By: Sarah Stewart Legal Group
Families with loved ones with Special Needs face all of the problems every family faces, and some others. With every family, it is important to plan for your children in case something happens to you or the other parent. But, in families where loved ones have Special Needs, it can be even more important.
Many families dealing with the day to day challenges of finding proper care for their loved ones and applying for and receiving government benefits can forget that inheritances can cause government benefits to be taken away from those who need it most. Income-based benefits are calculated based on the assets a person owns and the income received. So, if a recipient suddenly gets a windfall through an inheritance, he or she will lose those benefits. Though the recipient can get the benefits back again once he or she qualifies, the question is will he or she be able to?
Since trusts are so important to maintain proper care and assets for loved ones with Special Needs, we will discuss the 3 most important questions to ask before getting a trust for your loved one below.
(1) What will my loved one with Special Needs need if I’m no longer here to care for him or her?
When preparing your trust and wishes for your loved one, you will need to sit down and think about the needs he or she has and the costs you can anticipate for those needs throughout the years. You will also want to think about whether you are wanting your loved one to live in a home or a different setting and what additional problems may arise. Then, you will want to allot an excess amount for surprise costs. Most importantly, you will want to think about who you trust to care for your loved one if something were to happen to you. All of this information will be important in deciding how to fund your trust and who to name as a manager of the trust’s assets.
(2) Where are the funds coming from?
Before you start a trust for a loved one with Special Needs, you will need to decide where the money to fund the trust will come from. You have options for different kinds of trusts, but those options depend on who owns the assets before they go into the trust. There are trusts that can only be established with assets of the loved one with Special Needs. These are called First-Party trusts. And trusts established with funds from a parent, grandparent, or other person. These are Third-Party trusts. How the trust is funded decides the rules the trust must follow if you want your loved one with Special Needs to keep receiving government benefits. Your options are limited based on how you plan to fund the trust.
(3) How will the trust fit in with my other estate plans?
Just as loved ones with Special Needs have specific needs others may not, families with Special Needs will have estate planning issues other families do not. Most families will need to establish a separate plan for their loved ones with Special Needs and the rest of their family. If the family does not seek professional input in creating estate and financial plans, the family member with Special Needs and the caretaker may find themselves in a dismal situation.
What if the loved one with Special Needs loses supplemental funding and the caretaker cannot provide the necessary care for his or her loved one? Would he or she be able to figure out how to access those benefits again? What if you didn’t choose a caretaker for your loved one with Special Needs and when you die there is only a sibling, who is a child, left to care for him or her?
These are difficult questions for every family to answer. But, given the unique circumstances of each family, we all must consider them to properly prepare.