By Solid Serenity Legal Solutions
Estate Planning is important for everyone, but if you have loved ones with special needs who depend on you, making a plan takes on even greater significance. Adding to the significance of proper estate planning for special needs dependents is the uncertainty of what type of care they will need in the future or what kind of government assistance they will be eligible for if they are under the age of 18.
Planning for your loved ones with special needs planning can be overwhelming, but there are ways to prepare an estate plan that will best benefit your loved one.
The first step to setting up an estate plan for your loved one with special needs is to sit down with an estate planning attorney familiar with the intricacies of the law involving people with special needs and talk about what options are available to you. Discussing your loved one’s health, capabilities, and prognosis will help you and your attorney come up with the best possible plan that is tailored to your loved one and flexible going forward.
One option is to set up a trust that does not rely on or plan around government assistance. For those with sufficient assets, choosing a discretionary trust that pays for all living expenses allows them to ensure that the child is living a life they are accustomed to. These types of trusts usually contain a large sum of money, insurance policies, or other assets to fund the trust.
(2) Supplemental Needs Trusts
Another option is a trust called a supplemental needs trust. If there is a high likelihood that a loved one will receive government benefits, this kind of trust may work best.
This trust works to supplement the government benefits received rather than supplant them and must be constructed in a way that does not lead to the child becoming ineligible for government assistance. Government benefits will cover living expenses and the supplemental needs trust can be used for extra expenses for your loved one.
(3) Trusts with Supplemental Needs Trust Option
If it is unclear whether or not a Supplemental Needs Trust will be most beneficial for your loved one, another option is to leave developing a trust to the discretion of the trustee a trust will be in the loved one’s best interest at the time of your death. This structure allows the trustee to preserve the loved one’s benefits if they are receiving them at the time.
All three of these trusts can be funded immediately when the trust is established. Trusts can also be created now and funded upon the death of a parent. At that point the money can flow into the trust from the estate of the parent or through any life insurance plans in place.
(4) ABLE Accounts
An ABLE Account is an account that can be established by a loved one with special needs, or by someone on behalf of a loved one with special needs. In order to be eligible for the account, your loved one must have been declared disabled before the age of 26.
Annual contributions to an ABLE account are limited to the annual gift tax exemption set by the IRS. Each state has a set limit on how much can be in the account before the beneficiary will lose hie or her government benefits.
There are a number of options for planning for a loved one with special needs. Each option has specific pros and cons, so its important to find the best path for your family.
Meet with your knowledgeable estate planning attorney today to decide the best option for your family!