Special Needs Planning can seem like a daunting task. Sometimes fear can rise up and cause a freeze response as parents contemplate what may seem like an uncertain future for a vulnerable child. If you sense this could be the case for you, we encourage you to always remember that neither you, your loved one with special needs, nor future caregivers need to face this future alone.
Our firm can guide you in each step along your path to achieving peace through Special Needs Planning, and to help our clients avoid feeling overwhelmed, we break our planning process into five steps.
We previously looked at the first two of those steps:
1. Learn How Special Needs Planning Can Benefit Your Family
2. Identify the Best Level of Support for Your Child
Now, let’s get started with Step 3:
3 | Develop Future Budget Estimates for Your Loved One with Special Needs
A focal point of Special Needs Planning is providing assets to meet the financial needs of your loved one after your death - usually through a combination of government benefits, life insurance, family savings, and investments including retirement planning. Clients can begin to estimate expenses by completing our Circle of Support and Fiduciary Manual, noting the monthly, quarterly, and annual costs associated with the support categories listed in each section.
Our firm can also provide information regarding current public benefit programs that help meet some of these needs so that clients can budget for other needs and quality-of-life measures beyond the scope of those programs. Working with a financial advisor during this process is strongly encouraged, and some families choose to work with a chartered special needs consultant or other financial advisor focusing on serving the special needs community.
We’d be happy to work alongside your financial advisor to ensure that your Special Needs Planning and overall financial planning coordinate in the best way possible for your entire family’s care and support.
4 | Align Your Financial and Legal Affairs for the Support of Your Child with Special Needs
Inheritances and sizable lifetime gifts should be directed into a third-party Special Needs Trust (SNT). (Gifts under $17,000 annually may be placed into an ABLE account for those who qualify.) Parents or other relatives must establish these SNTs during their lifetime or through their Wills or Living Trust.
Inherited assets not directed into an SNT will disqualify the individual with disabilities from SSI, Medi-Cal, and other means-tested benefits until funds are either “spent down” or placed into a first-party SNT Trust after the person with disabilities inherits the funds.
However, a first-party SNT (established with funds that have already passed to the person with disabilities) is subject to Medi-Cal payback upon the death of the disabled beneficiary. This means that every dollar Medi-Cal has spent on an individual with a disability must be paid back from the first-party SNT after that individual’s death - before any assets are passed on to other family members.
By contrast, assets directed into a third-party SNT can be used to supplement the quality of life of the disabled individual and any remaining funds can be passed on to other family members upon the beneficiary’s death - with no Medi-Cal payback or estate recovery. This can be especially meaningful for sibling caregivers whose careers were impacted by caregiving responsibilities and whose parents felt it necessary to leave all or most of their estate to care for a child with special needs.
5 | Establish a Decision-Making Process and Implement a Lifelong Support System
After designing a Special Needs Plan, we generally find it best to begin to implement the plan gradually, while our parent clients are still healthy.
For example, a Special Needs Trust may require the development of an annual distribution plan by the Trustee with input from various Circle of Support team members. Clients may want to model this process at least every few years to identify any potential issues with implementing their plan. These issues could involve anything from a team member who dominates the discussion to one who just never manages to show up.
Likewise, if the plan is for your child to live with a family member and future conservator one day, we would suggest starting routine overnight visits to that person’s home. This provides needed respite for parents, helps identify any allergies or other environmental concerns, and helps the child come to feel “at home” with the extended family.
And if the plan is for aunts, uncles, and cousins to rotate taking your adult child on an outing each month in the future, starting that practice at least 3-6 times per year now can help these events become reliable routines for your child and strengthen these crucial relationships for your child’s future.
Moving from Great Start to Next Steps
At times, seeking proper diagnosis, therapy, and educational support must take priority over planning. You may need to secure the present before you can secure the future. But it’s crucial to be aware that the financial results of delaying Special Needs Planning can be consequential for your entire family.
When you are ready to check Special Needs Planning Step 1 off your to-do list, give us a call. We’d be honored to walk alongside you on your Special Needs Planning journey and connect you with financial planners and other professionals who focus on serving families impacted by special needs.
And if you missed Part 1 of this series, be sure to read it here.
Contact us today to get started.
This article is a service of Debbie Babb Law. We don’t just draft documents. We ensure you make informed and empowered decisions about life and death, for yourself and the people you love.
The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.