your intent, and will name the successor trustees and conservators to make sure there will always be someone to look after your child when you are no longer around.

What Is A Special Needs Trust?

The basic concept of a Special Needs Trust is that the trustee has discretion of how the assets are spent on behalf of the beneficiary with a disability, and the beneficiary does not have any access to the income or principal of the trust. The trust is designed to supplement the government benefits, not to supplant them. Since the trust is irrevocable, the trust will own the assets, not the person with the disability. This is the magic that makes a Special Needs Trust work! All assets are owned by the Special Needs Trust, thus keeping your child eligible for government benefits. The Social Security Administration even has a regulation found in their Program Operations Manual in which it defines that Special Needs Trusts are to be irrevocable. Not only does it meet the government regulations, but an irrevocable trust keeps the assets out of an estate of an individual with special needs.

A Special Needs Trust is different from a Support Trust. Most family revoacble trusts are considered Support Trusts because the trust is to provide for the health, welfare, etc. of the beneficiary during their lifetime. Since a beneficiary has power over the assets of a Support Trust, courts have ruled since the person with special needs has control over the assets, they are required to reimburse the government for the benefits they have received. In essence, you have left Uncle Sam a nice gift!

How To Plan

Since the parents are the creators of the trust, they can dictate the terms of distribution upon the demise of the loved one. The funds may go to remaining children or as a gift to the trustee, guardian or conservator. Also, at this point, charities which are near and dear to your heart would greatly appreciate a gift made in your loved one's memory. Without such generosity, such organizations may not continue to exist in the future in light of current budgetary restrictions on government programs assisting disabled individuals. Also, each family should strongly consider those programs that have benefited their child during his or her lifetime, and make a gift in accordance as they set in their heart to do.

What Does Your Special Needs Trust Contain?

Your Special Needs Trust book will contain the following:

• Special Needs Planning Intake Form
• Declaration of Trust
• Certificate of Trust
• Schedule of Assets
• Memorandum of Intent
• Federal Tax Indentification Number Application and Processing
• One copy of all aforementioned documents as well

This is just a brief overview of a Special Needs Trust, and is by no means a complete description. We encourage you to schedule a no-cost appointment to discuss this further.

Legal Alliance Group's fees for a Special Needs Trust is $1,375.00 inclusive. Please let us know if you are a TACA Member!