Broker Check

Planning for a Special Needs Child or Grandchild

June 27, 2017

Before she reached her second birthday, Julia was a smart, bleach blonde, blue eyed, “gifted” little girl. She could sing her ABC’s at an unusually young age. Soon after turning two, Epilepsy ravaged her body and mind. Julia is my niece and is legally disabled.

If you want to leave money or property to a loved one with a disability, you must plan carefully. Often, people with disabilities qualify for government assistance such as Supplemental Security Income (SSI), Medicaid, vocational rehabilitation and subsidized housing. Many people make the mistake of leaving assets to their disabled loved ones through a will or as a named beneficiary from an IRA/life insurance policy. Acquiring assets such as lump sum of money can cause a disqualification of these types of government assistance programs.
Special Needs Trusts are made specifically for the benefit of a disabled or a mentally ill beneficiary. These beneficiaries lack the mental capacity to manage their own finances. The trust is created with the special needs, lifestyle and future of the beneficiary in mind. More importantly, Special Needs Trusts are used to ensure that the beneficiaries don’t lose government benefits they are receiving.

If you have a family member or loved one with special needs, simply leaving them a portion of your property in your will may not be enough. A special needs trust can help ensure they are properly taken care of.

According to Joanne Marcus, executive director of Commonweath Community Trust (CCT), a nonprofit organization established in 1990 who providea administration of Special Needs Trusts, there are five steps to setting up a Special Needs Trust:

⦁ Understand the Need for a Trust: “in order to qualify for US government benefits, an individual can have no more than $2,000 in cash assets.”
⦁ Pick the Type of Trust That’s Right for Your Child: “Special Needs Trusts are funded by a third party, usually a close family member like a parent or grandparent, and can be coordinated with the family’s estate plan”.
⦁ Get Professional Help: “Because the regulations are complex and constantly changing, it’s important to select and surround yourself with attorney’s, financial planners or nonprofit that specializes in these types of trusts”
⦁ Choose a Trustee: “The trustee manages and invests the funds for the trust and makes disbursements that are for the sole benefit of the beneficiary. The trustee is also responsible for reporting to the government agencies providing the benefits and staying abreast of changing regulations”.
⦁ Choose an Advocate: “Especially in the case of a Special Needs Trust, an advocate is designated by the grantor (individuals funding the trust) and is someone who understands the grantors wishes and the beneficiary’s needs”.

On August 7th, Julia turns 26. Still, she continues to experience epileptic seizures after 24 years. However, she remains our always happy, maybe not bleach but blonde, blue eyed, “special” little girl.

Enjoy your summer!