How Should My Estate Plan Be Different if I Have a Child with Special Needs?

How Should My Estate Plan Be Different if I Have a Child with Special Needs

An estate plan for children with special needs requires careful and mindful planning. Parents of children with special needs provide critical support for their children, not only as their loving parents but also as their advocates, protectors, and financial support. However, the reality is that most children will outlive their parents. As a result, the parents of children with special needs should ensure that their children have a similar level of protection after they are gone.

At Rubin Law, our special needs planning attorneys regularly assist parents and caregivers in setting up comprehensive estate plans to provide for and protect their children with special needs. You can call our offices at 866-TO-RUBIN or contact us online to get more information about how we can assist you and your family.

The Goals of an Estate Plan When You Have a Child with Special Needs

Parents with children often create estate plans to provide financial support for their children in the future. While this is also a goal for parents with children who have special needs, these parents likely have other goals in creating their estate plan, as follows:

  • Designating a guardian for your child, if necessary;
  • Managing money to last throughout the child’s lifetime;
  • Protecting the child’s entitlement to government benefits; and
  • Providing funds to supplement the child’s existing public benefits or to substitute for them if those benefits should become unavailable.

A secondary concern of parents with a child with special needs often includes avoiding a “payback” provision for Medicaid benefits upon their child’s death. Parents also likely desire to avoid undue taxation of funds at the federal and state levels. Both these goals can help maximize the funds available to care for the child during their lifetime.

Designating a Successor Guardian for Your Child

If you have an adult child over whom you have guardianship, you will need to name a successor guardianship in your estate plan for your child. The successor guardian will take your place and make the decisions you currently are making for your child. In many cases, the successor guardian will be a sibling of your child with special needs or another close relative, but you should always choose the person who can provide your child with the best care.

Whomever you choose, you should be sure to discuss the legal ramifications of guardianship with that person. They must understand their legal responsibilities as guardians and be willing to provide the necessary care for your child.

You also should name an alternate to your chosen successor guardian. As years go by, the successor guardian may pass away, become disabled, or otherwise become unable to serve as your child’s guardian. Therefore, you should name an alternate or successor guardian for your child in your will if the successor guardian whom you initially designated cannot serve as guardian.

Creating a Special Needs Trust

In most cases, creating a special needs trust as the mechanism for your child with special needs to receive an inheritance from your estate – and any other funds from relatives – is the most effective and efficient way of achieving the goals listed above. You need not fund the special needs trust during your lifetime or put aside any money to create the trust. Instead, you can simply create the trust so that it already exists to receive money on behalf of your child after your death.

Whether a special needs trust is funded exclusively with an inheritance directed to the trust after your death and/or with gifts or bequests from other relatives, the funds in the trust do not jeopardize your child’s eligibility for public benefits. A trustee must manage and approve all distributions for specific purposes, so your child has no direct access to the trust. The safeguard of the trustee appointed to manage the trust also places necessary controls on the spending of the assets by your child, thus preserving assets for your child’s future.

A Third Party Special Needs Trust need not contain a Medicaid “payback” provision, which is an attractive feature. This characteristic makes it easier for the trustee to be more flexible and generous in using funds to support the child during their lifetime. However, distributions from a special needs trust may result in some taxable income to the child. Therefore, you must structure these trusts and manage investments carefully to minimize that tax liability and provide that any such liability be paid out of trust assets.

Call Rubin Law Today to See How We Can Help

Rubin Law is the only Illinois law firm exclusively dedicated to providing compassionate legal services for children and adults with special needs. In addition, we offer unique legal and future planning techniques to meet your family’s individual needs. At our law firm, you can discuss all your needs and objectives with an experienced Illinois special needs trust lawyer.

Call us today at 866-TO-RUBIN or contact us online to learn more about the services we can offer you and your family.