Having a special needs family member requires you to see the world in ways that most others do not. Each family’s requirements are unique. Persons with special needs frequently require care for the rest of their lives. Who will take over your role as a caretaker if you become disabled or die? Who will be willing and able to care for and treat your loved one as well as you do? A special needs planning attorney can assist you in developing a plan to ensure your loved one is cared for even if you can no longer do it personally.
Establishing a Conservatorship
You most likely have strong opinions about who you would (and would not) like to take on the caretaker position. For example, perhaps you believe that your brother or cousin would be better qualified for the position or that your parents would be a poor fit. If you have certain people in mind who you want (or do not want) to be the conservator, you must disclose this information to an attorney so that it can be clearly and legally specified. Otherwise, the courts have the authority to nominate someone of their choosing.
Many special needs attorneys will advise against giving an inheritance to someone with special needs outright, not because you don’t care about them, but because the purchase of assets may exclude your loved one from certain benefits or support programs. Even health insurance companies may see the acquisition of assets as a justification to seek payment for previously granted benefits. Instead, we advise parents to establish a Special Needs Trust, which can store assets for your child’s future care without raising the red flags of having them legally in their name.
Special Needs Trust
Again, depending on your specific scenario, your California special needs planning attorney may advise you to establish a Special Needs Trust for your loved one. It would help if you also decided how the trust would be funded, with life insurance being a popular option. This action safeguards your loved one’s eligibility for certain programs and benefits. This type of trust allows you to appoint someone of your choice as the legal manager of those funds, giving assets and funding to the family member with special needs.
There are important differences between First-Party and Third-Party Special Needs Trusts
First-Party Special Needs Trusts must be established for the sole benefit of a person with special needs by a parent, grandparent, legal guardian, or the Court. The Trust must be founded with money owned by the disabled person. The payback provision applies to first-party special needs trusts, which means that after the beneficiary dies, the trustee must utilize any leftover trust assets to repay the state of California for any benefits paid to the special needs beneficiary.
The assets of someone other than the recipient are used to fund Third-Party Special Needs Trusts. They are the most common and effective means for parents to provide for a disabled kid, and they are exempt from the return provision. Third-Party Trusts are typically established as a Revocable Living Trust or a Stand-Alone Trust.
Special Needs Estate Planning in California
When it comes to estate planning, parents of special needs children have a plethora of issues to consider. We are here to assist you in making the most of your estate plan and avoiding common mistakes. Improperly constructed special needs trusts, as well as other planning errors, may risk eligibility for critical public support. Furthermore, the care demands of your special needs loved one will change over time, as will your financial circumstances. Contact us online or give us a call for a personal discussion if you require a properly established special needs trust and successful overall special needs planning.