“We contacted Chip about setting up a Special Needs Trust for our son. As it turned out, we ended up with our wills, powers of attorney, a family trust for our other minor child, AND a special needs trust all in one consultation! The process only took about two weeks, and we just had to go to the office once more to review and sign everything. Chip and all of the staff are friendly and compassionate while also being knowledgeable and professional. We are very happy to have all our estate planning ducks in a row!” ~Sharon B.
Louisiana families who have a family member with a disability must plan for the future very carefully. How assets are left after your death can have a tremendous impact on the quality of life for that person. To protect a person with special needs, a well-defined estate plan is vital.
Many parents assume that making sure a child is financially secure after they are gone means leaving the assets outright to the children. For many reasons, such as a child’s inability to manage finances, the outright distribution of your assets to your children may not be the most prudent option. This becomes especially true if any of the beneficiaries of your estate have, or develop in the future, special needs, and require the assistance of government aid.
Know Your Options
Leaving assets outright to a special needs child could render them ineligible to receive otherwise valuable government assistance until those assets are exhausted. In Louisiana, the problem is exacerbated by the fact that Louisiana forced heirship laws mandate that a child with a permanent disability must receive an inheritance from the child’s deceased parent. But what is a parent to do to avoid this result?
One option is to disinherit the special needs child completely, thereby allowing the child to receive aid from the government they would otherwise not be able to receive with an inheritance. Although the parents could instruct their other children to care for the special needs child, there is no guarantee that this will be done. Additionally, there is no assurance that the government program will continue in existence or will provide the expected level of assistance. Finally, and possibly most significantly, the psychological effects of disinheriting the child could be devastating to the child and the parents during their lifetimes. Therefore, for most parents, this option is not an option at all.
Fortunately, there is a more viable option for fulfilling a parent’s desire to care for a special needs child without interfering with his or her ability to receive government assistance: the Special Needs Trust. Special provisions can be included in a trust that limits the child’s access to the trust assets and, hence, the inheritance’s effects upon assistance eligibility.
How a Special Needs Trust Works
The Special Needs Trust allows a parent, grandparent, or guardian to provide funds for a child with special needs without disrupting the child’s eligibility for government aid. Setting one up is a fairly simple process. Working with your estate planning attorney, you appoint trustees for your child’s trust. The trustees will manage the assets you transfer to the trust for your child’s benefit. In the event of your disability or death, the trustees will also supervise your child’s finances.
During your lifetime, you can serve as trustee and remain in complete control over your child’s finances. Should you die, however, your successor trustees will step in and take care of your child’s finances on your behalf. As part of setting up your child’s Special Needs Trust, you will provide detailed written instructions to direct your trustees’ activities. By law, trustees must follow these instructions. So, you can rest assured your child’s education, housing, and other needs are being taken care of.
Best of all, the Special Needs Trust will preserve your child’s eligibility for federal, state, and charitable benefit programs. This is accomplished by providing that the funds can only be withdrawn from the Special Needs Trust for purposes other than those covered under the governmental and private benefit programs.
Your Southeast Louisiana Special Needs Planning Attorney
As difficult a subject as it might be, all parents owe it to their children to ensure they’re well cared for, come what may. Parents of children with special needs face an even greater imperative to do this essential planning. Contact Metairie Special Needs Planning Attorney, Chip Morrison, at 504-831-2348 if you have questions about estate planning for your loved one with a disability.