In general, it is a daunting task to put together an estate plan. It can become more complex when children are in the mix, especially if any of those children have special needs. If this the case, it is important to detail your estate plan accordingly, because you may be the only source of social, emotional, and financial support for that child. At Blue Chip Estate Planning, our attorney understands how delicate special-needs planning can be.
What Constitutes Special Needs?
Special needs can also be called a disability, handicap, or incapacity. Under the Americans with Disabilities Act (ADA), special needs are cited as a physical or mental impairment that substantially limits one or more major life activities. This definition gets broken down further by the ADA then narrowed by case precedent. Being specific is imperative if you want your child to get federal or state assistance or protection. To do so, you must establish a comprehensive estate plan.
How an Estate Plan in Michigan Helps a Child with Special Needs
An estate plan can appoint guardians, create a trust, designate a trustee, identify care providers, find housing, manage money that benefits your child for their lifetime, allow for public assistance, and set aside funds for the future in case public funding is disrupted or restricted.
Nominating a Legal Guardian
One of the most important aspects of estate planning for parents of a child with special needs is choosing a guardian to look after the child once both parents have passed away. This can be done in the court, if guardianship is already established or in the parents' Last Will and Testament. For underage children, this legal guardian would have many of the rights and responsibilities of the child's parents, allowing them to make some of the most important decisions in the child's life. Oftentimes, a close relative will be appointed because the child trusts and is familiar with that person. For adult children with special needs, the guardian will make important decisions about the child's medical care and manage the child's finances. In either case, parents should choose someone who is trustworthy, reliable, and professional.
Testamentary or Special Needs Trusts
Children with special needs may not be able to earn a living on their own and often rely on their parents for financial security, which can continue after the parents' passing by establishing a Testamentary Trust or Special Needs Trust. Both types set aside assets from the parents' estate to fund a trust that would be professionally managed by a trustee of the parents' choice. Sometimes if the trustee is a family member, they may view the trust's assets as family assets and spend it on themself. If this may be an issue, you could consider appointing a trust company, an attorney, a financial institution, or a nonprofit organization specific to special needs as the trustee. You can also opt to have co-trustees, where one trustee is a family member and the other is not.
Mistakes to Avoid
When parents have assets that they want to leave to their child with special needs, there are a few things to avoid. First, some parents think they should disinherit their child so that they will qualify for public assistance. Even though it may provide great benefits like vocational rehabilitation, job coaching, and shared housing, public assistance cannot cover all the necessities. Secondly, some parents think they can leave their estate to their other children who promise to care for the child with special needs. Though this option may seem promising, there are no assurances, and your child with special needs could suffer because of a failure to plan properly. Next, if the parents leave an inheritance to the child and it meets a certain threshold, it will negatively impact the child's eligibility for public benefits. Finally, some parents fail to consider taxes, which should be regarded when deciding if the Special Needs Trust should be revocable or irrevocable, because the implications will vary accordingly.
Contact a Special Needs Trust Lawyer in Michigan
At Blue Chip Estate Planning, we understand that you want to make sure your child with special needs is safe and financially stable throughout their life. Our estate-planning attorney can help you understand what your child may qualify for and how to get it, and how to arrange and distribute your own assets upon your death in a way that will best benefit your child. To schedule a consultation, fill out our online form or call us directly at (248) 873-3244.
More Estate Planning Information:
Estate Planning - Charitable Trusts
Estate Planning - Irrevocable Trusts
Estate Planning - Spendthrift Trusts
