If your child requires or is likely to require governmental assistance to meet their basic needs, do not leave money directly to your child. Instead, establish a Special Needs Trust.

A trust that is not designed with your child’s special needs in mind will probably render your child ineligible for essential benefits. A Special Needs Trust is designed to manage resources while maintaining the individual’s eligibility for government benefits. Planning is important because many beneficiaries as adults will rely on government benefits for support. If the disabled person has assets in their own name, they might lose eligibility.

Medicaid, and other public benefits programs, will not pay for everything your child might need. A Special Needs Trust can pay for medical and dental expenses, annual independent check-ups, necessary or desirable equipment (such as a specially equipped van), training and education, insurance, transportation, and special foods.

Unfortunately, some Special Needs Trusts are unnecessarily restrictive and generic. Many trusts are not customized to the particular child’s needs. Thus, the child fails to receive the support and benefits that the parent provided when they were alive. For example, children who are high functioning and active in their communities can benefit from a Special Needs Trust that is carefully tailored to provide adequate resources to support their social lives.

Does your child have significant medical concerns? Should the trust allow for birthday gifts for other family members? What about travel expenses to visit loved ones? Do you have a preferred living arrangement for your child? Your child’s special needs trust should address all these issues and more.

Another mistake attorneys with special knowledge in this area often see is a “pay-back” provision in the trust rather than allowing the remainder of the trust to go to others upon the death of the child with special needs. If a “pay-back” provision is included unnecessarily, Medicaid will receive the remainder (up to the amount of benefits provided) in the trust upon the death of the beneficiary. These “pay-back” provisions, however, are necessary in certain types of special needs trusts. An attorney who knows the difference can save your family a small fortune.

A Special Needs Trust will help you avoid one of the most common mistakes parents make. Although many people with disabilities rely on SSI, Medicaid, or other needs-based government benefits, you may have been advised to disinherit your child with disabilities—the child who needs your help the most—to protect that child’s public benefits. These benefits, however, rarely provide more than subsistence, and this “solution” does not allow you to help your child after you are incapacitated or gone.

Disinheriting your child with special needs might be a temporary solution if your other children are financially secure and have money to spare. But permanently disinheriting your child with special needs could be a huge mistake! It is not a solution that will protect your child after you and your spouse are gone. The money can be lost in a lawsuit, divorce, liability claim, or adverse judgment against your other children. For example, what if your child with the money divorces? His or her spouse may be entitled to half of it and will likely not care for your child with special needs. What if your child with the money dies or becomes incapacitated while your child with special needs is still living?

These are just some of the concerns parents of special needs children need to navigate. The bottom line is to get a special needs trust in place with the help of an advisor who understands the unique issues inherent with special needs situations.

Dedicated to empowering your family, building your wealth and defining your legacy,

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It always surprises me to hear parents who have a child with special needs tell me that they were not aware of what they needed to do to ensure the future well-being and care of their child is properly handled. Or sometimes, they tell me they didn’t know they needed to do anything at all.

If that’s you, and you have a child with special needs at home, this article is for you. And if you have friends or family who have a child with special needs, please share this article with them.

Every parent who has a child with special needs MUST understand what’s needed to provide for the emotional, physical, and financial needs of their child, if and when something happens to them.

Naming Guardians
Of course, the first and most critical step in ensuring the well-being and care of your child with special needs’ future is to name both short and long-term legal guardians to take custody of and care of your child, in the event of your death or incapacity. And as you well know, this responsibility doesn’t end at age 18, if your child will not grow into an adult who can independently care for him or herself.

While we understand this lifetime responsibility probably feels overwhelming, we’ve been told repeatedly by parents that naming legal guardians in writing and knowing their child will be cared for in the way they want, by the people they want, creates immense relief.

Beyond naming a guardian, you’ll also need to provide financial resources to allow your child to live out his or her life in the manner you desire. This is where things can get tricky for children with special needs. In fact, it may seem like a “Catch-22” situation. You want to leave your child enough money to afford the support they need to live a comfortable life. Yet, if you leave money directly to a person with special needs, you risk disqualifying him or her for government benefits.

Special Needs Trusts
Fortunately, the government allows assets to be held in what’s known as a “special needs trust” to provide supplemental financial resources for a physically, mentally, or developmentally disabled child without affecting his or her eligibility for public healthcare and income assistance benefits.

However, the rules for such trusts are complicated and can vary greatly between different states, so a comprehensive special needs trust needs to be properly structured and appropriate for your child’s specific situation.

There are two ways to set up a special needs trust. In certain situations, we build it into your revocable living trust, and it will arise, or spring up, upon your death. From there, assets that are held in your revocable living trust will be used to fund your child’s special needs trust.

In other cases, we can set up a special needs trust that acts as a vehicle for receiving and holding assets for your child now. This makes sense if you have parents or other relatives who want to give your child with special needs gifts sooner rather than later.

Once the trust is funded, it’s the trustee’s job to use its funds to support the beneficiary without jeopardizing eligibility for government benefits. To handle this properly, the trustee must have a thorough understanding of how eligibility for such benefits works and stay current with the law.  The trustee is also required to pay the beneficiary’s taxes, keep detailed records, invest trust property, and stay current with the beneficiary’s needs.

If you need help creating a special needs trust for your child, contact us. We can develop a sustainable living plan for your child with special needs that will provide her or him with the financial means they need to live a full life, while preserving their access to government benefits.

Dedicated to empowering your family, building your wealth and defining your legacy,

Marc Garlett 91024

Legacy Planning 91024Parents of children with special needs usually share one overriding concern: what will happen to my child after I’m gone? They also often struggle with guilt for what they envision as an eventual destiny for their other children who may assume care of their special needs sibling.

But I’m here to tell you, this is the kind of situation estate planning was made for. You can take action right now to ensure your special needs child has the proper care for the rest of his or her life. As you consult with your attorney to create a special needs trust or other estate planning tools, be sure to consider the following:

The amount of financial support your special needs child will require over his or her life. Start by calculating how much support you are providing now. Then think about the support they will need as they reach adulthood and project what that amount will be all the way into their senior years. Consider if he or she will be able to provide any of their own support, or will rely completely on government benefits. Of course, you also need to estimate how much you are able to contribute.

Governmental benefits protection. If your child already receives government benefits from Medicare or Supplemental Security Income (SSI), your plan will need to take this into consideration and not provide your child with too much income which would disqualify them from these benefits. Usually, a special needs trust will enable you to provide your child with additional income without losing governmental benefits.

How your other children fit into your estate plan. A vast majority of parents want to ensure equal treatment for all their children when it comes to an inheritance. But sometimes, with a special needs child, this is not possible – especially if parents have limited financial resources. If this will be true for your family, be sure you talk with your other children about your plan, and discuss how distribution of other assets might help to even things up for them.

Who will manage your special needs child’s finances. When you create a special needs trust, you will also need to name a trustee or trustees to manage the trust assets for the benefit of your child. Choose someone you know, who cares about your child, and who is willing to assume and carry out the responsibilities of caring for him or her.

On one hand, parents of special needs children are no different than any other parent. We all do whatever needs to be done to protect and provide for our children, no matter what. On the other hand, parents of special needs children often have to go far above and beyond what most other parents have to deal with. And the universal question of, “how do I want my child cared for after I’m gone?” becomes complicated and multi-dimensional. But with special care and planning, those parents can also ensure their child’s care will continue in alignment with their desires, hopes, and dreams for the future, no matter what.

To you family’s health, wealth, and happiness,
Signature - Marc