Hi, I’m Colin, and I am so glad you are here!
As a probate and estate planning attorney in Dallas, Texas, I often see the unique challenges families face when planning for a special needs dependent.
The stakes are high when it comes to ensuring your child’s financial security and overall well-being, especially if you become incapacitated or pass away.
Today, I would like to spend a few minutes discussing the top four considerations to keep in mind when engaging in special needs dependent planning.
Let’s get started!
Establishing special needs trust
The overall design and purpose
One of the most crucial components of special needs dependent planning is the establishment of a Special Needs Trust (SNT). This trust is fundamentally designed to hold assets for your child’s benefit without compromising their eligibility for government benefits like Medicaid and Supplemental Security Income (SSI).
A SNT ensures that your child has access to the funds they need for additional care, education, and quality of life enhancements that government benefits typically do not cover.
Two primary types of special needs trust (SNT):
This type of trust holds funds in the name of the beneficiary. The assets belong to the individual with special needs, such as an inheritance, lawsuit settlement, or other personal funds.
One of the primary drawbacks of this trust is that it comes with a payback provision, meaning that upon the beneficiary’s death, any remaining funds in the trust must first reimburse the state for Medicaid benefits received by the beneficiary during their lifetime.
Unlike a First Party SNT, the third party trust is generally the more desirable option in that the assets in the trust are held by a third party instead of the beneficiary directly.
Assets are held by parents, grandparents, family members, or any other third party. This type of trust avoids the payback provision, so in the event of the beneficiary’s death, assets can be passed on to others as designated in the creation of the trust.
Appointing a knowledgeable trustee
- Selecting the right person for the job
Choosing the right trustee to manage your child’s Special Needs Trust cannot be overemphasized enough.
The trustee will be responsible for managing the trust assets and ensuring that distributions are made in a way that benefits your child without impacting their eligibility for government programs.
When it comes to the selection and/or appointment of a trustee; it is important to carefully consider your options.
The American Heart Association brilliantly outlines key points to consider when deciding between a family member or a professional trustee. The matter of most importance is that the trustee you select carries out your wishes and protects the assets left to your child with the highest level of integrity and responsibility.
- Picking the right attorney
Working with the right estate planning attorney well versed in special needs dependent planning is crucial. They can carefully guide you through the nuances of managing a Special Needs Trust and discuss options and answer questions specific to your situation.
Many clients have learned the hard way; just because an attorney is licensed does not mean they have experience handling delicate matters estate planning matters. Ask questions, do your research, and meet with them. Trust your gut. It could end up costing you in the long run!
Guardianship and care planning
- Designating a suitable guardian
In addition to financial planning, you need to think about who will care for your child if you’re no longer able to do so.
Designating a suitable guardian in your will is the critical first step. This person will have the legal authority to make decisions about your child’s care, living arrangements, and overall well-being.
Selecting a guardian can be a complex and emotionally challenging decision. According to Forbes’ article “10 Tips for Choosing a Guardian for Your Minor Child,” this is a common reason why many people delay writing their will. However, by taking thoughtful steps to narrow down your options, you can choose a guardian who understands your child’s needs and is prepared to take on this important responsibility.
2. Communication and planning
The key is to communicate openly and discuss your decision with potential guardians to ensure they are prepared and committed.
It is also helpful to create a detailed care plan that outlines your child’s routine, medical needs, preferences, and other important information to guide the guardian.
The more you can prepare the guardian in advance the less risk and disruption there will be in your child’s daily structure, habits and healthcare.
Coordinating with other family members
- Reduce confusion and misunderstandings
I would like to capitalize on the third key point a little further because this step is a crucial component to dependent estate planning.
Once the guardian is selected, coordinating the role of the guardian with other family members will help minimize confusion and potential misunderstandings. By ensuring everyone is on the same page, you can create a cohesive and supportive approach to your child’s care and well-being.
- Communicate your plans to family members
Communicate your plans with family members who might be involved in your child’s care or have a role in the estate plan. This prevents any misunderstandings or conflicts that could arise after your passing.
It’s also beneficial to educate family members about the importance of not directly gifting money or assets to your special needs child, as this can affect their government benefits. Instead, they should contribute to the Special Needs Trust.
Final thoughts
Creating a comprehensive estate plan for a special needs dependent requires careful consideration and professional guidance.
By establishing a Special Needs Trust, appointing a knowledgeable trustee, designating a guardian, and coordinating with family members, you can ensure your child’s future is secure and their needs are met.
If you are in Texas and need assistance with special needs dependent planning, feel free to reach out to me at colinsmithlaw.com.
I’m here to help you navigate these complex decisions and provide peace of mind for you and your family.
Until next time!
