Helping Clients Replace Themselves with Special Needs Planning

Helping Clients Replace Themselves with Special Needs Planning

For parents of special needs children, the estate plan is much more than a vehicle for the transfer of wealth to the next generation. In effect, the plan must take the parents’ place in their child’s life. For parents whose child will always require the care of someone else, just the thought of what the child’s life will be like after their deaths can be agonizing. The attorney must have legal and practical tools that address the parents’ fears. The attorney also must help the parents feel confident that their plan will successfully replace the support, effort and sacrifice of the parents.

Every special needs planning case is different. In this article we will discuss the additional considerations and techniques involved in special needs planning for a typical couple with a disabled child who is expected to depend on needs-based government benefits such as SSI and Medi-Cal.

Special needs attorneys must help parents consider carefully some of the decisions that are often “no-brainers” in other estate plans. One of the “no-brainer” decisions arises in planning the parents’ revocable living trust (RLT), which will usually direct dividing the trust property into shares for the children upon the deaths of the parents. In the vast majority of families, as long as there has been no estrangement or bad behavior, the parents want the children to have equal shares. This might be undesirable in special needs planning. If the parents’ resources are limited, it may be necessary to allocate a larger share to the special needs child if that child is not expected to be self-supporting.

Most parents, when creating an RLT, will name one of their children to be the trustee on their deaths. It is very common for parents of special needs children also to presume that one of their other children is the best choice to serve as trustee of the special needs trust (SNT). However, a sibling trustee can be a bad choice for several reasons.

The business dealings between a trustee and a beneficiary may cause strain in an otherwise loving sibling relationship. The job of trustee sometimes requires immediate attention to issues that can’t wait until the weekend, which can be difficult for a sibling who has a job, a family and other responsibilities. A sibling who is the trustee of an SNT will be geographically tied to their disabled sibling, possibly limiting career choices. Finally, administering an SNT correctly requires an understanding of the laws that govern the trust and the relevant government benefits, which may be beyond the capability of a sibling. The attorney must take great care to explain the potential pitfalls, gently steer the parents to a different choice, if possible, or at least help parents build into the trust an exit strategy for the sibling trustee.

The attorney must pay close attention to the parents’ finances. An inheritance is not a windfall for a special needs child. It is a support system that must last for the child’s entire life. Many parents overlook the fact that, even though their child will continue to receive government support, money will be needed to pay for all the care, attention and support the parents currently provide, out of love, for free. The parents must essentially prepare financially not only for their own retirements, but also for a potentially very long third “retirement” for their special needs child. A good financial advisor who can help parents create the necessary resources and who has experience with special needs families is a necessity, and it is often the attorney’s job to make that connection.

The parents of a special needs child know their child better than anyone else. We strongly encourage our clients to write a memorandum or letter, explaining important information about the child to successor trustees, guardians or conservators and others who may have responsibility for the child after the parents’ deaths. Ideally, this document gives details about the child’s medical history and current status, food and entertainment preferences, important friends and family members in the child’s life, and any other thing that would be helpful to someone trying to help the child live the best possible life.

Parents of special needs children who have cognitive or other communication impairments must communicate on behalf of, advocate for and protect their children. The attorney must help the parents imagine their child’s future with someone else taking on these vital roles. When the child cannot communicate or effectively advocate for himself, the attorney must help the parents choose a guardian or conservator (depending on the child’s age) carefully. Also, as the child approaches the age of 18, the attorney must assist the parents to be appointed the child’s conservator by the court.

The attorney will assist the parents to name a person or group of people to serve as advisors to the trustee of the SNT. This advisory committee, typically made up of friends and family members who know the child well and will continue to be present in the child’s life after the parents’ deaths, can help the trustee understand the child’s needs. The advisory committee may, for example, make recommendations for large expenditures on assistive equipment (modified vehicles, wheelchairs).
All trust beneficiaries are entitled to be kept informed of the trustee’s activities. However, the SNT beneficiary may not have the ability to read, analyze and object to the trustee’s accounting. The attorney must explore with parents the possibility of asking a friend or family member to review the trustee’s activities on behalf of the child. It is heart-wrenching for parents to think about a trustee misusing their child’s money, but that does happen, and the attorney must guide parents to think about this potential problem and possible solutions.

Parents of special needs children often feel anxious and helpless when contemplating their child’s life without them. Planning with them requires knowledge, skill and compassion and can be emotionally challenging, but the relief these parents feel upon creating their plan is the attorney’s greatest reward.

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