Clients must plan for their own disability as well as for the disability of family members.  Planning for the client's own disability often means purchasing disability insurance during the client's working years.   It also means establishing durable powers of attorney; living wills and/or health care proxies; revocable living trusts when appropriate; and shareholder, partnership and operating agreements when appropriate.

Planning for disability for other family members usually involves the drafting of a special needs trust as well as a life care plan detailing the disabled child’s needs and likely expenses upon the parent's death.  This type of planning should address questions such as where will the child live, who will have a personal interest in the child, and how will all of the child’s financial, personal, emotional, and spiritual needs be met.

A Special Needs Trust is a discretionary spend-thrift trust created for a person who is elderly or disabled as a way to supplement the person’s public benefits.  These public benefits may include SSI, Medicaid, Section 8 Housing, DDD benefits and other federal or state-sponsored assistance programs.

The advantage of a Special Needs Trust is that the trust helps maintain an individual’s potential eligibility for public benefits while at the same time enabling the individual to enjoy the income and principal in the trust.  Typical expenditures made by a Special Needs Trust include the following:

Purchase a home for the child with a disability.

  • Pay for services that Medicaid does not cover, including home care and such items as wheelchairs, handicap accessible vans and mechanical beds.
  • Pay for a personal attendant should that be required.
  • Pay for recreational and cultural experiences.

Enriching the life of a child with a disability.

There are two key requirements:

  • The beneficiary of the trust cannot have the authority to compel a distribution.
  • The beneficiary cannot have the authority to revoke the trust.

Critical to the success of a Special Needs Trust is adequate funding.  The best way for parents to determine how much of their estate to leave to a special needs child is to obtain a life care plan from a professional Life Care Planner.  That individual will estimate the cost of the child’s care over a typical lifetime.

If there are insufficient funds available, parents may consider buying a life insurance policy.  With one type of policy, upon the death of the second parent, the insurance proceeds are paid to the Special Needs Trust for the care of the person with special needs.

Selecting a trustee for a child with disabilities

Selection of a trustee will often determine whether or not the trust succeeds in meeting the parent’s objectives.

A special needs trustee should have these characteristics:

  • A long-term commitment.
  • A special sensitivity to the individual’s disabilities.
  • Active involvement in monitoring the client’s services.
  • The ability to be an advocate for medical and financial entitlements.
  • The ability to be a prudent investor and distributor of trust funds.

While family members often want to serve as trustee, they typically don’t possess all of the necessary qualifications.  For that reason, it is strongly recommended that families retain a professional trustee to oversee the Special Needs Trust with a family member named as co-trustee.

If a family selects a professional trustee from a bank, they should be sure that the bank has a trust department with an excellent track records for managing money.  If a family chooses an attorney to serve as the professional trustee, they should be certain that he or she has a good track record in managing trust money, or that he or she will arrange to hire a professional money manager to oversee trust investments.

Families should be aware that a trustee’s annual fees typically range from 1% to 1.5% of the trust assets.  Theses annual fees are a very worthwhile investment toward the preservation of the security and quality of life of a child with disabilities.

Trust accountings are required.  The Social Security Administration requires an annual accounting of the expenditure of funds in a Special Needs Trust.  This accounting is intended to ensure that trust funds have not been mishandled and serves to protect the person with special needs and any other beneficiaries of the trust.

Because the accounting work is fairly technical and must adhere to the rules of the Principal and Income Act, it is best handled by an accountant, who can be hired by the trustee.

A special needs trustee must have some familiarity with SSI.  The Supplemental Security Income (SSI) federal program is a minimum monthly cash payment for the aged, blind or disabled.  To qualify for SSI, a special needs individual must meet specific SSI definitions of disability or blindness.  SSI eligibility also is “needs based,” with a limit on income and assets.  SSI should not be confused with other Social Security benefits, such as retirement, survivor, dependent or other disability benefits.  SSI payments are dedicated to paying for the food and shelter of a person with a disability.

Selecting a Care Manager for a child with disabilities

The role of a care manager is often important in a special needs trust.  A Special Needs Trust can direct the trustee to hire a care manager.  That individual specializes in making the necessary arrangements to provide the special needs individual with the level of care he or she requires.  The care manager should have a social work background and related expertise and be knowledgeable about all social service programs available to assist the beneficiary.

A good care manager will:

  • Monitor the individual’s progress.
  • Ensure that the individual’s needs are met.
  • Coordinate nutrition and cleanliness programs.
  • Make sure that exercise and physical therapy programs are maintained.
  • Coordinate any socialization or psychological counseling.
  • Ensure that the special needs person has an assistive device, if needed.
  • Have a plan and a responsible advocate available to resolve problems in a quick and timely manner in the event of an emergency.

A Letter of Intent is always important.  As part of the process of planning for the future of a special needs child, it is very important for parents to write a Letter of Intent laying out their wishes for the child’s care.  A Letter of Intent provides parents with an opportunity to explain, in detail, their child’s unique life and background.  The letter helps ensure that those responsible for the child’s care in the future will see him or her as a “real,” multi-faceted person, rather than a number, statistic or faceless subject in a legal document.  The letter also serves as a vital document for the trustee, providing him or her with a greater understanding of the child, and ensuring that the family’s specific wishes, goals and expectations can be carried out.

A typical Letter of intent details the child’s:

  • Unique personality traits.
  • Medical history and special needs.
  • Special education, past and present.
  • Treatment, therapy and daily care needs.
  • Favorite foods and clothing.
  • Friends, co-workers and family members - anyone who is close to the child.
  • Favorite recreational activities and sports.
  • Past vacations and those he or she hopes to take in the future.

Written By Thomas D. Begley, Jr. for Beyond Counsel an Estate Planning Software Company

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