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Mar 10, 2019

How to Plan for Special Needs Beneficiaries

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Throughout your life, assisting your special needs child or relative can take up a great part of your time and tasks. Depending on the scope of their situation, the amount of assistance they need could vary. However, what happens when you’re not around? How does your special needs child or relative get their needs met? We explore various items to think about when discussing things with your special needs planning attorney.

List of Contents

Uniqueness of Special Needs Planning

Unlike most, special needs clients have several things to consider. Such individuals have benefits they receive from the government and local agencies both financially and healthcare. However, these resources could quickly disappear unless your special needs planning attorney properly creates an estate strategy that avoids the pitfalls of losing these critical benefits.

It would be easy for the estate plan to merely provide the assets to the special needs beneficiary. This risks jeopardizing government benefits. Alternatively, you can merely disinherit the special needs relative. This may preserve the government resources but could put the family assets that help him/her at risk. In addition, most of these public benefits are insufficient to provide all the necessary items a special needs relative requires. Thus, consulting with an experienced special needs planning attorney is important. They can help create a quality, intentional plan that benefits all your heirs.

SSI and Medicaid Basics

Supplemental Security Income (SSI) and Medicaid are two of the most common public benefits a special needs individual receives. SSI provides financial income through the federal government to those who are disabled. How do you define “disabled”? It’s a person who is “unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months.”  

So what does a special needs planning attorney have to keep in mind with regards to SSI? The asset limit for SSI is currently $2,000. Assets include cash, personal property, and real property that can assist the special needs individual. The exceptions to this list are where you live, furniture, clothes, car, and personal care items. Should a special needs planning attorney keeps these in mind, they can arrange an estate planning that would ensure SSI eligibility and vis-a-vis Medicaid qualifications.

Why is Medicaid important? It is the heart of medical benefits for special needs individuals. They generally have higher medical needs so maintaining Medicaid should also be a critical for the special needs planning attorney.

What should a Special Needs Planning Attorney do?

The key starting point for a lawyer is to establish a special needs trust. Such a trust gives a trustee the flexibility and discretion to distribute assets to preserve governmental benefits. Thus, public benefits like SSI and Medicaid are safe. They would provide extra trust resources in an attempt to support the governmental resources without impacting them.  

Special Needs Trust come in different formats. Some of them assist the special needs beneficiary up until their death using their own assets. These are first-party special needs trusts. Subsequently, they go to the government. Others have assets that come from someone other than the beneficiary and they would then go to someone other than the government. These are called third-party special needs trusts and are the most common sort. The latter usually takes form through a parent bequeathing assets upon their death to a child through a special needs trust and is kept their till the child’s death.

Beyond the above, there are many other factors a special needs planning attorney should determine such as the trustee, basis for distributions, power of appointment, and the many emotional considerations. If you have a special needs child or relative, please don’t go to any attorney but find a knowledgeable special needs planning attorney.

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