Special Needs Planning

Do you have a child or adult who is physically or mentally disabled? If so, it is very likely that you will need to create a special needs trust as a part of your estate planning. Very often, those with special needs are receiving needs-based government assistance in the form of Supplemental Security Income “SSI” and/or Medicaid. If your loved one receives an inheritance from you, that inheritance may disqualify them for their SSI or Medicaid. To ensure this does not happen, you will need to create a special needs trust to hold their inheritance. This type of special needs trust is called a third-party special needs or supplemental needs trust because it is created with the assets of someone other than the person receiving government benefits. When you create the special needs trust, you appoint a trustee to manage the assets in the trust for the benefit of the special needs trust beneficiary. In this way, the assets in the special needs trust can be used for your loved one’s benefit, but the assets will not disqualify them from receiving SSI or Medicaid.

Often, someone who is receiving SSI or Medicaid receives an inheritance or is involved in an accident and receives a settlement, the receipt of this money will disqualify them from receiving those SSI or Medicaid benefits. To allow them to continue receiving those benefits, a first-party special needs trust (also known as a self-settled or a d(4)(a)) can be created and the assets received in the inheritance or settlement can be placed in this trust so the SSI and/or Medicaid benefits can continue to be received. This type of trust is called a first-party special needs or supplemental needs trust because it holds the assets of the person who is receiving the benefits.

In addition to creating special needs trusts, there are also many other considerations that families with special needs members should consider as a part of their overall estate planning. One of the most important things to consider is ensuring the special needs person will have the necessary income and assets they will need to live comfortably during their lifetime. A life insurance policy naming the special needs trust as its beneficiary is a good way to ensure the special needs person has those necessary resources. There are also special considerations when retirement plan assets are left to a special needs trust as it could create adverse tax consequences or the inadvertent loss of SSI or Medicaid when distributions have to be made from those retirement assets.

Another important consideration in special needs planning is the use of a letter of intent. Although not a legal document, a special needs lawyer can assist you in drafting a letter of intent. This document memorializes the information that only you may know about your special needs child’s medical history, habits, likes and dislikes, experiences and wishes so those who come behind you as your child’s caregiver can have this invaluable knowledge to assist with your child’s care.

It is also possible that your child with special needs will need to have a legal guardian (what is known in Louisiana as a curator or a tutor) appointed for them when they turn 18 since Louisiana law will presume they have legal capacity to make decisions for themselves even if this is not the case. They may also need someone to act as their legal representative after you are no longer able to do so.

These and many more issues should be addressed for families with a special needs person. At Legacy Estate & Elder Law, our attorneys are well-versed in special needs planning and we are members of the Academy of Special Needs Planners, an organization devoted to providing resources to families with special needs members and attorneys who practice in this area of the law.

Creating a detailed plan for the disabled individual can eliminate stress and confusion in the long-run and can provide you peace of mind now in knowing that you have planned for your loved one with special needs when you can no longer provide care and financial support for them.

Please contact us now and let our compassionate team tailor your special needs planning to your specific needs and desires.