For parents of a child with certain disabilities, planning for the future takes on a particular significance. If you are in this position, safeguarding your child’s well-being and financial security is an effort that needs to extend beyond your lifetime.
A well-crafted estate plan can provide peace of mind, knowing your loved one will be cared for even in your absence. As such, if you’re a parent to a differently abled child, it helps to familiarize yourself with the key resources worth considering when building your estate plan.
Financial security through special needs trusts
One of the most crucial elements of your estate plan should be the creation of a special needs trust (SNT). An SNT holds assets on behalf of your child, helping to ensure they don’t disqualify them from receiving government benefits like Medicaid and Supplemental Security Income (SSI).
A trustee, a trusted individual you appoint, manages the trust’s funds and distributes them for supplemental needs not covered by government programs, such as education, therapy or improved quality of life expenses. There are two primary types of SNTs: self-settled SNT and third-party SNT.
A self-settled SNT is established with assets your child already owns. These trusts offer limited flexibility to protect benefits. On the other hand, a third-party SNT is funded with your assets and offers greater flexibility in distributions without jeopardizing benefits.
Guardianship and caregiving considerations
Your estate plan should clearly designate a guardian to care for your child in the event of your passing or incapacitation. This decision requires careful thought. Consider someone who shares your values, has a loving relationship with your child and possesses the necessary skills to manage their specific needs.
Discuss your wishes openly with your chosen guardian and try to ensure they are comfortable taking on this responsibility. You also include a letter of intent outlining your preferences for your child’s care, education and future.
Planning for incapacity: power of attorney
A durable power of attorney (POA) can enable you to appoint someone you trust to manage your financial affairs if you become incapacitated. This is essential for helping ensure your child’s needs are met even if you cannot handle finances yourself. Choose a responsible individual familiar with your financial situation and comfortable making financial decisions on your behalf.
Estate planning that is conscious of a child who has a disability requires careful consideration and legal guidance. Consulting with an experienced legal team can help to ensure that your plan is legally sound and addresses your child’s unique needs. By taking these steps, you can provide a lasting legacy of love and security, giving you peace of mind and your child the support they need to thrive.