Special Needs

What is Special Needs?
Among the many challenges facing parents of children with special needs is planning for the time when the parents will no longer be around to act as the primary care givers. In many cases, expenses will increase when care, management and guidance - previously provided by parents - must instead be obtained from a professional for a fee. Planning by parents can make all the difference in the life of the child with special needs, as well as in that of his or her siblings who may be left with the responsibility for care taking (on top of their own careers and caring for their own families and, possibly, ailing parents). Every family’ situation is unique. If you have a loved one with a disability — and rely upon a will to cover their future care — your loved one's inheritance can be taken away by the government. To ensure that governmental benefits (such as Medicaid or SSI) are never altered, diminished or destroyed, it is important that you establish Special Needs Planning — including a special needs trust.

In order to preserve the public assistance benefits of a person with a disability, such as a child with a developmental disability, etc., many people use a special needs trust.

Medicaid, which pays medical expenses for the poor, has limits on the amount of assets that a recipient can own or can earn during each year that welfare benefits are paid.

In order to qualify for the program prior to spending down one’s estate, some individuals attempt to give their assets to relatives or invest them into an exempt form, such as a personal residence in which the spouse resides. Single persons sometimes transfer their residence to their children and retain the right to live in the house for the remainder of their lifetime.

The law denies persons eligibility for Medicaid benefits if assets were transferred less than 60 months before applying for benefits. This is a complicated, changing area of the law.

Trusts for Children with Disabilities
A parent of a child with a disability should review each asset to see whether or not it will pass to that child at time of the parent’s death. For example, life insurance, annuities, IRAs, pension benefits, joint bank accounts, etc., often pass to persons other than those named in one’s will or trust. If such assets pass to a disabled child, however, he or she may lose current government benefits.

One must also decide whether or not to disinherit a child with a disability or use a special-needs type of trust.

 Special needs trusts are generally established by the parents or other relatives of the disabled child. The trustee should have absolute discretion over how to expend the trust funds for the benefit of the disabled child.

• Government benefits: Government benefits should be used to meet basic needs such as food,
clothing, and shelter.
• Special needs trust: The funds from the trust should be used for supplementary needs such as
utilities, medical care, special equipment, education, job training or entertainment.

Seek Professional Guidance
Since the laws in this area are very complex and vary from state to state, experienced, knowledgeable legal counsel should be retained to draft the appropriate documents.

How a Special Needs Trust Works
Special needs trusts allow family members to provide some benefits to a disabled child without causing him or her to lose government benefits.

Items to Consider:
· Parents can act as the trustees
· Trust should be separate from the family trust
· The trust may be revocable or irrevocable
· Final beneficiaries should be named to receive the trust assets after the disabled child dies
· Family members should discuss the future management of the trust and how it will be funded

This is a highly specialized document and should be drafted by an attorney who is experienced in the areas of disability, government benefits, and estate planning.