Written by Special Needs Attorneys:
Danielle B. Mayoras and Don L. Rosenberg
www.thecenterforspecialneedsplanning.com
Have you ever wondered what would happen to your special needs loved one if you passed away tomorrow? Have you done everything possible to ensure that your loved one with special needs will maintain his or her government benefits and receive an inheritance from you? For many parents with special needs children, whether the children are minors or adults, these questions linger in the back of their minds. Estate planning is always important to do; however, when one of our beneficiaries is a special needs loved one, the planning becomes critical.
When a parent leaves an inheritance over $2,000 to an individual with special needs, then that inheritance is actually a gift to the government because it eliminates that child’s qualification for government benefits. Parents and attorneys armed with the basic knowledge that you cannot have assets in the excess of $2,000 and still qualify for government benefits, often think that the only reliable method to protect a special needs loved one is to disinherit them. They believe, or are counseled; that leaving their inheritance to another child or individual who will morally take care of their special needs loved one solves the problem. In most cases, however, this does not solve the problem, but only makes it worse. Leaving everything to your daughter “Susie” if “Johnny” has special needs would allow Susie’s creditors to attach Johnny’s money. In addition, if Susie is having a bad year financially, there is nothing to stop her from using the money for herself. Furthermore, if Susie passes away, this money would go on to her beneficiaries and not to Johnny.
Parents can solve all of these problems by creating a Special Needs Trust. A properly drafted Special Needs Trust allows the special needs individual to maintain government benefits and to use the inheritance for everything but food and shelter. The Special Needs Trust is the perfect solution and the only reliable method to make sure that your inheritance benefits your child with special needs. The Special Needs Trust keeps assets in a form that will be available for your child and allows your child to maintain and receive government benefits.
A properly drafted Special Needs Trust will specify that funds from the Trust only supplement and do not replace the government benefits. These funds can be used for extra medical care, personal items, such as televisions, radios, computers, vacations, companionship, advocates or any other item or service to enhance your child’s self-esteem and situation (anything except food and shelter). With respect to shelter, your child can use the money to purchase a home, but cannot use the money for rent.
Oftentimes, parents who have minor or adult children with special needs wonder what the future will hold for their special loved one. Will they be productive in society, will they need governmental benefits, who will take care of them and be responsible for their financial needs? We have developed a very unique approach to address these questions – the “Wait and See Special Needs Trust”. A Special Needs Trust would be set up as a vessel into which an inheritance would go. However, a decision would be made by the trustee at the time that the parents pass away whether or not this individual is likely to need government benefits in the future. Specifically, the Wait and See Trust requires the trustee to test and have your special needs loved one evaluated educationally, cognitively, rehabilitatively, physically and emotionally.
These evaluations also include, but are not limited to, a physical and psychological evaluation, and evaluation of education and training programs, work opportunities and earning, recreation, leisure time, and social needs. If he or she is not likely to need government benefits, then the Special Needs Trust would not be used and the assets can then be used for basic needs as well as special needs. The benefit of this, of course, is that we have the advantage of planning for an unknown future.
As a parent, not only do you want to provide an inheritance to your children, but when you have a child with special needs, you often are the only one who knows their medical needs (i.e. doctors, prescriptions, as well as the child’s likes and dislikes). The Special Needs Trust incorporates a Letter of Guidance that addresses all of the information that caregivers so vitally need.
While government agencies recognize Special Needs Trusts, there are strict rules and it is critical that you work with an experienced special needs attorney to draft the Trust. One wrong word or phrase can make the difference between an inheritance that benefits your child and one that causes your child to lose the many services, assistance and benefits available. Parents of special needs children can solve their greatest worry with a properly drafted Special Needs Trust.
For more information on Special Needs Trusts and to stay up to date on the laws, contact The Center for Special Needs Planning at 1-877-PLAN-758 or www.thecenterforspecialneedsplanning.com, for a personal consultation and/or to subscribe to the informational e-letter, “The Insight: News, Stories, and Thoughts on Elder, Special Needs and Probate Law.”
This article provides general information concerning a variety of legal topics. It is not intended to be a legal opinion and should not be relied upon as legal advice. Legal advice should not be given without investigation of your particular circumstances.
About the Authors
Danielle B. Mayoras, Attorney and Director of Education
Danielle Mayoras has dedicated her legal career to educating professionals and businesses as well as the general public on the topics of special needs planning, elder law, and general estate planning through presentations, print, and broadcast media across the United States. Her speaking audiences range from nationally recognized brokerage firms, banks, and insurance companies to attorneys, accountants, and non-profit organizations. She was the speaker at the Special Olympics Summer Games, as well as countless support groups for parents who have special needs children as well as social workers and attorneys. She consistently draws rave reviews from audiences and her speaking skills are in high demand. Danielle is the co-author of the upcoming book Trial & Heirs: Famous Fortune Fights,(www.trialandheirs.com) to be released Fall of 2009. Additionally, Danielle is a founding partner of The Center for Special Needs Planning, The Center for Elder Law, and The Center for Probate Litigation.
Don L. Rosenberg, Attorney and Counselor
Don has been practicing for over twenty-eight years. His practice is limited to specializing in issues concerning disability, Special Needs Planning, Medicaid, estate, long term care, and nursing home. He is a Charter Member of the Academy of Special Needs Planners, past-President of KESHET, which is a nonprofit organization that serves families who have children of any age with disabilities of any kind and a Member of the Board of Directors of KADIMA, which is a nonprofit organization that serves families and individuals with mental illnesses. Additionally, Don is a founding partner of The Center for Special Needs Planning, The Center for Elder Law, and The Center for Probate Litigation. He is also the Chair and Officer of the Governing Council of the Elder Law and Disability Rights Section of the State Bar of Michigan.
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