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How Can Parents of Special Needs Children Ensure Long-Term Care Through Estate Planning?

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How Can Careful Estate Planning Protect Your Special Needs Child?

As you navigate the journey of raising a child with special needs, one of your most important responsibilities is ensuring their well-being and care are secured for the long term. The thought of leaving this world without proper plans in place for your precious child can be overwhelming and filled with anxiety. But you don’t have to carry this burden alone. By consulting with an experienced estate planning lawyer who is well-versed in special needs trusts and other crucial planning tools, you can find solace in knowing your child’s future will be safeguarded, no matter what lies ahead.

What is a Special Needs Trust and How Does it Work?

Many individuals with special needs depend upon means-tested programs like Supplemental Security Income (SSI) and Medicaid. These vital benefits ensure they can get the specialized care they need. However, parents wishing to provide for their disabled children long-term must be aware of the limitations on income and assets that are imposed by these programs.

A special needs trust is a legal arrangement that allows assets to be held for the benefit of a person with disabilities or special needs without jeopardizing their eligibility for critical government benefits.

When a special needs trust is created, parents or other grantors can place assets into the trust for the use of the designated beneficiary. A trustee is appointed to manage the trust assets and make distributions for the beneficiary’s supplemental needs during their lifetime. The trust’s funds can be used for items and activities not already covered by government benefits, such as education, therapies, personal items, recreational activities, transportation, quality of life improvements, and certain medical expenses. Notably, unlike a direct gift to the special needs individual, the trust’s assets are exempted from their income and resource limits for public benefits because they do not have direct control over the funds.

What Types of Special Needs Trusts Exist?

Choosing the most appropriate variety of special needs trust requires a careful evaluation of your finances, goals, and the needs of the beneficiary. As creating a trust is a complex legal endeavor, it’s essential to consult with a skilled attorney with in-depth knowledge of special needs trusts who can help you explore your options and make the best choice for your circumstances. The three main types of special needs trusts are:

  • Third-Party Special Needs Trust: This trust is established by someone other than the disabled individual, typically a parent or grandparent, and is funded with assets that do not belong to the disabled person. It is designed to hold gifts, inheritances, or life insurance proceeds for the benefit of the special needs child without affecting their eligibility for public benefits like Medicaid and SS. Upon the beneficiary’s death, the remaining assets can pass to other beneficiaries without Medicaid payback requirements.
  • First-Party Special Needs Trust: This trust is funded with the disabled individual’s own assets, such as a personal injury settlement or inheritance. It is also known as a “self-settled” trust. Upon the beneficiary’s death, any remaining funds in the trust are typically used to reimburse Medicaid for services provided.
  • Pooled Special Needs Trust: Managed by a non-profit organization, this type of trust pools the resources of many beneficiaries for investment purposes while maintaining individual accounts for each beneficiary. Pooled trusts may be more cost-effective and accessible for certain families. However, it is vital to fully understand the management costs and fees involved over the life of the trust and how that could impact the assets available to the beneficiary.

Could Other Estate Planning Documents Provide Protection For Your Special Needs Child?

While a special needs trust is often a key component in protecting a disabled child’s well-being, parents have various tools at their disposal to provide for their child’s future care and quality of life. Making certain your child’s unique needs are met after you are gone goes beyond simply preparing for financial considerations. An estate planning lawyer can guide you through other crucial steps, such as drafting a letter of intent outlining the child’s care preferences, appointing a guardian or conservator to make decisions on the child’s behalf, and setting up powers of attorney for financial and healthcare matters.

These essential documents ensure your child will have trusted advocates representing their future medical and personal needs who understand your hopes and desires for their care.

Your lawyer can also advise you on further planning strategies, such as life insurance policies, ABLE accounts, and housing trusts, to provide additional financial resources for the child’s future needs. A multi-faceted approach tailored to your family’s situation will give the most robust protection. Thoughtful planning not only preserves your child’s eligibility for crucial government benefits like Medicaid and SSI but also provides a safety net of supplemental funds to enhance their quality of life.

How Can Our Law Firm Help You?

Don’t let the uncertainty of tomorrow overshadow the love and dedication you have for your child today. Embrace the opportunity to give your child the security and peace of mind they deserve. Your dedication and commitment will echo through the generations, ensuring your child’s journey is filled with the care, support, and resources they need to thrive.

Consult with a special needs estate planning lawyer from Metropolitan Law Group and take the first step towards creating a comprehensive plan that safeguards your child’s well-being for years to come. Your child deserves the best possible care;

with the proper legal guidance, you can make that a reality. Contact our firm today at 612-448-9653 for a free 15-minute strategy call and learn how we can support your goals.

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