It's a daunting task to put together an estate plan. When you add children to it, it becomes more complex. If one of those children has special needs, it's not only more complex but imperative to estate plan — because you may be their only source of support socially, emotionally, and financially.
At Janssen Estate Probate & Elder Law, our special needs planning lawyer in Kansas and Missouri understands how delicate special needs planning can be. Parents worry, and rightfully so. Below is an overview of special needs planning.
What Constitutes Special Needs
Special needs is also referred to as “disability,” "handicap,” or “incapacity.” Each term is differently defined by state and federal law. Under the Americans with Disabilities Act (ADA), special needs is cited as a disability, and is defined per 42 US Code §12102 as
- A physical or mental impairment that substantially limits one or more major life activities of such individual;
- A record of such an impairment; or
- Being regarded as having such an impairment.
The meaning of the above definition gets further broken down by the ADA and then narrowed by case precedent. The definition matters if you want your child to get federal and/or state assistance and/or protection. We can help you understand what benefits your child may qualify for and how to get them, as well as how to arrange and distribute your own assets upon your death in a way that will best benefit your child.
In the end, though, if your child has special needs––however significant those needs are ––you want to make sure your child is safe and financially stable throughout their life. You can do this through a comprehensive estate plan.
How an Estate Plan Helps a Child with Special Needs
An estate plan can help make sure your child has all the necessities they need. If planned correctly, you can help provide:
- Money management that benefits the child for their lifetime
- Protection for public benefits
- Funds set aside for the future in case public funding is disrupted or restricted
Your tailored-made estate plan can incorporate things like identifying care providers, appointing a guardian, creating a trust and designating a trusted trustee, and finding housing.
Appointing a Legal Guardian to Look After your Child
One of the most important aspects of estate planning for parents of special needs children is choosing a guardian to look after the child once both parents have passed away. This can be done in the parents' last will and testament. If the parents do not make a joint will, they should make a point of ensuring that they both name the same person as their child's legal guardian.
- For underage children, this legal guardian would have many of the rights and responsibilities of the child's biological parents, allowing them to make some of the most important decisions in the child's life. Oftentimes, a close relative will be appointed because the child is familiar and trusts that person.
- For adult children with special needs, parents can appoint a conservator to make important decisions about the child's medical care and to manage the child's finances.
In either case, parents should choose someone who is trustworthy, reliable, and professional.
Testamentary or Special Needs Trusts
Children with special needs are rarely able to earn a living on their own. Instead, they rely on their parents for financial security.
Parents can continue to provide that financial security by establishing a testamentary trust or a special needs trust. Both set aside assets from the parents' estate to fund a trust that would be professionally managed by a trustee of the parents' choice. The principal in that trust would create interest payments that can be used to cover the child's ongoing needs and care. Also, if drafted properly as a spendthrift trust with strict limits on the trustee's ability to give money to the child, the child may still qualify for public assistance––if desired and necessary.
When selecting the trustee for the trust, you want to seriously consider who should act as trustee, especially if the trust is not set up as a spendthrift trust. If the trustee is a family member who views the trust's assets as family assets, they may spend the money themselves. In lieu of a family member trustee, you could also consider the following entities:
- A trust company
- A financial institution
- A nonprofit organization with experience or specific to special needs
- Your attorney (attorneys at Janssen Estate, Probate, and Elder Law are not generally available to serve as trustee)
You may also opt to appoint co-trustees. There are, of course, pros and cons to all of these options. You should always consult with a special needs lawyer prior to choosing a trustee.
Avoiding Mistakes in Estate Plans with Special Needs Children
When parents have assets they intend to leave their children, there are a few mistakes often made:
- Disinheritance. Some parents make the mistake of thinking that they can disinherit their child so that they will qualify for public assistance. Public assistance, however, cannot cover all the necessities the child needs even though it provides great benefits, like vocational rehabilitation, job coaching, shared housing, etc. This decision is not recommended.
- Sibling's promise. Parents think they can simply leave their estate to their non-special needs children, and rely on their promise to care for their special needs sibling. This also is a mistake. Life happens, and promises come and go. There are no assurances to be gained through a promise, and your special needs child can suffer due to this failure to properly plan for their care.
- Inheritance. Here, parents do leave an inheritance to the child, but if it meets a certain threshold, it will negatively impact the child's eligibility for public benefits. If your child will need both to live comfortably, then this is a mistake.
- Taxes. Choosing a revocable or irrevocable trust may come with tax implications. You should consult with an attorney and your tax expert about what tax implications may arise when creating a revocable or irrevocable trust.
In the end, it is always best to speak to an estate planning attorney to make sure you set up the estate in your special needs child's best interest.
Contact Us Today for Special Needs Planning Consultation
You want what's best for your special needs child, and we at Janssen Estate Probate & Elder Law understand that. We will review your assets, listen to your wants, and provide the best legal options for you so that your goals for your family are met. Contact us by filling out our online form or by calling us directly at 913-322-6300 to schedule a consultation today.
