Estate Planning For Special Needs Families

Estate planning for special needs at a home office.

If your family includes a special needs child or special needs adult, estate planning is a crucial priority. Special needs planning may protect the assets of the child or adult and ensure that they do not lose eligibility for government benefits. Due to the complex federal and state laws that apply, estate planning for special needs requires professional legal assistance. At Asset Protection & Elder Law of Georgia, we have the experience and knowledge to help families and adults address these essential issues.

Estate Planning for a Special Needs Child or Adult

A special needs child or adult is an individual who has a disability as defined in Social Security law. Under extensive federal and state laws and regulations, children and adults with special needs often qualify for government benefit programs, such as Supplemental Security Income (SSI) and Medicaid. Since these programs have means-based eligibility requirements, a special needs child or adult whose assets or income exceeds financial criteria will not be eligible for benefits. However, in some circumstances, estate planning can utilize a special needs trust to enable the child or adult to become or remain eligible for government benefits.

Special needs trusts, also known as SNT or supplemental needs trusts, are a specific type of trust permitted by federal and state law that may benefit a special needs child or adult. There are different types of special needs trusts. Which type is right for your family member depends on the circumstances of the special needs child or adult, as well as on the circumstances of a child’s family. Determining whether a special needs trust can help your family member — and what type of type of special trust best suits your situation — requires assistance from an attorney who assists with estate planning for special needs.

The estate planning needs of a special needs child change when they legally become an adult. An individual with special needs over the age of 18 years who has legal capacity should have several other estate planning documents to protect them and their assets. The documents include an advance directive and durable financial power of attorney that authorize designated persons to make personal and medical decisions and manage finances in the event the special needs adult becomes incapacitated temporarily or permanently. An estate planning attorney helps with these documents, as well as with special needs trusts.

If a special needs adult may not or does not have legal capacity, their family or loved ones should consult an attorney about guardianship and conservatorship.

Use of a Special Needs Trust

If a special needs child receives money from a personal injury judgment (or settlement) or an inheritance, or as the beneficiary of a life insurance policy or other beneficiary account, those assets may disqualify them from receiving government benefits. Similarly, direct financial gifts from family members or loved ones can jeopardize the receipt of government benefits. In these situations, a special needs trust may avoid potential disqualification and protect the financial assets.

A special needs trust may also be a valuable tool for an adult who develops special needs due to an accident, medical condition, or another reason. Depending on the circumstances, using a special needs trust for income and assets that exceed eligibility amounts may enable the individual to qualify for government benefits. However, there are limitations on creating special needs trusts for adults over the age of 65. In that case, Medicaid planning may help an elder qualify for Medicaid coverage of nursing home costs.

Federal and state regulations provide for different types of special needs trusts. The primary types are: 1) a first-party special needs trust, which is funded by assets belonging to the special needs child or adult, and 2) a third-party special needs trust, which is funded by another person, such as a family member like a parent or grandparent. Regardless of the type of special needs trust, detailed legal requirements apply to creation and funding and to management and administration of the trust.

A parent, loved one, or special needs adult should never attempt to set up a special needs trust on their own. Choosing the right type of special needs trust, drafting the proper documents to establish the trust, and funding the trust should only be accomplished with assistance from an estate planning attorney who helps special needs families and adults. Using the do-it-yourself (DIY) approach for any estate planning can result in significant legal and financial problems.

Characteristics of a Special Needs Trust

Establishing a special needs trust requires a properly drafted and executed legal document that contains all the terms and conditions that apply to the trust. All special needs trusts, regardless of type, share certain characteristics that are required by the laws and regulations that permit them.

First, the beneficiary (who is the child or adult with special needs) cannot receive income or principal directly from the trust. Instead, the trustee (who is designated in the trust document) uses the funds to pay for the specific needs of the beneficiary by making payment directly to service providers. The trustee has a fiduciary duty to manage and distribute the funds in the trust according to the terms in the document and consistent with the applicable legal requirements.

Under the laws and regulations, there are restrictions on what types of expenses may be paid from a special needs trust. The money and other assets can only be used for supplemental needs that are not covered by government benefits. For example, a special needs trust can pay for special medical services or equipment not otherwise covered, education and training, limited travel costs, entertainment costs, electronic equipment or services (computer, mobile phone, internet), and other expenses beyond government benefit coverage. Each special needs trust is drafted to address the specific unique daily or supplemental needs of the beneficiary of the trust, to guide the trustee in managing and disbursing the trust assets.

Talk With Our Georgia Estate Planning Attorneys

If your family includes a special needs child or adult, or you are an adult with special needs, and you think a special needs trust may be right for your circumstances, our estate planning attorneys at Asset Protection & Elder Law of Georgia can help you evaluate your circumstances and take the right steps to protect assets. We also offer Medicaid planning for all seniors concerned about long-term care and nursing home costs.

From our Cartersville office, we provide estate planning and elder law services to clients throughout the communities northwest of Atlanta, including in Bartow County, Cobb County, Cherokee County, Gordon County, Floyd County and Paulding County. Call us at (770) 382-0984 or contact us through our online form.

Categories: Estate Planning