Considerations When Planning for Families with Special Needs Children

 

Richard Morgan, Morgan and DiSalvo.

This video newsletter is about considerations for families with special needs children. It’s difficult when you have a child with special needs; there’s lots of rules and lots of government agencies, lots of government benefits, lots of different issues that you need to deal with. So when you’re dealing with estate planning, you want to think about all those other considerations in handling your estate plan.

So number one, you’ve got to think about what kinds of benefits the child qualifies for. Are they means tested; the child cannot earn a living and therefore, doesn’t have sufficient assets to take care of themselves, therefore, the government assists? Or is it something like SSDI, Social Security Disability Insurance? And that would be earned potentially from a parent’s Social Security record, and that’s not means tested, but it’s been earned. And so you need to think about these things on how to deal with these different sets of rules.

Number two, do not think about, well, it’s complicated to give the assets to that child because they might lose some benefits. Sometimes people do like what I call poor-man estate planning. They’ll just not give any assets to benefit that disabled child, they’ll give it to their sibling. That’s a bad idea. It’s way better to give those assets to a supplemental needs trust, a community pool trust or some other way to do it where they are actually going to get those assets in some manner to benefit from them.

When you do this kind of poor-man estate planning, where you give the assets to someone else and hope they carry out your intent, bad things can go on. Number one, let’s assume it’s a good kid, it’s a good person you gave the money to because there’s no legal restrictions on those funds, but let’s assume they’re good. Now, let’s say they get divorced; they have a car accident, they don’t have enough liability insurance, all kinds of bad things can happen. Guess what? Those assets are now subject to that individual’s creditor claims. It’s not good, so we want to make sure we set it up properly so that when you leave this earth, you know that disabled child’s going to be in good hands and be in good shape.

You need to think about your child’s life, and I know this is probably the most heart-wrenching part of this whole process, is if you left this earth, who’s going to make sure your child’s in good shape? So there’s lots of programs out there, lots of things going on. You need to get social workers or others that understand this whole world, and kind of figure out what the options are, and kind of go through a plan to get that in place because inevitably we all become incapacitated or deceased, and so we’ve got to make sure that your child is taken care of in that situation.

Finally, prepare for your own disability. So a lot of times, individuals spend most of their money, when they have disabled children, on their children’s care. They make less money because they’re spending more time with their children, and then their children have more expenses. So you want to make sure that you are going to be okay if something happens to you; that your financial situation is okay, that you have proper insurance and proper care, and all those things are kind of set up. And that’s more of a financial planning question. I’m here to tell you that you just need to think about and take care of it.

Richard Morgan, Morgan and DiSalvo.

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