Author: William P. Dale
With the advances in medicine during the second half of the 20th Century, more and more families are dealing with the situation in which a mentally disadvantaged child has been able to grow into adulthood and can expect to live a normal life span. Since many disabled citizens are now living a significantly greater number of years, families are faced with a growing number of questions as to their care and maintenance. Increasingly, parents are having to come to grips with the reality that, as they become older and enter into retirement years, they are no longer physically able to care for the needs of their special child. Also, as these senior citizens pass on, the estate consequences of any bequest to the disabled person must be evaluated.
In the climate that presently exists, when a mentally disabled individual is the beneficiary of certain federal and state governmental programs, such as Medicaid and/or assisted living programs, the government requires that the income of the disabled person must be limited in order to qualify for participation in such programs. If the special needs person becomes the beneficiary of a sizeable inheritance, it is possible to lose eligibility for certain government programs. Since the programs are designed to meet the special needs of that individual, the loss of eligibility in these programs could be a serious problem for both the disabled party and his or her family.
One of the estate planning devices which can be used in this particular situation is a Special Needs Trust. In this trust, typically, a parent will arrange it so that the special needs child will be able to receive distributions from the trust which will be a supplement to the benefits that they are receiving under government programs. Usually, it is envisioned that the distributions from the trust will pay for certain “additions or luxuries” for the child over and above that which they are receiving under the government program. In order for the child to remain eligible for these programs, the trust must be drafted in such a way that, at the death of the beneficiary, trust assets will pass to the government to the extent necessary to reimburse it for expenditures made on behalf of that beneficiary.
There are various ways in which this trust can be established either during the lifetime of the grantor, usually the parent, or after his or her death. Depending upon the particular situation, it may be advisable to establish the trust during the grantor’s lifetime or afterwards.
Finally, one of the principal non-monetary reasons for establishing such a trust would be to enable the parent, or other family member, to nominate the trustee and guardian for the special needs beneficiary without resort to the courts. This permits continuation of substantial control after the parent is no longer able to care for the beneficiary.
If your family has a special needs member, careful planning should be done to ensure that the needs of that person will be met throughout their lifetime. Evaluation of the availability and participation in government programs along with the consequences of being an heir in an estate must be made in order to plan properly for the future. We would be happy to meet with you and discuss your particular situation.