All You Need to Know About Special Needs Estate Planning

If you ever think of disinheriting your beneficiary with special needs because of numerous reasons, the most common of them being the government benefits they receive, then don't. There is a midway too where your beneficiary can benefit from your financial assets and also avail the facilities that the government provides for him. And SNT's provide that midway. However, there are still some estate planners who advise disinheriting but it is no more encouraged and such planners are now being held liable for it.

In the matter of allocating assets for your beneficiary with special needs, you need to be familiar with means-tested benefits and those that are based on employee work history. If a benefit is means-tested, it will be eligible to the beneficiary if his income and resources ( means ) are below a certain level, for example, Medicaid and Supplemental Security Income. The other employee-based benefits are majorly insurances and are dependent on employment history. Medicare and Social Security Disability Insurance are few of them. An SNT should not only maintain the beneficiary's mean tested benefits but also look out for employment-based benefits, if eligible. Now there can be cases where a disabled person might not need insurance of some type, for example, Medicaid but there can be other programs that would require Medicaid eligibility. Those programs might be important for the disabled person. Therefore, it is smart to keep all the doors open.

One should know the difference between three main types of SNT's: the first-party trust, the third-party trust, and the pooled trust. The assets possessed by the beneficiary with special needs such as those received by inheritance or accident settlement are held by the first-party trust. The third-party trust is usually used by parents or other family members who want to allocate their assets to someone with special needs and hence holds funds belonging to them. Whereas, a pooled trust holds funds from many different disabled beneficiaries. To best protect the beneficiary's government benefits, the decision of choosing which type of SNT must be made wisely.

As discussed earlier, a trustee is someone who holds and administers the financial assets according to the owner's will. This is a very integral job and the donor must be very sure about the person they will be assigning as the trustee. It is often suggested to choose a professional trustee, who can either serve alone or be a co-trustee with a relative or a family member.
https://www.specialneedsalliance.org/special-needs-101/free-trustee-handbook/

The dispute that arises during the distribution of assets is very common. This can be a very strenuous moment for parents who want to content every child of theirs but are tangled by the complexities of the issue, especially when one of the beneficiaries is disabled. According to many, the child with special needs must be allocated a greater proportion of assets as he needs more but it is easier said than done. Therefore, proper planning should be made so that creative resolutions can be opted, ensuring justice to all.

There are some assets that are governed by separate beneficiary designations e.g. life insurance, IRAs and other retirement plans. It is crucial to keep them into account as well while administering and allocating donor's assets.

In the case of distant family members who wish to allocate some of their assets to the disabled person, it is wiser to coordinate with them using a third party SNT instead of everyone creating their own trusts. In this way, the beneficiary's benefits provided by the government won't be compromised as well.

Besides an estate planning attorney, one can also go for allied professionals like a life care planner, a care manager, a life insurance professional, a government benefits application specialist and claims processor, and there are many more. A team of eligible professionals can work together to bring out the best for the beneficiary's future.

In the case of a beneficiary who might not be able to make health or safety decisions because of his disability, it is important for the parents to appoint a legal guardian after their death. But for this, they first need to become court-approved legal guardians, after their child turns 18.

Something achieved by a joint discussion always yields better results. If an adult beneficiary is sound enough to make legal decisions, it will be fruitful if the donors take his opinions into account while allocating their assets. If you need any help with your special needs planning please contact us here.