For many people, the basics of estate planning are simple enough, but for those families with loved ones who are disabled or have special needs, the estate planning process is more involved – and definitely more critical.
The latest statistics show that five percent of minor children have some sort of disability, and the burden of caring for these children make estate planning essential. In addition to specialized health care, these children usually need special schooling and intensive therapy, all of which come at a cost.
Here are some tips for parents facing the need to plan not only for their own financial future, but for that of a child with special needs:
Deal with expectations
Parents need to think about the kind of life they envision for their child. Will the child have a shorter life span? Will he or she be able to work or live independently? The answers to these questions will form the foundation of your plan.
Determine eligibility for public benefits
In order to meet eligibility requirements for Medicaid and Social Security Supplemental Income programs, a person with special needs or other disabilities cannot have more than $2,000 in assets. This makes it imperative that a child who could benefit from these services not have any assets titled in his or her own name – meaning they should not be listed as beneficiaries on life insurance policies, retirement accounts or plans, in trusts, wills or pensions.
Consider a special needs trust
Assets placed in a third-party special needs trust are not counted as assets toward public benefit program eligibility, but these trusts are governed by strict rules so the counsel of a lawyer in establishing this trust is necessary. Parents who are unable to fund a special needs trust with cash while they are still alive can do so through life insurance proceeds after they die.
This article is a service of the Law Office of Keoni Souza, LLC, an estate planning law firm in Honolulu, Hawaii. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by contacting our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.
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