Having a child with special needs can bring a family incredible joys and unique challenges. It is possible that your child may be dependent on you both emotionally and financially well into their adulthood. Two ways to ensure that you can care for an individual with special needs are guardianship and a special needs trust.
Guardianship is appropriate for individuals who are over the age of 18 and who do not have the ability to make their own financial or medical decisions. A guardianship is a court proceeding where a family member or friend is appointed by the court to make either financial or medical decisions or both for an “incapacitated” individual. The guardian must report to the court yearly as to the medical and financial situation of the incapacitated person.
Guardianship is only appropriate if an individual does not have the capacity to sign a durable or medical power of attorney authorizing someone else to make medical or financial decisions when they are not able. Although guardianship may be the only option to keep an individual safe in many scenarios, it is important to consider the least restrictive options for the individual before heading down the path of guardianship.
Special Needs Trust
Another important consideration for families with children with special needs is a special needs trust. If it is likely that your family member with special needs may require some sort of public benefit in the future, leaving them an inheritance of any sum may affect their ongoing eligibility for that benefit. Qualifying for public benefits is no easy feat. You must qualify both based on your disability and your assets meaning that you must ensure that you no longer have any considerable assets in your individual name at the time of qualification. It may take months to qualify for the appropriate public benefits which may only include a meager monthly income and standard health insurance.
Imagine if your family member had gone to great lengths to qualify for public benefits and after qualifying, they discover they will in inherit assets from a relative. Unless they are inheriting millions, it is not likely that the sum received will be sufficient to pay for their housing, food and medical care for the rest of their life. The amount received may just be sufficient to pay for a few months housing and medical care. What happens when the inherited sum runs out? Unfortunately, they will have to start the qualification process all over again and will have very little to show for that past inheritance.
However, there is a way to set aside the inherited assets to supplement the public benefits. Your family member could receive the benefit of the inherited assets in the form of better medical care, new clothing, funds for travel and transportation and possibly better housing all while not affecting their receipt of public benefits. To accomplish such a goal, you would set aside assets in a special or supplemental needs trust. This type of trust holds assets from a family member or friend or the special needs individual himself or herself and limits the individuals access to the trust assets. The trust may make distributions to the special needs beneficiary for all things not covered by public benefits essentially allowing the individual to create a sort of backup plan to supplement the assets they are receiving from public benefits.
Both guardianship and special needs trusts are important things to consider when you are planning for an individual with special needs. Guardianship ensures that an individual with limited capacity has the support necessary to assist in making the best medical decisions. A special needs trust allows family members to continue to support the needs of the individual when their only other form of assistance is public benefits. Although having a family member with special needs may add new and complicated considerations, working with an estate planning attorney that specializes in the field may alleviate some of the stress.