Magazine article The Exceptional Parent

Effective Planning for Your Child with Special Needs

Magazine article The Exceptional Parent

Effective Planning for Your Child with Special Needs

Article excerpt

(Part 1 in a Series of Articles)

Planning for the future of your child with special needs requires a very different approach than general estate planning. While many of the objectives are the same and encompass many of the same planning principles, many of the objectives are also very different. General estate planning centers on the process of maximizing the manner in which property will be transferred and disbursed, if the adult holding the assets passes away. Special emphasis is given to minimizing estate taxes, probate costs (costs included in settling an estate), and costs associated with transferring assets from one generation to the next generation. Special needs planning, on the other hand, deals with many of those same issues, but also focuses on preserving government benefit eligibility and providing quality lifetime care. There are many similarities between the two types of planning, but there are also many differences. The following represents information that you should discuss with your attorney or those professionals who are knowledgeable in the area of special needs planning.

The basic foundation of most estate plans is having a properly drafted and executed will. The will is especially critical for parents of a child with special needs. A will allows for an orderly distribution of assets to people chosen by the will's testator or creator. A designated person, or executor, is named to help settle the deceased person's personal affairs. Assets are appraised and recorded. Creditors are identified and outstanding debts are paid off.

The sad reality is that many parents have not taken the time to execute a will or develop an estate plan. For those individuals who die without properly drafted and executed wills, the states in which they reside at death have estate plans for them, which spell out steps and procedures in distributing their estates. The results can be particularly disastrous for special needs children receiving government benefits at the time of a parent's death. Some of the implications are discussed below.

Dying without a will is called, "dying intestate." State laws governing intestacy generally provide a specific formula for dividing a deceased person's property between the surviving spouse and children. For example, a state's law may provide that the surviving spouse receives one half of all assets, and that the children receive equal shares of the other half of the remaining property. If a child is a minor, depending on the amount of his or her inheritance, a guardian may have to be appointed by the court to manage the child's property. Smaller amounts, usually less than $10,000, may be payable to the surviving parent on behalf of the minor child under a state's Uniform Gift or Uniform Transfer to Minor Acts--statutes accepted in most states that enable property to be gifted to a minor child until that child reaches the age of majority (either age 18 or 21 depending upon the state). Upon reaching majority, the child is entitled to receive the property and has the right to demand a full accounting and can even sue if there is evidence of fund mismanagement. In addition, other relatives, even those estranged from the family, may be able to lay claim to property of the decedent's estate. The particular needs of the family are not considered.

If the parent dies without a will, his or her choice of guardian or living situation for the child may never be known. The court will be forced to step in, interview possible successor guardians, and eventually appoint a guardian to manage the affairs and property on behalf of the minor child. The deceased parent's wishes may never be known. An even more important issue is whether the appointed guardian is the appropriate individual to adequately raise and care for a person with a disability. The ultimate guardian may have been the last person that the deceased parents would have wanted to raise their child. This may further complicate the situation, causing considerable distress to surviving family members. …

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