Special Needs Situations

Estate planning for individuals with special needs is a critical process that requires thoughtful consideration, regardless of age.

Whether planning for a child or an aging family member with special needs, it’s essential to ensure that they are provided for financially without compromising their eligibility for vital government benefits. The goal is to protect their well-being, ensure proper care, and help secure financial stability.

Estate Planning Options for Special Needs

A Special Needs Trust is a key tool to provide financial support for individuals with special needs while protecting them from losing their eligibility for government assistance, such as Medicaid and Supplemental Security Income (SSI). A properly drafted trust allows loved ones to leave assets to an individual with special needs without affecting the individual’s benefits, as the funds can be used for services that are not covered by government programs—such as personal care, education, and therapies.

ABLE (Achieving a Better Life Experience) accounts provide a tax-advantaged savings vehicle for individuals with disabilities who were onset before age 26. These accounts allow families to save for qualified disability-related expenses, including housing, education, healthcare, and transportation, without risking the loss of eligibility for benefits like Medicaid or SSI. Contribution limits do apply.

For both children and elderly individuals with special needs, guardianship may be necessary to ensure that decisions regarding healthcare, finances, and daily living are made in their best interests. Guardianship involves appointing a responsible person or entity to handle these decisions when an individual cannot do so themselves due to age or disability.

For military families, the Exceptional Family Member Program (EFMP) provides vital support for family members with special needs. This program can help ensure continuity of care, access to appropriate medical services, and resources that cater to the specific needs of the individual, whether the family is stationed locally or abroad.

Important Considerations

A primary concern when planning for someone with special needs is ensuring that their assets do not disqualify them from important government programs like Medicaid or SSI. Special Needs Trusts and ABLE accounts are crucial for protecting eligibility while still providing financial support for things not covered by these programs. When considering a trust, it’s best to consult with a legal advisor to make sure documents are drafted properly.

When leaving assets to minors, there are specific rules and considerations that could limit access or control. Instead of leaving assets directly to a minor, a trust could be a better option to ensure the funds are managed by a responsible trustee and used appropriately.

As needs change over time, it’s important to have a plan in place to ensure that the person with special needs receives appropriate care. This might include transitioning to different care settings, such as an assisted living facility or residential care, or ensuring that a family member or caregiver is equipped to handle evolving needs.

When a person with special needs is unable to make decisions for themselves, establishing a durable power of attorney (for finances) or a healthcare power of attorney (for medical decisions) is essential. This allows trusted individuals to manage financial and healthcare matters if the person becomes incapacitated.