An article in the Wall Street Journal states the importance of building an Estate Plan for those with special needs. The Valentine family’s 14-year-old son Gabe has epilepsy and Asperger’s, and so the family created a Special Needs Trust to ensure that he is taken care of when they are no longer able. Due to the need of many parents to care for their special needs children, a growing number of financial services companies are designating themselves as “special needs planners” and helping families find ways to provide for their children.
According to the article, more than 41 million Americans, or almost 15% of the population, have some sort of disability. Due to medical advancements, many disabled persons are living longer than ever before, and thus are outliving their parents. Experts are recommending the creation of Special or Supplemental Needs Trusts to help enhance the quality of life of a disabled person. In order to qualify for governmental coverage, a disabled person cannot have more than $2,000 in assets (not including a home or car or basic personal items). However, in 1993 Congress said that disabled persons could receive funds from legal settlements or inheritance trust funds and still qualify for this coverage. Third-party trusts are more common, and allow an independent trustee to transfer money to the disabled person, since many disabled persons cannot handle money alone.
Third party trusts can be funded by life insurance after the death of parents, and will help pay for things uncovered by Medicaid, including “travel, companionship, or cultural experiences.” Because the rules governing Special Needs Trusts vary from state to state and can be very complicated, the help of a financial expert is advised. For example, the coordination of relatives and grandparents’ estates is crucial in order to preserve eligibility for government programs. Experts also recommend “letters of guidance,” in which parents can spell out everything caregivers should know about their child, ranging from medical needs to personal preferences.
For more information on setting up an estate plan for someone with special needs, contact Garden State Trust Company and our experienced professionals will be sure to help you. Simply fill out our contact form or call us at (732) 255-5000