Prepare for Your Child’s Future with Estate Planning
Why Estate Planning is Important
Proper estate planning is important for any family, but even more so for a family with a child with special needs. Good quality health care and longer life spans for children with disabilities means that plans must preserve public benefits like Supplemental Security Income and Medicaid. This will help provide them a quality of life for many years to come.
Failure to plan leads to a lack of choices. If a family of a person with special needs does not develop a financial plan for the future, the state may impose bureaucratic solutions on them. The consequences may not be what the family would choose for their son or daughter with a disability.
Unique Challenges to Special Needs Estate Planning
It is extremely important to seek legal advice from an attorney who has experience in estate planning for a child with special needs. There are numerous Mississippi and federal benefit programs that may serve the child’s needs. This includes SSI to provide a monthly income payment and Medicaid for medical insurance coverage. The laws and regulations of these programs vary greatly. A Special Needs Planning attorney can help you navigate and understand their requirements and benefits.
While CMDSS cannot offer specific legal advice or recommendations, the following are some planning steps that experts recommend.
Establish a Will
The parents of a child with Down syndrome should establish a Will (“last will and testament”) as soon as possible. A Will directs the distribution of your assets as well as how and to whom receive them. You may also name a guardian who would care for your child in the event of your death.
If you do not express your instructions about these matters, the state law will dictate the share of assets your child will receive. There also may be a conflict between family members over who will have custody of your child.
Establish a Special Needs Trust
Many public benefit programs limit their benefits to persons with few assets. Therefore, be careful in your Will to NOT leave money or property directly to your child with Down syndrome.
Instead, a Special Needs Trust should be established for that child. The the trust is written as the recipient of the child’s share of assets. It is also possible to designate the trust as the beneficiary of a life insurance policy or an IRA or other retirement account.
(Warning: The IRS has specific rules that allow a trust to be named beneficiary of a retirement account. You must have a knowledgeable attorney review the trust to make sure it qualifies.)
When properly drafted and administered, the assets in the trust will not be counted as the child’s assets, and he or she can keep SSI and Medicaid benefits in addition to the funds in the trust for future needs. It is essential to name, as trustee over the trust, a person or bank who will be devoted to the best interest of your child (the trust “beneficiary”) and is willing to seek professional guidance about investments and public benefit rules in making payments from the trust.
You may establish a Special Needs Trust in your Will, in which case the trust will not exist until your death. Or, you may create a “living” Special Needs Trust that will be in effect now, so that other family or community members can contribute to the trust for your child now if they desire. It is important that other relatives or friends NOT name your child as beneficiary; they should instead leave those assets to the trust. If your child receives an inheritance directly, he or she could be disqualified for SSI or Medicaid benefits and for other services that may require Medicaid eligibility.
Parental Death Planning and Establishing Power of Attorney
The parents of a child with Down syndrome must also plan for their own incapacity or death. A “durable power of attorney” is the legal document that allows you to name the person(s) who will manage your financial affairs – including providing for the financial care of your child – if you later become incapacitated from an illness or injury. The power of attorney must contain certain specific wording to be effective, and it should state any rules or requirements you want your agent to follow in managing your affairs.
An adult with Down syndrome may have sufficient legal capacity to do their own power of attorney, thereby expressing their own wishes about who will be able to handle their affairs and how.
Establish an Advance Health Care Directive
Similar to the durable power of attorney, the “advance health care directive” document can name the person(s) who would make medical treatment or health care decisions for you if you become unable to do so. A person age 18 or older with a disability can sign a health care directive if they understand what they are signing.
When a child with a disability becomes an adult, some medical or educational programs may be unwilling to let the parents continue to make decisions for the child. In such cases, it may be necessary to get appointed as guardian for the child. An attorney handles this court proceeding and will advise you about the ongoing requirements of guardian law.
Some children with Down syndrome are able to live an independent life as adults. Others, however, are unable to manage without assistance. It is impossible to predict your child’s future, but with proper estate planning, you can feel comfortable that your child’s future needs will be met.
Attorneys Specializing in Special Needs Trusts/Wills
Each family must choose a qualified attorney with whom they are comfortable working. Inclusion on this list should NOT be considered an endorsement of any kind by CMDSS, either expressed or implied. CMDSS families have recommended these resources, which are provided for informational purposes.
Do you have a child with Down syndrome and additional questions about estate planning? Please contact us.