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Modern Estate Planning Blog

Elder Law & Special Needs Planning

National Special Needs Law Month and Long-Term Disability Planning

October 22, 2019

Celebrated every October, National Special Needs Law Month is that time of year when families, caregivers, attorneys, and estate planners across the country are encouraged to explore the long-term needs of those who require specialized, ongoing care.

More specifically, this awareness month is designed to ensure that the medical and financial needs of those with disabilities are clearly spelled out in legal form to eliminate any potential confusion or costly expenses once their caregivers pass.

If you currently care for or live with someone with special needs, we invite you to use this year’s National Special Needs Law Month to make sure that all of your paperwork and long-term planning are in order.

But what exactly does “special needs planning” entail?

What Is Special Needs Planning?

Special needs planning shares much in common with more conventional estate planning. In both cases, you formally establish provisions, rules and exclusions designed to benefit those you leave behind.

The difference is that special needs planning focuses on those with disabilities. Thus, the process involves more than simply divvying up assets as you would with a traditional will. 

Instead, the goal of special needs planning is to ensure the beneficiary’s unique medical and financial needs are fully met to maximize his or her quality of life in your absence.

Special needs planning is not limited to providing for minor children, the focus is to also help adults and retirees who face disabilities as well.

Some of the areas that special needs planning tries to address include:

  • Guardianship/Conservatorship – i.e. who will act as steward of your loved one after you’re gone?
  • Finances – i.e. what funding will be available to support your loved one – including housing, food, medical care and living assistance?
  • Compliance – i.e. do the provisions and rules you outline mesh with local, state and federal requirements governing eligibility for public assistance (i.e., SSI, Medi-Cal, etc.)?

Because answers to these questions rarely materialize on their own, you need to sit down with a special needs attorney to formally map out how all of the above pieces fit together.

To understand what that entails – keep reading.

How to Make Your Special Needs Planning Official

National Special Needs Law Month and Long-Term Disability Planning | Chubb Law Firm

A primary component of the plan is a “special needs trust” overseen by a designated trustee tasked with distributing funds and managing expenses if and when you expire.

That trustee can be a family member, friend or independent third party – depending on how you choose to establish your special needs trust. But by design, these legally-binding fiduciary arrangements exist to protect assets from counting against the special needs beneficiary and jeopardizing public benefits, so that the underlying funding remains available for as long as possible.

If you were to use a more straightforward will or outright distribution from a regular trust, for example, the funds would belong to the beneficiary and impact qualification for public benefits like SSI, subsidized housing or Medi-Cal.

Another key component of special needs planning is creation  of a conservatorship, also known as a “living probate.” The conservator is someone who can make important medical or financial decisions if the family member with special needs does not have the ability to make these decisions on their own.

If the beneficiary is a minor, your special needs planning will also need to include a designated guardian whose role is to raise the child to maturity – according to whatever wishes you layout. Once the minor reaches that age of 18 the guardianship will convert into a conservatorship.

The above pieces represent the main pillars of special needs planning. But depending on the situation, you may wish to explore any number of ancillary or tangential aspects as well.

Just to highlight one example, the Achieving a Better Life Experience Act of 2014 (ABLE) provides for tax-free savings accounts that can enable a disabled loved one to save funds without jeopardizing public benefits eligibilty. ABLE accounts share much in common with the 529 savings plans that parents sometimes use to pay for their kids’ college tuition.

What Are the Benefits of Special Needs Planning?

The most obvious advantage of special needs planning is peace of mind in knowing that your loved one will be looked after once you’re gone.

This is true with all types of estate planning. But those with special needs are especially vulnerable to predatory practices and bureaucratic red tape. With the right type of planning, you can shield your loved one from both so whatever assets you leave behind can be used to improve their quality of life instead of being used to settle disputes, payoff claims or render your family member ineligible for government assistance.

Another benefit of special needs planning is to help beneficiaries avoid lengthy (and expensive) legal proceedings once you pass. That’s because using a trust makes it easier for assets to bypass probate and avoid all the fees and delays typically involved.

And there’s an even more immediate reason why special needs planning is important.

National Special Needs Law Month and Long-Term Disability Planning | Chubb Law Firm

There’s always a possibility that a lawsuit or creditor could win claims against your current assets. For example, maybe a house that you intend to leave to your loved one is sold to pay off some outstanding debt or court settlement while you’re still alive.

Placing assets in a properly structured special needs trust, however, prevents that from happening. Because creditors can’t touch your home, it remains available for your loved one once you transition to the next life.

How Are Assets Allocated in Special Needs Planning?

You now understand the core components of special needs planning – including the what, why and even the benefits. 

But these alone are not enough. 

It’s also important you understand how the assets you leave behind can and cannot be used. That’s because a disabled beneficiary who is dependent on government assistance could be disqualified if they receive anything that might be considered “income” or “resources.”

In other words, whatever assets you leave behind must be managed very carefully to avoid triggering ineligibility.

These restrictions vary from state to state. The primary prohibition is using  special needs trust funds to pay for housing or food. If the funds are used this way, the public assistance will be reduced dollar for dollar. This can be tricky because housing includes things like utilities, rent or property taxes. 

Fortunately, whatever money you do leave behind is still accessible in other ways. For example, these funds can be used to improve the beneficiary’s quality of life if those expenses fall outside of the public assistance sphere. 

Common expenses include things like:

  • Vocational training
  • Hobbies and travel
  • Housekeeping
  • Internet access

But even when paying for qualifying expenses, the money cannot go directly to the beneficiary or else it might be counted as income. Instead, all bills must be paid directly to the service or business on behalf of the beneficiary.

National Special Needs Law Month and Long-Term Disability Planning | Chubb Law Firm

Do I Need a Lawyer to Help Me with Special Needs Planning?

Yes. Navigating the complexities of special needs law is not a DIY job. And this isn’t the type of long-term planning you should ever leave to Internet research or gut instincts.

In the absence of competent legal counsel, the chances of assets being caught up in probate are very high. And probate only represents the first of many avoidable hurdles in a very long and expensive process.

Using a lawyer isn’t a legal requirement. But remember the goal of special needs planning is to provide for a lifetime of support to those you leave behind. If you want to protect your assets and guarantee your family members have the resources they need to live comfortably, seeking legal advice is essential.

Do I Need a Special Needs Lawyer?

The short answer is yes. And here’s why.

Many of the best practices already established in retirement, probate and estate planning law also apply to those of special needs. But because of the unique challenges that people with disabilities face with public benefits eligibility, special needs law remains a separate field best handled by licensed practitioners who specialize in this area of the law. 

In fact, many of our own clients are referred to us by highly experienced probate and estate planning lawyers who simply don’t know enough about special needs planning to feel competent navigating the terrain.

Come Celebrate National Special Needs Law Month with Us

If you want your loved one to live their best possible life once you’re gone, consulting with a special needs lawyer is one of the wisest decisions you could ever make—and there’s no better time to get started than this year’s Special Needs Law Month.

To learn more, please schedule a consultation by calling us directly at 916-241-9661.

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