Every family can benefit from estate planning. Knowing what will happen after someone passes can provide a great sense of security and peace of mind to the entire family. Having a plan allows the grieving family members the comfort and space they need without also having to make big decisions.
However, estate planning takes on heightened importance when a family has a child with special needs. Whether the child is a minor or an adult, it's very important that plans be in place to make sure the child is provided for and is able to receive the care needed to insure a happy, healthy life. This planning is particularly important in Tennessee when the special needs child will be receiving needs-based public benefits such as Supplemental Security Income (SSI) or TennCare/Medicaid.
Though the specific plans that are put in place will vary depending on the age of the child, the child's competency, and other family considerations, the intention behind planning will always be the same: To make sure the child's needs are provided for after the parent is gone. These goals can often be met by using of a properly prepared special needs trust.
Why Make a Plan?
A primary goal of estate planning for a special needs child is to preserve public benefits for the child while supplementing and enhancing the quality of the child's life. The reasons for conducting this type of planning include:
- Protecting the child's eligibility for public benefits
- Lifetime money management for the child
- Making sure funds are available in the event public funding should stop or be restricted
As you might expect, providing for a special needs child requires some special considerations. Parents want to make sure that the intended portion of the parents' estate is able to pass to the special needs child at the time of the parents' death and not be considered as an asset. This consideration is important because, if the portion of the estate is viewed as an asset, the special needs child could become ineligible for certain government services. Parents must also be aware that too much monthly income, as well as too much cash, can negatively impact their child s future eligibility for benefits.
Typical Options for Special Needs Children
There are several options available to plan for a special needs child who is receiving needs-based public benefits in Tennessee. Here are some of them:
- Give the entire estate to the siblings. If the parents have other children, they can give the estate to the siblings with the understanding that the siblings will take care of the disabled brother or sister. However, there are some obvious risks with this approach. If the siblings later owe money to creditors or lose their share through bankruptcy, divorce, or mismanagement of funds, or if they are negligent in caring for their disabled sibling, the special needs child will not receive the care the parents desired.
- Leave an inheritance to the special needs child. Though this is a simple and fair approach, it will almost certainly negatively impact the disabled child's eligibility for publicly funded benefits. The child could even become ineligible for SSI and Medicaid, losing eligibility for assisted housing, supported employment, vocational rehabilitation, group housing, job coaching, attendant personal care aides, and transportation assistance.
- Create a Special Needs Trust. This is the option most families choose as it's the best way to guarantee that the special needs child will be provided for. A Special Needs Trust will allow the child to continue to qualify for public assistance programs because the assets will be held in the trust are will not be available to the child. In addition, the parents will need to appoint a trustee to act as the child's money manager. The added benefit in this is that the trustee will continue to look after the child's financial well-being after the parents have died.
Parents have the option of creating a Revocable Living Trust, also called an intervivos trust, or creating a trust at the point of their deaths, which is known as a testamentary trust. The advantages of a revocable living trust include:
- Avoiding probate
- Streamlining your affairs once you pass
- Giving a co-trustee an opportunity to learn to administer the trust before the parents have died
There are many other important decisions and details to consider when deciding how to provide for a special needs child after the death of the parents. Working with a knowledgeable estate attorney, you can better your options and create a plan that will give you the peace of mind that comes with knowing that your child will be taken care of for their rest of their life.