During the past year, I have written extensively on important topics related to special needs planning issues. My hope was to provide families with valuable information and knowledge that they could utilize in planning for the financial future of their loved ones with special needs. I would now like to summarize some of the critical issues related to special needs planning and their relevance to families.
Only work with knowledgeable professionals that have an expertise in special needs planning:
Specialization is becoming the norm in most professions. A person with a heart problem sees a cardiologist. A person purchasing a home sees a real estate attorney. Effective special needs planning requires a high degree of specialized knowledge and expertise. Generalists typically do not possess the knowledge or expertise necessary to provide comprehensive planning services or the ability to keep pace with future law changes. Special needs planning professionals that have an expertise in their planning approach should be able to obtain additional resources and services for families, and provide them with updated information on recent law changes or innovations in the field.
Learn about how the special needs or supplementary needs trust preserves governments benefit eligibility:
Needs-based government programs such as SSI (Supplemental Security Income) and Medicaid do not allow people with disabilities to have more than $2,000 in assets. As a result, many attorneys have told families to disinherit their children with special needs. However, there is no longer any reason to disinherit children with special needs or to leave money to siblings or other relatives on their behalf. Morally obligated gifts can be attached through divorce, bankruptcy, or lawsuit. The special needs trust is the only planning technique that allows families to preserve government benefit eligibility. If drafted correctly, special needs trust assets can only be used to supplement government benefits and can never supplant government benefits.
Prepare, review, and revise legal documents:
All families should have legal documents such as wills, trusts, power of attorney and healthcare proxies. All of these documents need to be reviewed and revised to make certain that they will work successfully in special needs planning situations. Improperly drafted and/or worded documents will cause the loss of important government benefits such as SSI and Medicaid.
Review and revise financial assets:
All family-held assets need to be reviewed to make certain that distributions made during life or upon death will not cause the loss of government benefits. Certain assets held, such as custodian accounts or as tenants in common, UGMA or UTMA accounts, may need to be shifted, retitled, or re-configured to preserve government benefit eligibility. Care should be taken to change primary or contingent beneficiary designations on all group term insurance plans, life insurance policies? 401(k) plans, tax sheltered annuities, retirement plans, etc. People with special needs should not be named as beneficiaries. Rather, money should be left to the special needs trust.
Develop a clearer vision of how you want your child to live if both parents are no longer around:
Families need to develop a clear vision of the hopes, dreams, and aspirations that they want for their loved one after they are gone. Subsequent planning efforts and funding should impact the desired lifestyle, residence, and job situation based on this vision and other family objectives.
Develop a precise understanding of your child's diagnosis, prognosis, functional skill level, earning potential, and abilities:
A clear and definitive diagnosis is a basic starting point. A definitive diagnosis can help lead to an accurate and realistic assessment of your child's functional skill level and eventual prognosis. …