Just as many people use tax season as a reminder to review old estate planning documents, October’s Special Needs Law Month is a good reminder to re-evaluate plans for loved ones with special needs.
Special needs planning, while a part of estate planning, is much more comprehensive. Estate planning generally focuses primarily on lifetime protection and post-death distribution of assets, Special needs planning focuses primarily on the individual beneficiary’s lifestyle and care needs.
Whether you are preparing a plan for the first time or reviewing an older plan, start by writing a simple biography of your loved one with special needs.
Write the individual’s name, birth date and his or her age at the time of writing. Then talk about favorite activities, closest friends and favorite places. Consider ideal gifts and foods they like and dislike. Make notes regarding relationships with other family members and even with household pets. This short guide to your loved one can be a good place to start mapping out a plan that will best suit his or her needs.
Next, write down what you envision for the future.
Imagine three scenarios: a good future that includes you, a good future that does not include you and a bad future. Be specific. You quickly will begin to realize what the best and worst scenarios entail, both of which should be included in your written plan.
The first question usually discussed is who will become the individual’s guardian. Make a list of more than one person, in succession. Consider the possibility that at the time of need, your first choice may not be available. Talk to each person and be realistic with your own expectations.
While considering the best choices for guardian, give equal consideration to the expected living arrangements. Will your loved one be able to live independently, so long as someone provides regular check-ins? Could he or she live semi-independently, perhaps in a garage apartment? Would you consider a group home or would that option be unimaginable? Talk to potential guardians about these expectations.
A special needs plan usually also includes a supplemental needs trust with detailed instructions for the trustee. Just like with prospective guardians, you should talk to possible trustees. Whereas a guardian is responsible for the “person,” the trustee is responsible for the property.
A trustee can be a close friend, a family member or a professional. While a family member may seem ideal and is in many cases, hiring a professional fiduciary is usually best when a beneficiary suffers from mental illness, struggles with a drug addiction, does not have a close natural support system or if the beneficiary has a large estate or significant care needs. In those cases, a neutral professional who is not part of the family may be best.
If the beneficiary will be living away from family members, consider including a provision that would allow the Trustee to hire someone to regularly check on the beneficiary. A beneficiary’s needs cannot be met if they are unknown. The Trustee should also be given spending instructions for your intent for the use of the Trust funds. If you want the beneficiary to be able to travel, purchase gifts or attend concerts, include those instructions.
Whoever the trustee, they must be trustworthy, organized and good with money. The trustee likely will need to work with an attorney and a CPA who can guide them on appropriate spending without risking benefits as well as the best way to protect against excessive taxes.
Special needs planning is comprehensive, but should not be feared. Careful planning can ensure that the people serving after you will know how to give your loved one the best life possible.