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Special Needs Require Special Planning: 5 Considerations when planning your estate

I am often asked what is different about estate planning for a family with a member requiring special needs. Here are five areas that are important to consider:

  1. Keeping Government Benefits:

The impact on Government benefits such as Medicaid and Social Security must be considered when leaving assets to a beneficiary with a disability.  To qualify for Supplemental Security Income (SSI) from the Social Security Administration, a person must not have countable resources greater than $2,000.00 ($3,000.00 for a couple).  Countable resources include cash, money in a bank account and many forms of personal property.  There are several items not included in countable resources, such as the home you live in, one car per driver, and property used in a business.  For more detailed information, visit For our purposes, the takeaway is leaving assets directly to a beneficiary who is receiving or is eligible to receive SSI and Medicaid benefits will likely disqualify them or cause them to lose their benefits until the resources are used up.  Consider using a Supplemental Needs Trust (often called a Special Needs Trust).  A Supplemental Needs Trust can be funded and hold unlimited amounts of property.  The Trustee can hold the property for the benefit of the disabled beneficiary and use the property to supplement the benefits they receive from government benefits.  This will increase the overall quality of life without diminishing any government help.

  1. Planning for a Lifetime:

Consider that your beneficiary will need help for their entire lifetime.  When considering where to leave our assets or how much life insurance to purchase, most think about ensuring there is enough life insurance money to last until their kids reach the age of majority or can finish college.  Consider that your beneficiary may not be able to attend college or fully support themselves after turning 18.  Work with a financial planner to project the amount that will be needed to support your beneficiary for their lifetime, rather than just a few years.  A qualified financial planner should be able to give you projections based on inflation and allow you to make an informed decision about what the best amount of life insurance is.

  1. Funding the Trust:

Change your beneficiary designations on your life insurance, retirement benefits, and bank accounts to the Supplemental Needs Trust. Often, Supplemental Needs Trusts are set up and then left unfunded because the beneficiary designations were never changed on financial accounts.  The trust can only help shield and protect assets that are placed within it.  Once again, it is not enough to just have a Supplemental Needs Trust, the trust must be funded with any assets intended for the disabled beneficiary.

  1. Living Arrangements:

Consider the long-term living arrangements for your beneficiary.  Will your beneficiary be able to live alone someday or will they always live with a family member?  Do your family members understand their commitment could be a lifetime commitment?  When planning, consider whether the family member who has pledged to support your disabled beneficiary can do so.  Can they do so in their current home?  Will they need to relocate?  I have seen several families benefit from group homes and other community living arrangements where their child is exposed to other living options a little bit at a time, rather than being thrust into a new experience with no direction or experience.

  1. Creating a Guidebook:

Put together a letter of intent.  In the world of Special Needs, the letter of intent is one of the most important documents.  While not a legal document, it is imperative.  A letter of intent is a guidebook to your child.  You spend every day with your child, take them to all their appointments, feed them all their meals.  If you leave your child with a babysitter, you leave the babysitter with tons of information about dietary restrictions, bedtime routines, soothing methods, and emergency contacts.  The letter of intent includes all that information and more.  At a minimum, the letter should include some family history, the names and contact information of their friends and people they are connected to, medical history, names of doctors and providers they see, foods they love, dietary restrictions, activities they love, their normal daily routine, any medications they take and what calms them when they are upset.  The letter should also be used to describe your hopes and aspirations for your child as well as religious preferences.  In short, this document will be used as a guide to caring for your child, so treat it as such.  Take lots of time, update it regularly and include any information that you think would be helpful to a person caring for your child.