By: Barry E. Haimo, Esq.
June 21, 2018
Estate Planning for Special Needs Beneficiaries
Life is always a bit more complicated if you are caring for someone with special needs. Depending on the nature of their condition, you will likely need to find them specialized medical help, educational help, therapies, training, and so on. Moreover, these needs will not ever stop. They will continue to need extra assistance for the rest of their life.
One of the biggest worries that most caretakers of special needs individuals have is, ‘What will happen to my loved one after I am gone?’ You want to make sure that your loved one is well looked after and gets the help he or she needs.
This is where a knowledgeable Florida estate planning attorney comes in. There are many specific ways to plan for your loved one’s needs, but you have to understand what options are available to you.
Let’s dive in.
Draft a Letter of Intent
Essentially, this letter tells people about your special needs loved one. It can include details like:
- What are their functional abilities
- The things they like and dislike
- Their interests
- Routines they follow
Think of it as a way of introducing your loved one to all the involved parties. It lets them get to know him or her and helps them understand how to care for and interact with your loved one.
Create a Special Needs Trust
In the world of special needs, money isn’t everything. In fact, some programs and living facilities require that the person be eligible for programs such as SSI or Medicaid, and having too much money hinders this.
A Special Needs Trust, or SNT, gives them access to your money without having to worry about that issue. The trust allows them to use assets for their needs without disqualifying them for programs that they might need.
Something important to note – you typically do not want to set up the SNT in your will. If you do this, it will be subject to court intervention. Instead, make sure the SNT is created while you are still alive.
Be Specific about How Assets Should be Used
You know your loved one. You know what they need and what will help them best. Unfortunately, that does not mean that the person administering your estate will know as well – so you have to spell it out for them.
This can involve both specifying what to spend money on and how much, as well as setting aside funds for professional advisers, advocates, and care managers who are used to working with people who have your loved one’s condition and can determine how best to meet their needs by spending well.
Look for Funding Alternatives
Worried you don’t have enough money to fund the SNT trust? Ask your attorney to look into how you can use life insurance to fund it.
Typically, you want to try to avoid using retirement accounts to fund the trust. The planning requirements of these types of accounts just don’t mesh well with the needs of an SNT. If you have no alternative but to use retirement accounts to fund the SNT, make sure that your attorney set your loved one up as a designated beneficiary.
Make the Rest of Your Estate Plan Work with the Special Needs Trust
It goes beyond setting up a Special Needs Trust. You also need to make sure that the rest of your estate planning documents recognize and work around it. For example, Power of Attorney documents need to be drafted to give your POA the power to fund the SNT. Other documents must be written to clarify that any assets that would otherwise go to the special needs individual should instead by diverted to the SNT.
This goes for gifts as well. Your special needs loved one cannot receive gifts without it causing a potential problem, so anyone who wishes to leave a gift needs to instead complete paperwork that instead sends it to the SNT.
Partition Funds, Exempt Trusts, and More
There are additional options available that serve to protect both your loved one and your assets. The best way to learn what’s right for you is to sit down with an experienced Florida estate planning attorney as soon as possible.
Barry E. Haimo, Esq.
Strategic Planning With Purpose®
YOU ARE NOT OUR CLIENT UNLESS WE EXECUTE A WRITTEN AGREEMENT TO THAT EFFECT. MOREOVER, THE INFORMATION CONTAINED HEREIN IS INTENDED FOR INFORMATIONAL PURPOSES ONLY. EACH SITUATION IS HIGHLY FACT SPECIFIC AND EXCEPTIONS OFTEN EXIST TO GENERAL RULES. DO NOT RELY ON THIS INFORMATION, AS A CONSULTATION TO UNDERSTAND THE FACTS AND THE CLIENT’S NEEDS AND GOALS IS NECESSARY. ULTIMATELY WE MUST BE RETAINED TO PROVIDE LEGAL ADVICE AND REPRESENTATION. THIS INFORMATION IS PROVIDED AS A COURTESY AND, ACCORDINGLY, DOES NOT CONSTITUTE LEGAL ADVICE.