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Special Needs

Do I Need to Incorporate Phoenix Special Needs Planning into My Estate Plan?

By | Special Needs | No Comments

Phoenix special needs planningIf you are a parent, having a comprehensive estate plan in place is certainly important. If you are the parent of a child with special needs, however, estate planning takes on a heightened importance. The best way to ensure that your child is well cared for both now and after you are gone is to include special needs planning into your comprehensive estate plan.

The Cost of Care

Like most parents, you probably don’t dwell on the costs involved in raising your child; however, raising a child is certainly not cheap, and raising a child with special needs typically involves additional costs and expenses, such as:

  • Specialized equipment
  • Prescription medication
  • Caregivers
  • Therapists (occupational, physical, speech etc.)
  • Doctor visits
  • Surgeries

Not only do you face additional costs and expenses when you are raising a child with special needs, but there is a very good chance that your child will continue to incur these additional expenses after he or she reaches adulthood. It is often the expectation for the continued need to contribute to your child that prompts the need to include special needs planning into your estate plan.

Why Is Special Needs Planning Required?

Typically, gifting funds or assets to an adult child, either through your Last Will and Testament or through a trust, does not present a problem; however, in the case of a child with special needs, doing either can actually cause more harm than good. If your child depends on assistance from programs such as SSI, Food Stamps, or Medicaid, gifting anything of value to your child could threaten his/her eligibility for benefits from these programs. As you likely already know, many assistance programs have both an income and an asset test that applicants/recipients must pass to gain or retain eligibility. Without regard to your child’s physical and/or mental abilities and limitations, the law will treat your child as an adult once he/she has attained the age of majority (18). Consequently, anything you gift directly to your child will be counted for the purpose of determining eligibility for state and/or federal assistance programs. Your well-intentioned gift (and/or gifts from other family members), meant to provide continued financial support for your child, could ultimately have the opposite effect.

 Special Needs Planning

The good news is that you can continue to provide financial support to your child by incorporating a  special needs planning component into your overall estate plan. Within a properly drafted Revocable Living Trust, special needs planning can be incorporated allowing you to  designate assets to be used for the care and maintenance of an individual with special needs without the risk of losing eligibility for state and federal assistance programs. The trust is intended to provide supplemental care over and above that which is provided by programs such as Medicaid and SSI. To ensure that a trust is recognized as a Special Needs Trust the trust agreement must include very specific language, hence the need to work closely with an experienced estate planning attorney during the creation of the trust agreement.

Contact a  Special Needs Planning Estate Planning Lawyer

For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about special needs planning, contact an experienced  estate planning lawyer at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.


Considerations in Planning for a Special Needs Beneficiary: Part I

By | Attorney Andrea Claus, Beneficiaries, Special Needs | No Comments

I met with a prospect the other day, a married couple with 3 adult children.  It was a pretty typical meeting until I reviewed their existing distributions: when the second of them passed, there estate was to be left 50-50 to only two of their three kids.  I asked why they are disinheriting their third child, and their reply was so that he would not lose his government benefits.

I hear that kind of story all of the time. Having a special needs loved one has many ups and many downs.  However, it is important to understand some of the basic rules when it comes to planning for families with special people.  There is so much to go through, I will be writing this in three parts, so look for Part II soon.

Each family I meet with is unique; everyone has their individual concerns when it comes to estate planning. Those planning for a special needs loved one must carefully consider many things when crafting their plan.  A crucial piece of planning information is determining if the special needs beneficiary is in receipt of any type of government benefit or assistance program.  There are different categories of assistance that a special needs individual might qualify for:

The first category is the entitlement programs. They are called entitlement programs because a person does not have to have low income or assets to qualify for them; the person is “entitled” to receive the benefit.  The two most common entitlement programs are Social Security Disability Income (“SSDI”), and Medicare.  There are different ways to qualify for SSDI, but typically special needs persons become eligible under the Childhood Disability Benefits or Disabled Adult Child Program. Since SSDI and Medicare eligibility is not based on income or assets, these programs do not usually need to be considered when developing an estate plan for special needs beneficiaries.

The second category is the “means tested” programs.  There are certain programs and benefits for special needs individuals where that individual’s income and assets are considered.  These “means-tested” programs include Supplemental Security Income (“SSI”), Medicaid, In Home Supportive Services, Subsidized or Section 8 Housing, and Temporary Aid to Needy Families.

For an individual receiving these types of benefits, or in need of these types of benefits, careful planning is necessary-an inheritance can disqualify receipt of the benefit.  Without the proper planning an inheritance will need to be “spent down” to the level where he or she once again qualifies. Since these means-tested programs generally do not allow a person to have more than $2,000 in their name, the receipt of an inheritance will disqualify a special needs beneficiary until he or she has spent the inheritance down to $2,000.

What is intended as a heartfelt gift can do significant damage.  An inheritance of greater than $2,000 has the potential to cause the loss of Medicaid for a special needs beneficiary, which can be devastating since he or she may not be eligible for any other kind of health insurance coverage.

It does not have to be that way.  A properly drafted plan can pass an inheritance of any size to a special needs beneficiary without the loss of benefits, even if it is a means-tested program.  If you have a special needs beneficiary, we can put together a plan that will do what you intend it to: benefit your loved one.

andrea-claus  Contributed by Morris Hall, PLLC Phoenix and Prescott Estate Planning Attorney, Andrea L. Claus.

What the Attorneys of Morris Hall, PLLC Can Do For You:
The attorneys at Morris Hall have 100’s of years of combined experience ensuring that families’ assets are protected from probate, unnecessary taxes, creditors, ex-spouses and Medicaid spend-down.  Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Carefree, Tucson, Oro Valley, Prescott, Flagstaff and Arrowhead.  Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.