Special Needs

Special Needs for a Special Life
Planning for the Special Needs Individual in Your Life
Ensuring your wealth flows in the right direction

The following data about techniques for estate planning is not intended to be a legal investment or tax advice, it is purely for educational reasons. Neither PlanKidsFuture, nor our agents, subsidiaries, nor employees provide such advice.

We always advise consulting with a professional regarding your individual situation.

What is “special needs”?

Approximately 54 million Americans are considered to be disabled, according to the U.S. Census. That figure works out to be nearly one in six people.

Congress passed the Americans with Disabilities Act (ADA) in 1990, since then, this law has made an enormous impact on how people perceive disability. The ADA along with other U.S. laws (like the Rehabilitation Act of 1973) has helped millions of mentally, emotionally, and physically disabled children obtain a Free Appropriate Public Education (FAPE) in a nonrestrictive environment for their specific needs.

Parents are more aware of the government protections and supports that are available to help people with disabilities because of the ADA. Since parents and grandparents are discovering disabilities at much younger age, they’re creating more effective plans to provide lifetime care and support for their disabled loved ones.

Types of emotional and physical disabilities that are protected under ADA

• Blindness
• Serious Injuries
• Diabetes
• Severe Alcoholism/Addiction
• Chronic Back Pain
• Anemia
• Motor Impairments
• Autism
• Bipolar Disorder
• Arthritis
• Heart Disease
• Depression

How to plan for a special needs child

• When you have a child, your whole world revolves around them. Parents never cease to worry about their kids, and many ask themselves questions such as; Will they be able to look after themselves? What will their future hold? Will they be able to access all the healthcare benefits that they need?
• While this is perfectly normal for any parent to do, for the majority of children, when they turn into adults they are able to assume and take responsibility for themselves. For someone with special needs, things are a little bit different.
• Whether they have a mental, physical or emotional condition, whether they currently have, or will have a long-term dependability on you, or on your career for support; the question of how they are cared for is always high on the agenda.
• Your child may have been born with a medical condition, or perhaps they have developed one later in their life or even been a victim of an accident which has had an ongoing and lasting effect on them. All of these are classed as “special needs”, this is when children require a level of help beyond the abilities that a parent can normally provide.
• A question which every parent asks themselves at least once in their lifetime: What happens to my child if I die? While it might seem a drastic question to ask, it is one that needs to be dealt with, and a question that we will help you find an answer to.
• If you were to become disabled, or if you were to die, how can you make sure that your child gets everything they need, and how can you plan for this? There is no single answer to this question, however, we will help you to understand exactly what you can do and how it can be done.

Below are some of the concerns you may have thought of with regards to having to plan ahead for a special needs child.

Guardianship challenges: emotional and physical caring for your child

• If I die or become disabled, who will be the primary caregiver for my child?
• Will this be a member of my family?
• If I leave any assets to my child, or for my child, will the designated Guardian also be responsible for those matters?

Government programs: things to consider regarding finances

• Will any type of government programs be used to help with the care of my child if I am unable to take care of them myself?
• If any such programs are suitable, will my child meet any means-tested criteria such as income-based eligibility which may determine qualification for the program?
• Will the government provide adequate levels of care in order to meet the physical and financial demands of my child?

Estate tax challenges

• What will be the forecasted size of my estate (gross)?
• Will estate taxes have any impact either on my estate or on what is left for my children?
• Is there enough liquidity to cover the liabilities related to estate tax while also taking care of the financial requirements of my family?

Alternative issues for the family

• Are there any other children in the family if so are they miners?
• Will they require any support?
• Will there be any specific concerns to address with the other children?
• How can I make sure there is no misconception regarding preferential treatment towards my special needs child?

Considerations for planning

• Is it of importance to qualify public assistance in order to help my child?
• Will a “special needs trust” suits the current situation?
• Will this planning process take into account the needs of my wider family?
• Am I treating everyone equally and fairly?

DISTINCTIVE PLANS FOR A SPECIAL-NEED INDIVIDUAL

Estate planning is not just for the rich and wealthy. Planning for a special needs child is actually a subcategory of estate planning. In the context of planning, this is mainly arranging your estate regardless of its size, to ensure the needs of the entire family are met as efficiently as possible; while also taking into account the unique needs and requirements of your special needs individual.
Special needs planning will make sure there is a dedicated plan in place for the future of that person, along with the rest of the family. The demand or request for special needs planning, along with its purpose is to spend time now, planning for the future should anything happen which is outside of your control; While you have the time to get advice, develop, and put into place a plan that is perfectly suited to all of your needs.

Different resources for financial help

I. The family

Although this is dependent on the individual and what their unique needs are, it is the role of the caregiver to offer as much financial, emotional, and physical support as they can. If the primary caregiver should become disabled or die, then primary care will need to be undertaken by another family member. However, it cannot be assured that there will be someone who can do this, nor can it be guaranteed that there will be the resources available financially in order to carry out this responsibility.

II. Federal and state governments

There may be a number of programs which are state, and federal government led that could help the family. These programs could consist of facilities such as care institutions, educational initiatives, and medical facilities. There may also be other means-tested assistance available as well. Programs which are sponsored by the state could very well differ from one state to the next, even if they are underwritten federally and managed by the individual states.

The top three programs the government provides are listed below:

MEDICAID. This program is funded federally. However, it is state-run. The aim of this program is to help individuals who need government assistance. If a person is disabled, this is designed to pay for their medical expenses, and it is also “means” tested.

SOCIAL SECURITY. The benefits of this program are not “means” tested, and they are provided by the federal government. The amount of money that is paid out may be based on the income or on the person. If it is needed for a child with special needs, this will be determined by the earnings of the parents.

SUPPLEMENTAL SECURITY INCOME. This program is in place for disabled people with low income and resources. In certain circumstances, the payments might be reduced this is applicable where money is received via other sources in order to help pay for basic requirements such as board and lodgings.

To get the most up-to-date information regarding these programs it is important you contact either your federal or state agency to confirm such data.

There may also be other sources of assistance available or other programs which we have not listed that might be suitable for your needs. These programs or sources may also provide additional benefits and payments towards things such as legal expenses and special education.

III. Charities

Organizations of a charitable nature may also be able to help the family, to care for a child with special needs by delivering medical advice, counseling services, assistance with home care and more.

With regards to special needs planning, the culmination of benefits that are available through these are vital, as they can be implemented not just to help the person with special needs, but also to help family too. This will also ensure the best possible support network is in place for special needs child, and the network of people around them.

Financial security planning

This topic is critical for parents of a child with special needs, and for most, it is a goal and objective they wish to meet. If a parent becomes disabled or in the event of death, the question arises with regards to the continued care and payment for such care of a special needs child. More often than not, it is left to the family members who remain to tend to this matter. It is important to consider how much money is needed to support the child, along with how to get the resources in place for that support as well. Consideration will need to be given in advance to the impact this could have on both the family as well as public assistance.

There is a range of strategies that can be utilized for this. Which ones are most appropriate will depend entirely on a range of challenges such as the condition which causes the special need of the child family’s financial state, the amount of care that is required, along with how much dependency varies on the government along with charitable groups. We will go into a little bit more detail on the most popular plans for such a situation below.

This option means that the child with the special needs, is left all funds, outright. Along with this or control of those assets will also belong to the child. Where money is left in a trust, this will be managed by a trustee in accordance with the terms. There are a number of advantages and disadvantages to this option, some of these are listed below:

• One of the most significant advantages to this option is the simplicity and ease of implementation. Secondly, this will enable the child, as long as they are capable, to lead a life which is financially independent.
• Some of the drawbacks to this option are quite significant, and as such, they need to be considered carefully in advance. By leaving assets to a child, this generally means they will not be able to seek help from the government or charitable programs listed above.

These assets if used by the Guardian will need to be supervised by the court, this could also lead to delays along with additional expenses for the administration of the trust. There is also the chance that these assets might be used to prepay agencies of the government towards any expenses that may have been incurred with respect to the child.

With this approach, absolutely nothing is left directly to the child with special needs and the family members are to provide care on a voluntary basis. Because the child has been impoverished, and they have nothing, in the way of financial means to contribute towards anything, the government and potentially charities to would look to assist them financially. This is quite commonly used by families.

Perhaps, one of the most prominent benefits of this option is that you should still be able to receive assistance from government or charitable programs. It is then possible for the family to supplement the financial needs of the child from their own money or from assets which have been inherited by the family, that could have otherwise of been left to the child.

A major drawback with this option is the informality of the arrangement. Often the child with special needs relies upon the family for financial support. As this is an informal setup, there is no way to guarantee the funds allocated will actually be used specifically for the care of that child. In some cases, assets could easily be depleted due to unexpected family obligations such as divorce, debts, death, loss of a job and others. In some cases, the government has been known to count gifts to the family as part of their means testing process. Something which is also important to remember is that government or charitable programs are not indefinite, they are not guaranteed and cannot be looked upon in such a way that they will always be there, as they may not.

A specially set out trust that is structured to enable a special needs child to have financial security while also making sure that they are eligible for certain government programs. This is a plan that gives optimum levels of flexibility to the family, while also allowing the newly assigned primary caregiver to ensure the financial physical emotional and social needs of the child are met, in full.

What exactly is a special needs trust?

• A special needs trust delivers advantages to a special needs child, while making sure this has no impact or bearing on any public assistance which may be available.
• These benefits are meant to supplement the lifestyle of the child rather than to pay for the direct support of the individual. It is possible to customize trusts such as these to ensure they cater for individual needs and individual circumstances, such as the medical condition of the individual child.
• There are certain provisions which need to be included in a special needs trust. A good example of one of these can be seen in the provision which means the trustee is given complete control over how any funds are used. The other element which is important to mention is that assets from this trust cannot be used to pay towards basic support, which includes day-to-day things such as food and clothing.
• The creator of a trust is also known as the grantor. A special needs trust is purpose built for families that have a child or children with special needs. Having a trust is an essential element for estate planning.
• Generally, benefits from the government can be safeguarded over the lifetime of the child. However, if that child was to die there are individual states which might ask to be paid back so this money can be sent back to the government. There are a number of payback provisions and these typically are applicable to trusts that have been funded with the child’s assets. For example, the settlement proceeds following a lawsuit. If a trust has been funded with assets from an alternative source then these typically will not have the payback provisions applied, as long as the trust has been correctly drafted.
• If a child dies the remaining assets generally would go to the remaining family members.

How does a special needs trust work?

1. Firstly, you will need to get the help of an experienced attorney that specializes in these types of arrangements. Then together you will formulate a special needs trust.
2. You will need to assign a trustee. This person is then responsible for the management of the trust assets in the manner set out in the trust agreement. The trustee is also responsible for providing benefits of a supplementary nature that are not already accounted for through the government or charity assistance that is in place.
3. In order to ensure the child qualifies for any means-tested programs, it is vital the child has no income or resources which are significant financial value.
4. A special needs trust is purpose built to stop the inclusion of trust assets or trust pavements in the means testing process further government or charity help.

Special needs trust funding

The best way to think of this trust is like a family bank account which is specifically set aside to contribute to the care of the child with special needs. The best way to fund a special needs trust is dependent upon your circumstances some common questions to ask below:

How much money do i need in the trust?

Enough to last for the lifetime of the child

How are these funds made available for the purpose of the special needs trust?

There are several different ways that these funds can be made available.

• Firstly, the trust can buy life insurance which is taken out on the lives of the parents. This is an ideal way to source the funds because life insurance gives you the money when you need it most.
• Secondly, using either a will or through naming the trust as a beneficiary and retirement of life insurance benefits assets can be left specifically to the trust.
• Finally, members of the family are also able to gift contributions into the trust. Family members should not give gifts directly to the child as this quote potentially jeopardize any assistance from other avenues such as public assistance or government funded assistance.

Is it possible to provide funds to other members of the family?

Yes, it is possible to do this. By using life insurance, it allows other assets to be given to other family members. This type of insurance can also equalize your estate. Alternatively, if the child dies then any remaining assets which are held within the trust can then be given out to other members of the family.

RESPONSIBILITIES AND APPOINTMENT OF A TRUSTEE

1. The most important duties are to fully implement the terms and instructions of the individual trust. Also to manage and invest the trust assets in a sensible and responsible way.
2. A Trustees role, in some cases, may require more than one person or institution. It is quite common for the institution named in the trust to manage and invest assets. While the member of the family who is named as a trustee gives money forms their role as the advocate for the child.
3. When choosing a Trustee, it is important that the person you select can act and behave correctly. In their position as an advocate for the child with special needs, they need to be able to pay out, to manage and to keep records for the administration of the trust as well.

To conclude

Regardless of the individual family’s circumstances, a plan that is well thought out and structured correctly will provide the parents of a child with special needs, certainty and assurance. It will ascertain a peace of mind, that the child along with all other family members will be secure financially and will receive the most tax efficient flexibility in these matters.

At PlanKidsFuture, we know the realities of the concerns and we understand the challenges that come with planning ahead for a child with special needs.

We will individualize your concerns and interests and refer you to various attorneys, CPAs and other licensed professionals who in turn will guide you through these processes and ensure that your objectives are fully met.