Recently, a couple came to our firm seeking assistance with basic business succession planning but it quickly became clear that they also needed to plan for their young daughter who suffers from a severe disability. The couple had two young children, one with special needs and one who was developing typically, and no existing estate plan in place to provide for their future care. The situation of a client seeking help on one thing (business succession) but needing something else more urgently (a special needs trust) isn't uncommon in our line of work. Many people aren't aware of the fact that if they transfer wealth to individuals with special needs, one must do so with great care and with the oversight of a team of experts who know which pitfalls to avoid and avenues to pursue in order to ensure that a special needs individual receiving an inheritance maintains eligibility for important government benefits. 

According to the Wealth Counsel's 4th Annual Industry Trend Survey, published in January 2011, one of the top ten reasons clients plan their estate is to provide for a special needs family member. In 2010, the U.S. Census Bureau provided data which calculated the total number of disabled individuals in the U.S. to be 54 Million, or 19 percent of the civilian, non-institutionalized population. According to the same data, five percent of children ages five to 17 are disabled; 10 percent of people ages 18 to 64 are disabled; and 38 percent of adults 65 years or older are disabled. Although the words "disabled" and "special needs" have distinct meanings, we use the words interchangeably because the issues of safeguarding government benefits is so important in either situation.  One family's adult child was disqualified from Medicaid when he unexpectedly received a $10,000 bequest from an automobile insurer as the result of an accident. It took six months to re-qualify him for the benefits he needs; long enough to require the parents to obtain a home equity line of credit to be used for the high cost of their child's medicines. 

As financial advisors to parents of special needs children or disabled individuals or even clients concerned about their own incapacity in the future, it is important to be able to speak with your clients about the steps they can take to prepare for the future and to educate them about the estate planning tools that are available to them to properly plan.    

Caring For A Disabled Loved One Or Special Needs Child 
The first step that every person caring for a child with special needs or a disabled loved one should take is to build a network of experts to advise them.  A team of experts can be their lifeline in a crisis and can assist them in accessing the resources available to them and their loved one.  First and foremost, your client will need to begin working with an attorney who specializes in trusts and estates planning, and preferably one that has familiarity with planning for individuals with special needs. 

When we first began working with our clients who had a daughter with  special needs, we explained to them that a properly drafted estate plan was critical because it would provide for their daughter's continued care if something were to happen to the both of them and they could no longer care for her. Their eldest child was too young to care for his sister, and their other family members were mostly living overseas.  This couple needed a plan to provide for guardianship and care of both of their minor children as well as one that serves to safeguard their disabled child's eligibility for government benefits. 

The government benefits available to individuals with special needs vary by locality, but may include disability pay, food stamps, or subsidized housing, just to name a few.  If a parent wants to ensure a particular living situation for their child after the parents' death, that can be addressed during the estate planning process too.  Some clients express concern about government funds allocated to housing or a fear that an individual will only be able to live in a state-run housing facility.  Given the choice, many clients prefer to select a higher-standard of residential care.  To that end, we craft special language in a trust to provide for a better living arrangement, even if the person's monthly benefits check may be reduced by an amount equal to the payment made for the better housing.

Estate planning options to provide for individuals with special needs include, in part, having the parent create his or her own revocable living trust with special needs provisions benefiting the loved one (to take effect after the death of the parent) or a separate special needs trust for the loved one (to take effect immediately).  The decision of what document is best for the situation is determined after consultation with an attorney and consideration of various factors such as how the trust will be funded, whether a grandparent (or other relative) wants to make gifts to the disabled individual, and whether or not an inheritance is anticipated. 

A trust document is a great vehicle, because it allows a client to be specific and detailed in their desires.  For the clients whose daughter had special needs, we drafted a separate Article within the individual revocable trust which provided for the daughter's care and for the intended continuation of her eligibility for government benefits.  Also, we added a provision uniquely tailored to the child:  the daughter's disability was quite severe, and left her unable to communicate with her parents, except they could see her light up whenever they played music for her.  We specially drafted a provision in her trust that instructed a successor trustee to pay for music therapy and MP3s/CDs to feed her love of music and to comfort her.  This is just an example of the flexibility in drafting that is available through a revocable trust.

A useful exercise that you can suggest to clients is to think about long term planning such as writing out their loved one's daily schedule.  What would a third person need to know if the client wasn't there to care for the incapacitated individual?  Is there a specific morning routine that helps stabilize the individual's daily life?  A particular afternoon snack the child needs to eat?  This exercise will also help to inform the estate planning process.  If you are interested in helping clients with pressures facing a family with a special needs individual, consider certifications that will allow you to develop a specialty with special needs and long term planning.

It is also not uncommon for us to meet a client whose child is not typically developing and is quickly approaching the age of majority.  Frankly, once the child enters the teen years, the parent finally has the time to think about the future -- the early years are often incredibly stressful with little time to think about estate planning.  If your client's special needs child or disabled loved one is over the age of 18, consider suggesting a conservatorship or guardianship.  Conservators and guardians have court-ordered authority and responsibility to manage the affairs of those who cannot make their own decisions about finances or health care.  (If your client's child is approaching 18, the parents will want to begin the process at least six months prior to their 18th birthday).             

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