Creating an estate plan can be beneficial for you and your loved ones, but when one of your dependents has special needs, having an estate plan is critical to his or her safety and well-being after you pass away. You should consider creating an estate plan as soon as possible to protect against any unforeseen events, like an accident, unexpected illness, or catastrophic injury that could limit your ability to care for your loved one. Creating an estate plan now can save you and your family money, give you peace of mind, and ensure the protection of those who need a little more care. To learn more about estate planning when you have a child with special needs, call or contact the office of Nusinov Smith today for a free consultation.
Steps for Preparing an Estate Plan
There are steps that everyone should take when creating an estate plan, but they can be particularly beneficial to parents drafting an estate plan who have a child with special needs. First, collect all personal information, emergency contacts, medical providers, and medical history for you and your family. Next, collect all financial and legal documents along with all usernames and passwords to online accounts. Then, draft up a letter of intent.
Once you have collected all relevant documents, speak with a special needs estate planning attorney about your wishes and needs. Create and sign all estate planning paperwork, such as a will, living will, health care proxy, and power of attorney forms. Consider and name your child’s conservator or guardian upon your death, and then discuss what type of special needs trust works best for your unique family situation.
First Party Special Needs Trusts
A first party special needs trust is typically established when a child with special needs inherits money or property outright, or receives a court settlement. This type of trust can be established by a beneficiary’s parent, grandparent, legal guardian, court, or by the beneficiary so long as the child with special needs is declared mentally and legally competent. Property in a first party special needs trust can only be used for the sole benefit of the beneficiary, and upon the beneficiary’s death any remaining assets are paid back to Medicaid up to the total lifetime benefits amount.
Third Party Special Needs Trusts
A third party special needs trust are commonly established by parents in advance for a child with special needs. This type of trust can be set up by a parent, grandparent, sibling, or any other person except for the beneficiary. A third party special needs trust can be included in an estate plan as part of a will or established as a living trust to avoid probate. This type of trust is typically funded by the estate of the beneficiary’s parents or other individual that established the trust.
Third party special needs trusts do not come into existence until the passing of the person who created and funded it through an estate. This type of trust does not need to be irrevocable in order to access public benefits; however, if the beneficiary has the power to revoke the trust, then the assets are considered available for Supplemental Security Income or Medicaid. Finally, upon the death of the beneficiary, a third party trust is not required to use the remaining assets to reimburse public benefits received during your child’s lifetime and the creator of the trust has the ability to direct where the remaining assets will go after the beneficiary’s death.
Key Takeaways from Estate Planning
After creating an estate plan, there are still some key takeaways that must be considered and reviewed periodically. First, have a conversation with your family about the contents of your estate plan to clarify roles, wishes, and directives for your child with special needs. Be sure that your estate plan has some flexibility, as needs and abilities of both your special needs child and those entrusted to look after him or her may change over time. Finally, keep your estate plan current by reviewing it every three to five years or whenever a major life event occurs.
Call or Contact Our Office Now
Estate planning, especially when you have a child with special needs, can seem like a daunting prospect, but creating an estate plan now can benefit you and your loved ones with safety, security, and an understanding of what is to come. If you wish to schedule a consultation to discuss your estate plan, call or contact the law office of Nusinov Smith today.