Special Needs Trusts continue to be Vital for People with Disabilities

The term “special needs trust” is used to refer to a trust that’s for benefit of a person with disabilities who depends on means-tested public benefits that have income limits or resource/asset limits. Sometimes these are “first party trusts” — created by the disabled person (over age 18) or his parent, grandparent, or guardian with court permission, or by a court, and funded with assets owned by the disabled person. Other times they are “third party trusts” — created by somebody (such as a parent or grandparent) for benefit of a disabled family member, and funded with the parent or grandparent’s assets. Still other times, these Trusts are written into a Last Will and Testament, so that the share being left to the disabled person will be protected within the “special needs trust.”  Now more than ever, families and individuals should review their estate plans to see if trusts are needed.

When an estate inheritance passes to a person who depends on means-tested benefits like SSI or Medicaid/.MLTSS, the individual might lose their benefits after receiving the inheritance because they will have excess resources. This creates a particularly risky situation for a person who receives Supports services through the NJ Division of Developmental Disabilities, because DDD benefits depend upon the person meeting those means-tested criteria. It can also be risky for an individual who receives skilled nursing benefits through the Medicaid/MLTSS program. There are remedies available, such as filing a court petition, but time and benefits can be lost while the remedies are being pursued. And now in this time of court closings due to COVID-19, everything is more difficult to pursue in court. Supreme Court release 3-27-2020

A special needs trust can be written in your Will and can be named as the beneficiary of your tax-deferred account (IRA, 401K, etc.) or your life insurance. The trust can be designated to receive the share of your probate assets that would otherwise go directly to the person with disabilities (causing the problems described above). Careful planning can prevent a crisis. If one of the potential heirs of your estate or your Will is disabled, you may want to review your plans to see if a special needs trust  would be protective for your heir.

Call us for advice about estate planning with special needs trusts …  732-382-6070

How to create a master plan for the care of your special needs child

If you’ve been caring for your child who has special needs, you have deep personal knowledge of how your child behaves and responds. You know what they like and what they hate. You know what triggers an anxious or distressed reaction. It could be a flavor, a show, a color, or a person.

As an aging parent, you are probably concerned about who will take care of your child when you are gone. Even as a young parent, this could be on your mind. You may be thinking only about your estate plan – what funds should I set aside? Who will mange those for my child? Do I need a Special Needs Trust (SNT)? Who should I designate as the successor guardian in my Last Will and testament? These are critical decisions for you to make. But what about the actual care plan? There are so many details to think about and convey to the person who follows in your shoes.

Who is going to take your place? Can your child stay in the home? Who will live there and oversee the daily routine? Who will take care of the house? How will they know just what your child is like, or what your preferences are? How will they know about the social life and cultural life your child enjoys? If religious practices or weekly rituals are important, does the potential caregiver know about that? Do they know just how you enable your child to participate in these activities? What is the supported decision-making model that you have been using with your child?

The answer is to write up a blueprint for special needs care — a “master plan”. Call it what you like, it is a detailed discussion of the kinds of things just described. Write up the daily schedule, food preferences, clothing preferences. Include names of favored friends and relatives, best-loved teachers and aides, doctors and health care providers, and people who must be avoided. Collect the IEPs, IQ tests and other cognitive evaluations, progress reports, court orders, and medical records. Collect the current Social Security or SSI documents and Medicaid or Medicare proofs. List the doctors and prescriptions. Make requests or recommendations for activities and outings. No detail is too small.

Estate planning is much more than just a Will, trust or power of attorney. It’s about creating peace of mind and a sense of security for your special needs child as well.

Call us for special needs future care planning, and estate planning … 732-382-6070

Family Estate Planning to Protect Children with Special Needs (part II)

Parents of children with special needs are typically aware that their child may need to be financially eligible for important governmental programs through Medicaid, SSI or the DDD. Under these programs, there is an limit on the amount of assets the child can have. These parents will often consider (1) leaving the child’s share of the estate in a supplemental needs trust, or (2) not leaving anything to that child and asking their other children to provide supplementation when necessary from what they wkill inherit.

Unforseen circumstances could prevent even your best-intentioned child from supporting or supplementing their special needs sibling after you are gone. Your daughter could have debts or legal poblems of her own. Her spouse may object to transferring the inheritance for support of the sibling. Your son may need to pay for college expenses for his own children. And so on. By directing a portion of your estate into a supplemental needs trust, you can protect money for your special needs child and guarantee that the funds will be there solely for this child’s benefit no matter what happens to other family members.

Your own parents may be grappling with the same issue. Consider recommending to them that they put an SNT into their own Wills so that any inheritance by a special-needs  grandchild goes into the Trust. Remind them, though, that not all discretionary trusts would qualify as a special needs trusts.

They may also want to consider create an SNT now, which they  can fund over time, so that for instance, if they make a gift to other grandchildren (to reduce the size of the taxable estate), they can also make a gift for benefit of the special needs grandchild. They could direct a percentge of their annuities or tax defered accounts into such a trust (with all required language of course). They could direct a percentage of life insurance to that trust. The special needs child may have several different relatives who would want to provide funds for him, and they could all transfer gifts into that trust.  So this kind of trust is established during your parents’ lifetime  (an inter vivos trust) and is funded during or after lifetime, or both. The trustee can be a family member or a suitable bank, brokerage trust service, or nonprofit organization which administers such trusts.

Estate planning outs you in control of the arrangements, beacause you make the plan. Planning for the fuiture in this way gives everyone involved peace of mind.

For estate planning that meets your family’s special needs, call 732-382-6070