What Will Happen When We’re Gone? Planning for the Future for Your Child with Disabilities

Decide What You Want

Old rustic signpost with the phrase Plan ahead, outdoors in sunny woodland with a faded vintage or retro effect to the image.Thinking about what will happen to your child once you die, or are too ill to care for him or her, can be scary and raise your anxiety level. One technique is to think about what you don’t want for your child – for example, “I don’t want my son to have to live with my sister – she has three children of her own, it would be too much” or “We don’t want our daughter to have to leave our home and neighborhood”.

Do a reality check on your “don’t want” list—if your child is a minor, they may not be able to stay in the family home without an adult. Think about how they might be able to at least stay in their school, around their friends, and keep getting services from their usual providers. You may come up with more than one option, and that’s okay. An estate plan, including your will, can be flexible.

This is the most important part of the estate planning process. You will need legal documents to make sure your wishes are carried out, but making these decisions now is important. Remember, wills and other legal documents can be revisited as your child grows up and if family circumstances change.

Gather Information for Reference and Legal Documents

Gather information in four categories: Personal, Medical, Financial, and Legal Documents. There is an excellent list of what documents and information to include in an article from the Special Needs Alliance. (Click on this text to read about Estate plans)

The recommended list may seem too big to tackle, so take it one step at a time. Have a family member help and remember to keep all the information available, but safe! Some secure, easily accessible options are a locked fireproof safe, a safety deposit box (make sure someone in addition to you has access), or a password-protected computer with a cloud backup.

You Need a Will

The will contains (almost) all your instructions for how you want your child to be taken care of when you die (see Letter of Intent later in this article). Your child will need a guardian or guardianship alternative while they are a minor, and for their lifetime if you expect they will be unable to fully care for/support themselves.

If you die without a will, or if you don’t specify a guardian, a court will appoint a guardian – and it won’t necessarily be a family member. It could be someone who may be a complete stranger to your child.

When selecting a guardian, remember that you don’t need the same individual to manage your child’s finances AND personally take care of them. In fact, it’s usually not recommended for them to be that same person – we will talk more about that later in this article. Some estate planners also encourage parents to think outside the family box when naming a guardian. Think about close friends as well as your parents or siblings. If your child is older, think about adults with whom your child has a bond. This can help if you want your child to continue in their current school, job, or neighborhood.

Something we were not aware of before we researched for this article – you need to list each of your children individually when naming their guardian, even if all your children will have the same guardian. The probate court will not assume that you meant the same guardian for any children you don’t list and they could appoint a separate guardian for each of the unlisted children!

Make plans for your own future needs and for your other children. Think about who will handle what if you become incapacitated. Will you need someone to manage your finances? Make decisions about your healthcare and living arrangements? Powers of attorney and advanced healthcare directives will mean that your children and other relatives have clear directions about your needs and your wishes.

Your Child with Disabilities and Your Will…

Don’t leave your child with disabilities any money in your wills, but don’t disinherit your child either. Let us explain…

Individuals with disabilities frequently qualify for government benefits such as Medicaid, which can be essential for services and/or healthcare. Government benefits require that beneficiaries have very limited assets – a few thousand dollars at most. Inheriting money above that limit will mean that your child will become ineligible for benefits including needed services. To become eligible again, your loved one would have to spend all the inherited money on the services and benefits they no longer qualify for plus everyday expenses until the limit is reached. Then they have to reapply!

If you disinherit your child with disabilities and give the money to a family member to support your child (even if you named that person your child’s guardian), this can place a large legal burden on the family member or guardian. It also doesn’t guarantee that your child will get their needs met.

What to do instead of leaving money in your will or disinheriting your child:

Set up a Special Needs Trust, or SNT.  A trust is a legal “entity” in which assets can be placed. Trusts have a beneficiary – someone for whose benefit the trust was created- and are managed by individuals called “trustees.” Trustees can be professionals (bankers, trust company managers, attorneys), private individuals, or any combination of the two.

A SNT is a type of trust specifically designed so that beneficiaries with disabilities can get government benefits/services and still receive income to increase their quality of life. Government benefits will cover most of the basics (“needs”), monies from the trust can pay for the “wants”.  Income from a Special Needs Trust is not counted as an asset or income for purposes of most government benefit programs, but setting up the trust should only be done by a qualified attorney. If it is done incorrectly, your child’s benefits could still be at risk. You can get a recommendation or referral from your state bar association (http://shop.americanbar.org/ebus/ABAGroups/DivisionforBarServices/BarAssociationDirectories/StateLocalBarAssociations.aspx

You can arrange for the Special Needs Trust to be the beneficiary for life insurance policies and retirement plans. You can let friends and relatives know that they can give or leave money/assets to your child through the trust.).Think ahead: trustees may need to manage the trust for decades.

Letter of intent: This is a document expressing your wishes for your child.  It has no legal standing, but acts as a guide for your child’s guardians and trustees.  Do you want your child to be able to visit their grandmother and travel by air? Get a therapy not covered by Medicare or other insurance? Go to Disneyworld at least once? Take swimming lessons? Own a dog?  This is where you put those wishes. The co-trustees can figure out how to make it happen, if the trust income covers the cost.

You should also include your wishes for your child’s daily lives – school, work opportunities, living arrangements in addition to what is covered in your will.

The trustees will take your letter of intent very seriously. It is important to understand, however, that their legal duty is to your child, who is the trust’s beneficiary. If they believe that your child’s best interests are served by doing something different than you write in the letter of intent, that’s what will happen. This is why co-trustees are a good idea – one with a professional viewpoint and one with a personal viewpoint.

Special Needs Trusts for Military Families

Military members have the option to direct payment of a Survivor Benefit Plan (SBP) Annuity for their dependent child to a Special Needs Trust (SNT). There are differences between Special Needs Trusts funded by a military Survivor Benefit Plan and the civilian-funded plans discussed above. You can find out details about the differences, and how to set up this type of trust, in this article by the Military Parent Technical Assistance Center. (Click on this text to read more about the latest news on military special needs info