What are Estate Planning and Special Needs Planning?

As a mom of a child with medical complications, an Estate Planning attorney, and someone who has experience with the special needs community, I understand the importance of getting preparations done.  When you have a child who is receiving supplemental services, has an Individualized Education Program (IEP), or otherwise needs access to different resources, there is a lot to think about.  The last thing we want to think about is what would happen to our children should we not be around anymore. 

When we work so hard to provide for our families, and particularly for those whose children receive means tested/income based government benefits (e.g. SSI, Medi-Cal), it’s crucial to consider Estate Planning and Special Needs planning.

Now, what is Estate Planning?

-Estate Planning is the process to arrange for what will happen to your assets, minor children, health care wishes, and other related concerns, based on your wishes.  It is your opportunity to create a comprehensive plan customized for your family’s goals and dynamics.  A typical Estate Plan usually includes a trust (which details your wishes for asset distribution, who can manage for you, and avoids the probate process), a will (which works with the trust and designates guardianship of minor children), a financial power of attorney (says who can make your financial and legal decisions if you cannot), and an advance health care directive (nominates health care agents and details your health care wishes).

What is Special Needs Planning?

-Special Needs Planning is the process for ensuring your family member with special needs is able to inherit through your estate such that the government benefits that they may be receiving do not have to be eliminated.  Special Needs Planning also encompasses working with an attorney so she can understand the beneficiary’s needs, care management goals, and the family dynamics. The result is a Special/Supplemental Needs Trust, a legal document that either can be incorporated into your trust or be a stand-alone legal document. 

In addition to have the legal documentation, our firm also provides clients with a template Letter of Intent. It is a good idea to provide relevant information about the individual with special needs in terms of medical history, abilities, preferences, and wishes that the family would like to share that otherwise may not be evident.

Why is this important?

-When an estate goes through the probate process because there was no plan, then the court decides what happens to the money and who it goes to.  Should the family structure be pretty simple and there be no conflicts, the assets will get to the closest of kin.  This, however, takes going through a long court-supervised process, stress, and attorney’s fees.  Additionally, the money goes outright to the people who the judge determines are the rightful heirs (or if they are minors, they get everything when they turn 18 years old). 

What would this do?

-The money the person with special needs inherits would be considered their own asset and count towards their income.  Because certain governmental benefits have income restrictions, this would likely exclude the beneficiary from being able to receive the benefits until they no longer have the inheritance income.  A Special Needs Trust, however, allows the trustee to determine when to distribute assets to the beneficiary with special needs, based on their needs and benefits received.

When should you consider Estate Planning/Special Needs Planning?

-Adults who are at least 18 years old should consider their plan.  Having a well-crafted customized plan means that your family does not have to guess what your wishes and go through the probate court process.  Special Needs Planning is important to consider if you have a child or a loved one who will likely be receiving government benefits throughout their lifetime.  Often, we see clients set up a Special Needs Trust when their child’s prognosis is very clear or when they have turned 18 years old. 

I hope this was helpful!  This process can seem overwhelming so it’s important to find the right attorney, make the connection, and start working together to develop a customized and comprehensive plan for your family.