The financial and emotional toll caring for a child with special needs can be overwhelming. Parents will face unique legal and financial challenges that will evolve over time requiring lifetime adjustments. Without proper planning, these challenges can be even more daunting.
Some of the questions asked by families include:
At CapWealth, we believe it’s important to answer these and other questions long in advance, and help you feel confident in knowing your loved one will be cared for.
Letter Of Intent
A letter of intent is a valuable, and often overlooked, document to guide future caregivers, guardians, and trustees in providing the best possible care for your child. It’s not a formal legal document, but rather a letter helping those who will care for your child. Some areas to address in your letter of intent include: medical history, medications, daily schedule, housing arrangements, social activities, life skills, family history, dietary restrictions, education, government benefits, religion, and behavioral issues.
Government benefits, such as Supplemental Security Income (SSI) and Medicaid, can provide cash assistance and health insurance to defray certain expenses. Your child may qualify for SSI provided:
Many children under the age of 18 who meet Social Security’s definition of disability are excluded from receiving SSI because the family’s household income and/or assets are too high. In that case, a child should apply at age 18 because only the child’s assets and income are counted at that time.
Special Needs Trusts
Many individuals with significant special needs obtain basic support from SSI, which also is the gateway to Medicaid and other critical programs. Since SSI covers only essential expenses, parents usually want to supplement their child’s lifestyle. Because SSI imposes limits on income and assets, providing funds to the child directly can jeopardize benefits eligibility. With a properly-drafted special needs trust, your child can receive “supplemental” funds from the trust, without disqualifying him or her from valuable government benefits.
When your child turns 18, he or she is considered a competent adult with legal rights to make decisions regarding health, education, finances, and safety. If your child is unable to make such decisions, a guardianship may be necessary. Guardianship require significant time and costs. A less restrictive option is a durable power of attorney and medical directive, each of which can be revoked at any time. A durable power of attorney, living will, and health care proxy are important for incapacity planning for those unable to make decisions for themselves.
Estate and trust planning are especially important for families with special needs considerations. Each parent should create a will that names a guardian for minor children. Other important decisions include how to pass on assets with the least tax consequence and the choice of executor and trustee.
CapWealth and LPL Financial do not provide legal advice or services. Please consult your legal advisor regarding your specific situation.