The information in this column is not intended as legal advice but to provide a general understanding of the law. Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstances.
A family close to my heart recently experienced the loss of their second parent. The family includes an adult child with special needs. A family with a special needs child, even an adult child, faces unique challenges, so they need strategies to meet their family's needs. I hope to share some useful information in this week’s column for such families.
Planning for the future can be overwhelming, but creating a care plan is one place to start for a family dealing with a member who has a special need or disability. Your loved one might qualify for local or federal benefits, and you might be able to save for their needs in a tax-advantaged ABLE account.
When you have a family member with special needs, you think about so many things all at once that future planning often gets shunted aside in favor of getting through today. But most of the challenges you face are not temporary. So when you are ready, you might consider thinking through the whole life cycle of help that is ahead of you.
A good test for when you need to do advanced financial planning for an individual with special needs is whether you anticipate them needing assistance with self-care throughout adulthood. When you determine the severity of the need, you can then figure out what level of local and federal benefits are involved. For long-term planning, many familes consider a trust for an individual with special needs or a disability.
It can be hard for families to look far down the road and think about what happens when primary caregivers are no longer able to care for their loved one, but planning for the future can prevent mistakes later that could negatively impact benefits and cause conflict.
For instance, it may not be a good idea to name a person with special needs as a beneficiary on a parent's financial or retirement accounts. If the assets go to the child, it could interfere with their ability to receive Social Security disability benefits.
There are several types of trusts that many families establish for the benefit of individuals with special needs. One of the most common is a third-party special needs trust, created by someone who wants to leave money to a dependent with special needs without risking that person's eligibility for government benefits. The trust can be established by a Will or created during the benefactor's lifetime. The creators of the trust appoint a trustee who has discretion over when and how funds are distributed. The trustee cannot distribute money directly to the dependent, but they can pay for certain items and services not covered by the dependent's monthly Supplemental Security Income (SSI) for disability. Upon the death of the dependent, any assets remaining in the trust may be distributed according to the creator's wishes as specified in the trust's terms.
All estate plans need to evolve over time to keep pace with changes in people's lives and financial situations. Each of these trust types comes with its own benefits and limitations. Whether a special needs trust is an appropriate solution and, if so, which type is best suited for your particular situation and that of your loved one, is best discussed with an experienced attorney. And no matter which type you choose, try to build some flexibility into your plan. To keep your plan current, review it every 3 to 5 years, or whenever your life or your family changes in a major way. That way, you can be confident that your loved ones will be cared for when you're no longer here to look after them financially.
Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.