Thinking Ahead for Special Needs Care

Special needs planning

For the family of a child with special needs, it is necessary to implement a comprehensive estate plan because there will be several unique circumstances along with many decisions that may affect that child’s quality of life.  Whether a family has substantial means or few assets, a child or adult with special needs will need “special instructions” to ensure that financial and other resources will be available to provide the desired quality of life.

The family’s estate plan needs to be comprehensive and include a will, a trust and powers of attorney.  These legal documents ensure the parent’s wishes are carried out if they cannot personally see to it themselves.

There are provisions within these documents that can have an enormous impact on the life of a person with special needs.  Specifically, there are two additional tools that are designed for families with special needs: a special needs trust and “special instructions” for care of a special needs child.

The special needs trust
An inheritance may cause many problems for a person with special needs.  An inheritance of as little as $2,000 could disqualify a person with disabilities from such federal benefits as Supplemental Social Security Income (SSI) and Medicaid, and from other state programs.  This can be an enormous loss, since eligibility for many critical services could be lost.

One solution is the “supplemental needs” or “special needs” trust.  If worded properly, it can be drafted by a qualified attorney to remedy this problem.  It also allows other family members to leave assets such as money or property to the trust rather than directly to the person with special needs.  A trustee manages the trust on behalf of the person with the disability.  The trustee is given absolute discretion to determine how much the person should receive and when it should be received.  In some cases, a co-trustee may also be named to handle the personal aspects of managing the trust while another individual or corporate trustee manages the financial decisions.

The purpose of the special needs trust is to provide extra and supplemental care, maintenance, support and education above and beyond that which is already provided by any local, state and federal government programs.

It is imperative that the family works with an attorney who is competent and knowledgeable in the areas of disability law, tax law and estate planning.

For some families, funding the trust may require a reallocation of their current assets, while others may need additional assets to secure the level of financial security they wish to provide for their child or dependent.

Special instructions
A Special Instructions document provides direction for the person who will care for a person with special needs in the event that he or she survives both parents.  Although it is not legally binding, it is intended as a working document for the future caregiver to follow.  These instructions detail the disabled person’s history, daily needs, likes and dislikes, and specific wishes and expectations as they relate to the disabled person’s future.  An attorney knowledgeable in this area can help a family of a child with special needs with these important tools.

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Rich Mino, a financial advisor with Del Mar Financial Partners, Inc., works closely with families and small businesses in the Carmel Valley area.  He is passionate about making a difference in his community through financial literacy programs, and focuses on building strong relationships with all of his clients so that he can be a resource to them where needed most.  An active member of the Del Mar Kiwanis, Rich supports his Carmel Valley community through local service projects, and by sponsoring the Builders Club and Key Club leadership programs at Carmel Valley Middle and Torrey Pines High Schools.  In 2012, he is working to implement a financial literacy educational program to help prepare and educate kids with the challenges that they will face as they begin and graduate from college.  He is a registered representative of Securian Financial Services, Inc., Member FINRA/SIPC. Securities dealer and registered investment advisor.  Del Mar Financial Partners, Inc. is independently owned and operated. 12526 High Bluff Drive, Suite 280, San Diego, CA 92130. 438300 DOFU 01/2012

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties.  You are encouraged to seek tax or legal advice from an independent professional advisor.  The content is derived from sources believed to be accurate.  Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.  This material was written and prepared by Emerald. © 2012 Emerald Connect, Inc.

Securities and investment advisory services are offered through Securian Financial Services, membe FINRA/SIPC. Copyright 2010 © Custom Communications Insurance Publishing.

Material in this article may not be reprinted without permission.

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