Planning for the future needs of a family member who has special needs is a crucial part of any New Jersey estate plan. Individuals with special needs often receive government benefits such as Supplemental Security Income and Medicaid benefits, which can be put in jeopardy if the recipient receives a large sum of money. At the same time, families want to provide for the continued support of their loved one and may need the ability to make certain important decisions on their behalf. At the Begley Law Group, our team of experienced New Jersey special needs planning attorneys skillfully create unique strategies to preserve benefit eligibility while allowing our clients to ensure that their loved one is properly cared for well after they have passed on.
Many children with disabilities will be unable to take care of themselves when their loved ones are no longer around. How will they live as happily and productively as possible once the parents are no longer living? Where will the children live, who will take care of them, and what will they do for money?
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Supplemental / Special Needs Planning
The needs of children experiencing disability vary widely, yet many families share the same concerns when it comes to planning for their child’s future. Initially, families focus on providing their child with a supportive educational environment that encourages inclusion and individuality as much as possible. However, as a child with special needs transitions to adulthood, a family’s focus must shift to address a different set of challenges.
Special needs planning typically involves two major elements: estate planning and guardianship planning. Estate planning refers to how a family will provide for a loved one with special needs. Guardianship is concerned with a family member’s need, and ability to, make important legal and medical decisions on behalf of a child.
Children and adults with special needs often rely on public benefits. Most often, these include Supplemental Security Income (SSI) and Medicaid. However, both of these programs are needs-based, meaning applicants must meet strict income and asset limits.
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Thus, the traditional means of leaving a loved one an inheritance through a will, or otherwise transferring assets to their name, can render the recipient ineligible for benefits. To help get around this, families can establish a Special Needs Trust for their child.
A Special Needs Trust, also called a Supplemental Needs Trust, is a tool that families can use to provide for the ongoing support of a loved one with special needs, while preserving their eligibility for needs-based government benefits such as SSI and Medicaid. Thus, rather than transferring property to a loved one with special needs through a will, a parent can create a Special Needs Trust.
Friends and family members can then arrange to transfer assets into the trust at any time. A Special Needs Trust can also inherit property through a will. Because the beneficiary of a Special Needs Trust never legally owns the assets contained in the trust, their benefit eligibility remains unaffected, provided the trust meets certain criteria.
Special Needs Planning
The beneficiary of a Special Needs Trust can use trust funds to pay for a wide variety of supplemental needs that are not covered by government assistance.
While many purchases can be made from a Special Needs Trust, anything related to food or shelter are generally not among them. Thus, Special Needs Trust funds should not be used to buy groceries or pay rent, without first discussing the expense with a knowledgeable New Jersey special needs planning attorney.
At Begley Law Group, our seasoned estate planning lawyers have extensive experience constructing Special Needs Trusts to accommodate the unique needs of our clients. We can help families of varying net worth accomplish their financial goals by creating comprehensive estate plans, including Special Needs Trusts.
Special Needs And Disability Estate Planning
As children with special needs grow into adulthood, parents may be confronted with certain challenges. Chief among these is the fact that, once a child turns 18, they are presumed to be capable of making their own financial, legal and medical decisions. Of course, this may be appropriate for some adult children with disabilities, but not for others. Parents have a variety of options to address their future ability to make decisions on behalf of their adult children.
Perhaps the easiest – and least expensive – way to address a parent’s ability to make decisions on behalf of an adult child with disabilities is to pursue a Power of Attorney document (POA).
A POA is a legal document that allows one person, the agent, to make decisions on behalf of another, the principal. However, POAs must be created in advance of their need. In other words, once someone becomes incapacitated, they can no longer execute a POA.
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Guardianship refers to a legal relationship, created by the court, in which one person is appointed to care for another. Before granting a Guardianship petition, the court must hear evidence from doctors that a person is incapable of caring for themselves. The court will also appoint a third-party as counsel to the incapacitated person to make sure that Guardianship is necessary and in their best interest. The Guardianship process is public, and many families would prefer to avoid it. However, in some cases in which a POA was not created, it may be the only option.
If special needs children have capacity, they should be encouraged to execute a Living Will/Advance Directive/Medical Power of Attorney authorizing other family members to make medical decisions for them if they are unable to make them for themselves. If possible, the special needs child should indicate their preference with respect to life support.
As a general rule, it is best to have a Professional Trustee. Professional Trustees have expertise in managing money and keep abreast of changes in public benefit laws. If a family member serves as Trustee and the law changes, the family member could be sued by the public benefit agency to make restitution for benefits incorrectly paid.
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The family member can retain control by serving as Trust Protector. The Trust Protector would have the right to remove and replace the Trustee, with or without cause, if the family is dissatisfied with the performance of the Professional Trustee. Another reason to select a Professional Trustee is that a family member will most likely be required to post a bond, and (1) the family member may not be able to obtain the bond, or (2) even if the family member is able to obtain the bond, the bond premiums may well exceed the cost of the fees of the Professional Trustee.
Frequently parents have more than one child. The family with three children, one of whom has disabilities, might decide to leave their estates in equal thirds to each of the children. Careful consideration should be given to leaving the child with disabilities a larger share. The healthy children should be able to work and take care of themselves. The child with disabilities is unlikely to ever be able to work or provide enough income to be self-sufficient.
At the time, the Special Needs Trust is being drafted, the attorney should suggest to the family of the child with disabilities that a budget be developed in an attempt to anticipate the future needs of the child with disabilities. The budget could be prepared by a professional Life Care Planner or by family members. As a rule of thumb, if the money is to last a long time, only approximately 4 percent of the trust assets should be withdrawn in any one calendar year.
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A rule of thumb would be to take the annual budget and multiply by 25 and that is the amount that might be considered to fund the trust. This is usually a large number and many families are unable to provide it. Life insurance could be considered to fund all or a part of the Trust.
Special needs planning is crucial for all families who have a minor or adult child with disabilities or special needs. By taking care to create a solid plan now, families may be able to avoid significant expense and stress later on. The skilled New Jersey and Pennsylvania estate planning attorneys at Begley Law Group command an in-depth knowledge of all estate planning and special needs planning principles and put this knowledge behind the clients we serve. We also handle Veteran’s benefits, Guardianship, Medicaid planning and other issues related to the practice of New Jersey elder law. To learn more, and to set up a time for your consultation, call 856-235-8501 or toll-free at 800-533-7227. You can also reach out to us through our online form. Members of the Academy of Special Needs Planners all devote a significant part of their practices to working with individuals with special needs and with their families to plan for the future.
They are familiar with the special challenges such individuals and families face as well as the resources available to them in the community. Academy members work together to stay current on legal developments and to share
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