Planning for Children with Special Needs
At KMC Law of MD, we are interested in helping you develop a comprehensive approach to your planning that will support your decisions and give you peace of mind that your family member will be provided for in the future.
As difficult as it is to discuss, the reality is that we will not live forever. An achievable estate plan has two equal important components:
documents that meet all legal requirements and a strategic life plan that goes beyond the legal documents
consideration for family & support, financial, emotional, legal and government benefits for your child
Working through your strategic plan when drafting your legal documents will enable you to best choose how your family is cared for now and how your wealth is distributed in the future.
The challenge is knowing how to get established and how to adjust.
Wills & Special Needs Trusts
Keeping assets directly out of the hands of an individual with special needs is critical to protecting eligibility for government benefits. Even if your family can currently provide for this individual, it is fiscally prudent to maintain eligibility for future unknowns. For this reason, make sure you have a Will and you properly identify your beneficiaries. If you were to pass without a Will, your child with special needs could directly inherit from your estate. Using one or more Special Needs Trusts in your estate plan will provide a depository for assets and specific directions for the distribution of those assets to ensure longevity.
Remember, Wills and Trusts are legal devices which provide for the orderly administration of tangible assets. Their creation is similar to the making of a bucket with a spigot. Wills provide for the one-time dump of assets into the bucket . . . trusts have a rate of flow factor.
Guardianship & Other Less Restrictive Options
There are two aspects of guardianship parents of a child with special needs must consider. First, what happens if the child is still a minor when his or her parents pass? Second, upon turning 18 years of age, will your child have the mental capacity to make financial and medical decisions on his or her own?
Identifying who will care for your child after you pass is one of the most difficult decisions a parent can ever make. Although it is emotionally very difficult to think about your minor child being raised by someone other than their parents, it is critical that parents envision the emotional, life style, and practical aspects of the child living with the designated guardian. It is also important that it is discussed with the people the parent wishes to choose as a guardian so that they may likewise think through the choice.
Once your child turns 18, he or she is presumed competent to manage every aspect of his or her life. A guardianship may be considered when the child is unable to make decisions in his or her own best interest or provide for his or her welfare, and is unwilling or incompetent to sign a power of attorney. Parents or other family members may consider the legal process to be appointed guardian. The Orphan’s Court will appoint a guardian if it determines the child is incompetent to manage every aspect of his or her life.
A less restrictive option is to have your child complete a power of attorney document. A power of attorney document is signed by one individual (the principal) appointing another individual (the attorney-in-fact or agent) to act for him or her. Powers of attorney can be roughly divided into two categories: the financial power of attorney, which addresses issues related to daily living, such as financial matters, education, public benefits and privacy/access to documents, and those that address health care. Appointing a power of attorney avoids court involvement. Unlike a guardianship, the child is never determined to be incompetent. The child is simply allowing someone else to act for him. The adult child should not sign a durable power of attorney if he or she is unable to understand what a power of attorney is.
Financial Planning for Longevity
Special Needs Financial Planning is unlike the traditional “Money® Magazine” – style financial planning where you purchase a home, raise your children, plan for college tuition, and retirement. Special needs financial planning is planning for two generations.
Coordinating your estate plan with your financial goals will allow you to develop an overall planning strategy that will preserve your child’s eligibility for government benefits; maximize public and private resources; address financial concerns regarding residential options; and identify short- and long-term financial costs. Additionally, without a funding process beyond the establishment of your Will and Trust, there may be an empty bucket when funds are needed.
Often times families are forced to make compromising decisions in planning when their child reaches one of these pressure points:
· your child’s 18th birthday;
· upon the turning of age 21;
· upon the death of a parent or grandparent; or
· loss of SSI, SSDI, or Medicaid benefits due to improper planning.
Having a comprehensive approach to your planning will help ensure your family member will be financially secure and that you will feel confident in your decisions.
KMC Law of MD does not provide financial planning services. Content in this section is for general information only and not intended to provide specific advice or recommendations for any individual, nor intended to be a substitute for specific individualized investment, tax, or legal advice.