First Five Steps in Special Needs Planning

First Five Steps in Special Needs Planning

What is special needs planning? The focus of special needs planning is to protect and secure the future of our loved ones with disabilities.

Through special needs planning, we work to preserve and maximize needs-based public benefits, such as Supplemental Security Income (SSI) and state programs, such as California’s Medi-Cal, and protect our loved ones from those who could potentially take advantage of an individual with special needs. We work to ensure the greatest quality of life for our loved ones, now and in the future, and, in particular, in our absence.
Unsure of where to begin? Start with these first five steps:

1. Write a Memorandum of Intent/Letter of Intent: A letter of intent is a document prepared by you, the primary caretaker of a special needs child/loved one, giving direction to future caretakers about the care of your loved one in your absence. You should provide instruction regarding the specific emotional, physical, and medical needs of your loved one, as well as your hopes and desires for your loved one’s future.
2. Establish a Special Needs Trust: A special needs trust is a special type of trust that allows a person under a physical or mental disability to have an unlimited amount of resources secured for his or her benefit, without disqualifying the individual from needs-based governmental benefits. In addition, a special needs trust can protect assets from potential predators or others that might take advantage of a person with special needs.

A special needs trust should be established by an estate planning attorney who is familiar with public benefits and specializes in working with the families of loved ones with disabilities. An improperly drafted trust could leave your loved one unprotected and could result in loss of public benefits.

3. Remove Child’s/Loved One’s Name from Assets (including retirement plans and life insurance policies): Your child/loved one should not be named as beneficiary, or contingent beneficiary, of any life insurance policy or retirement plan. It could jeopardize his or her eligibility to receive needs-based governmental benefits and leaves the assets unprotected from potential predators. A special needs trust can be used to hold such proceeds, without jeopardizing eligibility.

4. Carefully Choose an advocate/care manager and a successor trustee: Administering a special needs trust can be complicated. Be sure to choose someone who is familiar with public benefits or is willing to learn in order to serve as trustee in your absence. In addition, you should select a care manager or advocate, i.e., someone to ensure the safety and emotional and physical well-being of your child in your absence.

5. Inform other Family Members about Your Special Needs Trust and Gifting: Be sure family members, such as grandparents, do not name your child directly as beneficiary of any trust, retirement plan or life insurance policy. Let them know you have established a special needs trust and that they should gift to your child only through this trust.

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