Special Needs Planning

Parents of special needs children face unique planning issues, primarily because they must consider providing care for their children throughout their entire adult lives. Parents do everything to insure that their child lives in a safe environment and can take advantage of every available resource; they face a great challenge in replacing themselves at their death to insure their special needs child long is protected and gets their needs provided. While government assistance is helpful, it is not guaranteed for the future; hence, parents must plan for that care.

At our firm, we frequently plan for families with special needs. We attempt to create plans with flexibility for our families because everything changes over time. Flexibility is the key in SNT planning. Special needs families must secure foundational legal documents for their loved ones. Parents should encourage their special needs children to execute Powers of Attorney if possible when they turn 18. This will allow parents to act as their financial and health care agents. Otherwise, parents will no longer have the ability to make important decisions on a child’s behalf once they reach adulthood.

Parents should also create a special needs trust in order to plan for their children’s future. If you leave money directly to your special needs child, it may cause him or her to lose important government benefits. For this reason, it’s important that special needs children receive assets in trust. We use two different types of trusts for special needs planning.

In some situations, parents and grandchildren wish to leave an inheritance for a special needs child’s benefit. In these cases, we use a very flexible trust during the child’s lifetime and then distribute the parents ‘assets according to their wishes at the child’s death. This trust is creditor protected, meaning that the government cannot claim the trust assets. Instead, the parents may choose to leave these assets to another beneficiary at the special needs child’s death.

We use a different type of trust when a special needs child receives money from a lawsuit or settlement to which he or she is entitled. This can also happen if a parent or grandparent leaves an inheritance to the special need child outright, rather than in trust. In these types of situations, we use a “payback” trust. Medicaid considers the property placed into these trusts “non-countable.” However, anything remaining in the trust at the special needs child’s death must be paid back to Medicaid. Some special needs children have both kinds of trusts, as each type operates differently.

Finally, we know that special needs children have great abilities, but they also have needs requiring greater care. As a result, their families require more community support. One of the best resources for special needs families is the ARC. This organization, made up primarily of families with special needs children, is a collaboration of community resources, as well as information on protective laws for special needs children. Visit http://www.arcwake.org for more information.

If you need assistance with special needs planning, or if you have questions about government assistance programs such as Medicaid or Veterans Benefits, consider W.G. Alexander & Associates – we offer a unique blend of asset protection, Elder Law and estate planning. You can also attend our free seminars, learn more through our website at www.wgalaw.com, or call us at (919) 256-7000.

Attorney Bill Alexander discusses these issues and more every Tuesday morning on W.G. Alexander & Associates’ radio program, “Asset Protection Today,” on TalkRadio 850 WPTK (AM). Be sure to listen from 9:00-10:00 AM.