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Families with Special Needs Children Should Not Delay Planning


For parents of special needs children, there’s nothing ordinary about raising a child. Caring for a child with special needs is not something most people are fully prepared to do; yet, with love in their hearts, parents pour everything they have into providing their child with the best possible life. In many cases, it’s a daily ordeal of extended caregiving and medical treatments that can drain them of their time and money.

Consumed by the “here and now” of making a better life for their child today, many parents never get to the planning that needs to be done to secure the child’s future. To ensure their child continues to receive the care he or she needs, with no interruption of available government benefits, parents must make planning an absolute priority.

The legal and financial consequences of not planning for a special needs child’s future can be catastrophic. At the very least, parents need to plan for the possibility of their premature death, which involves special arrangements in their estate plan. However, legal and financial arrangements also have to be made for the child’s eventual transition to adulthood. Of course, the parents can still provide care after their child becomes an adult, but, without proper planning, the child could lose significant financial benefits which would be a tremendous financial strain. To prepare for a special needs child’s future, parents need to consider the following crucial issues:

Special Needs Trust

Parents need to know that there is a $2,000 limitation on the amount of personal assets that can be held in the child’s name to remain eligible for government assistance. Any assets over that amount should be held in a Special Needs Trust. Any contributions made by family members or charitable organizations should be place in the trust.

The trust is also the conduit for any special instructions on managing the child’s money as well as coordinating the disbursement of funds between the guardian and any care-givers. The trust should be coordinated with their personal wills as well as state disability laws to ensure full compliance with benefit requirements.

Create New Wills

The parent’s will should be changed to name the child’s special needs trust as the beneficiary of any assets he or she is to receive. The will should also name a guardian who will be the child’s care-giver.

Beneficiary Designations

Any asset, such as life insurance and retirement plans, with named beneficiaries should be changed to name the special needs trust as the beneficiary for the child’s portion of the proceeds. Failure to name the trust as the beneficiary would result in the proceeds flowing directly to the child which would disqualify him or her for government assistance.

Power of Attorney and Medical Directive

If it is determined that the child is physically or mentally incapable of handling his or her own affairs, a power of attorney will transfer legal and financial control to the parents. For medical treatment, a medical directive will allow the parents to make medical decisions on their child’s behalf. In the event of the parents’ death, a guardian can be given contingent powers.

Letter of Intent

A letter of intent contains specific information related to the care of the child, down to feeding requirements, medical needs, and the child’s personal preferences. It can list approved physicians and care-givers as well as the people who should or shouldn’t be in the child’s life. Although it’s not a legal document, when communicated with the family’s attorney, physician, future guardian, and anyone else with a stake in the child’s life, it can hold significant weight. Much of what is contained in a letter of intent can be included in the parents’ will, which does carry the weight of law.

Educate Family Members

For parents with extended family members, it would be important to communicate these issues, so they understand the overall plan and any specific roles they have in the ongoing care of the child. They also need to be educated on the financial limits so that any contributions they make are made to the special needs trust.

While these are the core issues, planning for a special needs child needs to be tailored to the child’s and the family’s situation. Parents should only use the services of a qualified attorney who specialized in special needs planning. The right attorney will guide the parents through the issues that concern them and act as the family’s advocate in any legal or financial matter. The attorney is also in the best position to coordinate legal and financial matters with the family’s other advisors as well as any named trustees or guardians.

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This article contains general information only. Sunflower Bank is not, by means of this article, rendering accounting, financial, investment, legal, tax, or other professional advice or services. This article is not a substitute for such professional advice or services, before making any decisions related to these matters, you should consult a qualified professional advisor.