Planning for Loved Ones with Special Needs

Planning for Loved Ones with Special Needs2018-08-31T14:09:39+00:00


Your first step in protection your loved one is to select a trusted family member or friend to supervise the personal, financial, and legal affairs of your loved one when you are no longer able to handle them. We understand that this selection is difficult, but who is better able to make it than you? Who better understands the unique needs of your loved one? Who knows better which of the potential caregivers will provide the compassionate care and protection that your loved one needs and deserves?
The worst thing you can do is nothing! If you fail to make the appointment yourself, you will leave the selection of your loved one’s future caregiver to the mercy of judges and social workers. The are more than ready to select your loved one’s caregiver if you fail to chose one yourself. Do you want to choose the caregiver yourself or leave the choice to the intrusive and costly court system? When made aware of their options, our clients select the caregiver themselves and take the steps necessary to make their wishes legally binding.

You know that the skills required to supervise the health care needs of your loved one are vastly different from those needed to manage his or her finances. The individual who is best qualified to tuck your loved one in at night and make medical decisions might be the least qualified to handle financial or legal issues (and vice versa). The first responsibility (housing and health care) require someone with a “good heart” who is loving and understanding. The law calls this individual the “guardian of the person” because this guardian oversees personal care needs. The second responsibility (financial and legal) requires someone with a “good head on his or her shoulders.” Such a person must possess sound financial and legal judgment. The law calls this person the “guardian of the estate” because this guardian oversees financial and legal issues.
You are fortunate if you know someone who is equally qualified to serve as both a guardian of the person and of the estate for your loved one. If not, there is no need to worry, because the law allows you to name different individuals for these very different roles. Any good plan to provide for the future care of your loved one starts with resolving these guardianship issues. Once the proper guardian are selected, it is necessary to provide them specific written instructions concerning the proper care desired for your loved one.

While naming guardians to care for your loved one is a good start, it is important that you also leave clear and detailed written instructions concerning the type of care you want provided. Otherwise, you risk leaving the guardians in the dark about the responsibilities being entrusted to them. You are the most knowledgeable concerning your loved one’s needs and are in the best position to provide these instructions. Needed instructions include the following:
a summary of your loved one’s medical history, medications, physicians, and daily care needs;
a review of your loved one’s daily routine, habits, and likes and dislikes;
a list of your loved one’s friends and their contact in formation;
a list of your loved one’s favorite hobbies, recreation, clubs, spiritual care givers, and other organizations that provide assistance;
a statement of your desires regarding the living arrangements to be provided for your loved one;
a statement of the benefits and services (both government and nonprofit) that your loved one is receiving or may be eligible to receive in the future; and
an explanation of your hopes and dreams for your loved one’s future.
By including these detailed instructions in your estate plan, the caregivers you choose will better understand and perform their responsibilities. This will help ensure your loved one continues to receive the same loving care that you have been providing. It is like the passing of a baton–the better the instructions are, the better prepared the new guardians will be when they accept the responsibilities handed over to them. Even great instructions are not enough. You also need to put a sound financial plan in place for the management of the money that will provide the financial support for your loved one.

It is necessary to put a sound financial plan in place to provide for the care of your loved one because all the great instructions in the world will mean little if your caregivers do not have the money to carry them out. Our clients want their loved ones to receive more than the bare minimum level of care that the government provides. They want their loved ones to have the best life possible given their special needs.
Do you want to provide your loved one better than basic housing and living arrangements? Do you want your loved one to receive better medical and dental care than the government supplies? Do you want your loved one to have access to vocational training and other educational opportunities? Do you want your loved one to have access to transportation, furnishings, clothing, and other things needed to make life as normal as possible? If so, then you need to financially prepare for these things. It takes an experienced estate planning attorney and a qualified financial planner working together to establish and maintain a financial plan to ensure that your loved one will have the needed resources.

It is up to you to determine what government benefits are available for your loved one. A good financial planner will be able to calculate the cost of providing your loved one the lifestyle that you want him or her to receive beyond that which the government is willing to pay. Once these amounts are determined, the financial planner will recommend various ways to ensure there are sufficient resources to meet the shortfall between the lifestyle the government will pay for and the lifestyle you desire for your loved one.
An important part of this analysis is to make sure enough assets are available throughout your loved one’s life. Your financial advisor can help you explore your options and ensure enough financial resources exist to meet your planning goals. Depending on the circumstances, your financial advisor may recommend life insurance, annuities, bonds, mutual funds, or other investments. Regardless of the specific investments selected, it is critical that your financial plan be coordinated with your estate plan. Failure to do so can cause the loss of all government benefits. To avoid this tragedy, make sure that you work with an estate planning attorney who has special needs planning experience.

A good financial plan must be designed so your loved one will not be disqualified from receiving government benefits. An experienced estate planning attorney knows how to avoid the legal pitfalls that can threaten the financial legacy you leave your child or adult with special needs.
Nothing could be worse than having the government declare that the inheritance you left your loved one makes him or her ineligible for benefits. If this happens, the government will deny or cancel the aid it would have otherwise provided for your loved one. Even worse, it could force your loved one to undergo the difficult process of reapplying for government benefits once the inheritance is depleted. This is a planning disaster that must be avoided!

Fortunately, a very special kind of trust can be used to leave an inheritance that will not disqualify a loved one with special needs from receiving government benefits. These are known as “Special Needs Trusts.” They are designed so that assets in the trust will supplement–but not replace–the government benefits. Since the assets are held in trust, they do not legally belong to your loved one (even though the trust assets must be used solely to enhance your loved one’s life). The government will not count the inherited trust assets against your loved one and jeopardize his or her eligibility for benefits.

Giving money directly to someone else to care for your loved one (even to a trusted child or friend), instead of leaving the inheritance in a Special Needs Trust, has many hidden risks. These risks exist because when you give your assets to someone, they become the legal owner of them. This can have unfortunate consequences such as:
If that person become disabled, they law requires that the assets be spent on his or her care instead of on your loved one’s care;
If that person dies, the law requires that the assets be distributed according to that person’s estate plan;
If that person has financial difficulties, the assets might be lost to that person’s creditors;
If that person goes through a divorce, the assets might be lost to an ex-spouse; and
If that person wants to, he can spend the assets however he wants (and not necessarily for your child’s care) since legally the assets belong to him.
For all these reasons, and many others, protecting assets in a Special Needs Trust is much wiser than leaving them at risk as described above.

As mentioned earlier, if you do not implement an estate plan that protects your child with special needs, a judge will impose a plan of his own choosing on the family. To determine whether the judge’s plan is likely to be the one you would choose for your loved one, just ask yourself a few questions:
Will the judge appoint the trustee I would want to manage the assets I leave my loved one?
Will the judge’s plan keep my child’s financial and legal affairs private instead of making them a public record?
Will the judge’s plan require that the assets I leave my loved one be distributed to my loved one for only the purposes I want, when I want, and how I want?
Will the judge’s plan result in the least costs and delays for my family?
You simply cannot ensure that the decisions of some unknown judge sitting in some unknown courtroom at some unknown time in the future will decide things the way you would. The truth of the matter is that the decisions of many judges would be exactly opposite of how you would conduct your own private affairs.
Unless you designate who will protect your child’s assets, a judge will choose for you. The judge, due to open record laws, may allow anyone to rifle through the court file and learn the size and extent of your child’s assets. There is no guarantee that the judge’s plan will provide the same lifestyle that you desire for your loved one. It can take years for cases to go through the stressful, expensive, and time-consuming court bureaucracy.
If the above listing of the risks of leaving things in the hands of a judge were not bad enough, any plan created by a judge will be subject to the judge’s “continuing jurisdiction” over the administration of your loved one’s assets. This means that the person appointed by the judge to administer your child’s assets must file financial reports with the judge every year for as long as your loved one lives. This not only imposes additional annual costs of administering the judge’s plan (at your loved one’s expense), but is places one mor intrusive and disruptive burden on your loved one.
The judge’s plan will also disqualify your loved one from receiving government benefits if your loved one is deemed to personally own the assets. A well-crafted Special Needs Trust written according to your instructions will protect the confidentiality of your loved one’s private affairs and preserve his or her right to receive government benefits.
As seen, there are many challenges involved with planning for a loved one with special needs, but they are not insurmountable. With experienced counseling and good planning they can be overcome. If you wan the peace of mind that comes from knowing you have done everything possible to protect your loved one, then a Special Needs Trust must be part of your comprehensive estate plan.

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