Those with special needs require specific estate planning to be in a better financial situation.
Do you have a loved one with special needs?
Whether physical or mental, special needs issues are very common.
In America alone, 58 million individuals over the age of five classify as having a disability.
Do you want your loved one to have financial security even when you are no longer around to provide care?
According to a recent CBS News article titled “’Special needs’ people need special financial planning,” this will require specific estate planning.
Simply giving money to a person with special needs can affect eligibility for important government programs.
To be eligible, a person with special needs should not have more than $2,000 in assets.
Then how do you leave them money?
There are a few options.
Special Needs Trust.
Setting up a special needs trust allows you to put away money to help supplement government benefits without losing the benefits.
You cannot do this on your own.
You will need an experienced estate planning attorney to create a special needs trust for you.
Also, the individual with special needs cannot be the owner of the trust.
ABLE (Achieving Better Life Experience) Account.
Was your loved one diagnosed with a disability before age 26?
If yes, then you could create and contribute to an ABLE account.
Contributions to the account are capped at $15,000 each year.
Only $100,000 can be in the account at any given time.
If these rules are broken, your loved one will lose government benefits.
How can you use this money?
These funds can be used for legal fees, funeral expenses, health care, job training, education, and other needs.
Letter of Intent.
Although a letter of intent does not help provide financial security for your loved one with special needs , it does allow you to provide instructions to a guardian.
You can outline the history of your loved one and the details of their care to be provided.
Now you know some key things to do.
What should you avoid?
Do not disinherit your special needs child.
Government benefits can help, but they are not enough.
Do not leave assets—including bonds or a 529 College Savings Plan— in the name of your child.
Your generosity will negatively impact government eligibility.
Do not assume siblings can care for your child.
They may not have the money, time, or ability to do so.
Do not leave money to a sibling to use for a child with special needs.
You cannot guarantee the money will be used as you desire and it could even be taken from the sibling through a divorce, lawsuit or bankruptcy.
The most important thing you can do is work with an experienced estate planning attorney.
He or she will be able to help you create a plan for the needs of your child.
So, how do you find an "experienced" estate planning attorney?
First, ask around. Friends, family and other professional advisors are trustworthy sources.
Second, conduct an "organic" search on "Google" for "estate planning" near you (e.g., "Estate Planning Anytown MoKan").
Third, either way, verify! Check out the education, experience, ratings and client reviews of any attorney before you contact him or her.
In fact, I use both of these services to thoroughly vett attorneys before referring members of our "client" family for legal help in other areas of law or for matters in jurisdictions outside Kansas or Missouri.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: CBS News (December 25, 2017) “’Special needs’ people need special financial planning”