Estate planning is important for everyone, but for families with a special-needs child, it is nothing short of critical. As a child with special needs approaches age 18, families must prepare for continued decision-making for that child and secure legal authority to do so.
Understanding the types of special-needs trusts and the guardianship proceeding available for individuals with special needs is the best place to start to protect your loved ones. Preparing a Last Will and Testament is the first order of business for parents of a child with special needs. It is important to make sure that your child’s inheritance is directed into a special-needs trust (also called a supplemental-needs trust) for the child’s benefit. Special-needs trusts permit individuals with special needs to retain funds from an inheritance without eliminating or reducing government benefits such as Medicaid or Supplemental
Security Income (SSI) benefits.
Third-party special-needs trusts are established by an individual such as a parent or grandparent with their assets for the benefit of a child or grandchild with special needs.
A third-party special-needs trust may be established and funded during the parents’/grandparents’ lifetime (a living trust) or may be established in a Last Will and
Testament (a testamentary trust) and therefore not created or funded until the death of the parent/grandparent. In either case, the creation or funding of the third-party special-needs trust has no effect on the child’s eligibility for government benefits.
Further, as another individual’s assets are used to fund the third-party trust, there is no payback requirement to the state. Instead, any assets remaining in the trust at the time the person with special needs passes away may be inherited by other family members or beneficiaries.
Self-settled special-needs trusts can be established by a parent, grandparent, legal guardian, or the special-needs person themselves (if they have capacity) under the age of 65. The difference, however, is that this trust is funded with the assets of the person with special needs, such as lawsuit proceeds, retroactive government benefits, or an inheritance which was left outright to them. The trust must be a payback trust and therefore any funds remaining in the trust upon the death of the special-needs person must be paid back to the government as reimbursement for government benefits expended on their behalf.
Parents of children with special needs must plan for the child’s care beyond the age of 18. If parents wish to continue to make important decisions for their child after age 18, such as medical care, financial, and residential placement decisions, they must become the legal guardian of the child. A petition to become the guardian in this case is typically brought in the Surrogate’s Court and is appropriate for children with intellectual or developmental disabilities. An Article 17A Guardianship covers most decisions that are usually made by a parent for a child, including healthcare and financial decisions. The court can appoint a guardian of the person, the property, or both.
For more information on planning for your child with special needs, join us for our free webinar on Wednesday, March 3 at 10 a.m. schnepsmedia.com/webinars.
About Cona Elder Law PLLC
Jennifer B. Cona is the founder and managing partner of Cona Elder Law PLLC. Cona Elder Law is an award-winning law firm concentrating in the areas of elder law, estate planning, estate administration and litigation, and health care law. Cona Elder Law takes a holistic approach to elder law, providing support and resources for older adults and caregivers, and maintaining long-term, partnering relationships with clients to provide the best solutions for multiple generations. The firm has been ranked the #1 Elder Law firm by Long Island Business News for eight consecutive years and was honored as “A Firm that Makes a Difference” by the Hauppauge Industrial Association (HIA-LI). Cona Elder Law is located in Melville. For additional information visit conaelderlaw.com.
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