The importance of planning for a loved one with special needs
According to the World Health Organization, an estimated 1.3 billion people worldwide live with a disability. Put simply, everyone knows someone with a disability. While “special needs” has no single definition, the term generally refers to the effects of a disabling condition and the life circumstances that follow.
Those needs may include ongoing physical care, limited employment opportunities, reduced earning capacity, and additional resources needed to maintain a good quality of life. Because of this complexity, thoughtful legal planning is essential to protect beneficiaries with special needs.
Common planning mistakes to avoid
Families often act with the best intentions, yet certain decisions can unintentionally jeopardize a loved one’s future:
• Disinheriting the beneficiary with special needs.
This approach rarely offers protection and can leave the individual without adequate financial support.
• Leaving the beneficiary’s inheritance to another family member.
Even the most responsible relative may face divorce, creditor claims, illness, or death, putting those funds at risk.
• Relying on informal arrangements.
Verbal promises and unwritten agreements provide no legal protection or long-term reliability.
Special needs trusts are essential in planning
The foundation of effective planning for a beneficiary with special needs is a Special Needs Trust (SNT). These trusts are specifically designed to provide financial support while preserving eligibility for essential government benefit programs such as Supplemental Security Income (SSI) and Medicaid.
Properly structured, an SNT allows families to enhance a beneficiary’s quality of life without disqualifying them from public benefits.
Types of special needs trusts
There are two primary categories of Special Needs Trusts:
• First-Party Special Needs Trusts, funded with assets belonging to or legally payable to the beneficiary, such as personal injury settlements or retroactive benefit payments.
• Third-Party Special Needs Trusts, funded with assets from someone other than the beneficiary, most commonly parents or grandparents, and often incorporated into an estate plan.
Protecting benefits while improving quality of life
Special Needs Trusts are carefully drafted so trust assets are not considered “countable resources.” Trust funds can instead be used to supplement government benefits by paying for therapies, education, travel, recreation, and personal services that improve daily living.
A team approach to long-term success
Successful special needs planning typically involves a coordinated team that may include an attorney, trustee and successor trustees, care manager, investment advisor, government benefits specialist, special education advocate, and a guardian or conservator when appropriate.
Providing security and peace of mind
While planning for a beneficiary with special needs can be complex, it offers families peace of mind knowing their loved one will be protected, supported, and cared for long after they are gone. If you are looking for an expert to help guide you, reach out to a local certified elder law attorney.
For educational purposes only. This is not legal advice. Lisa Hostetler Brown is a Certified Elder Law Attorney certified by the National Elder Law Foundation. 2 Hampton Hall Blvd, Ste 100, Bluffton, SC 29910. | 843-757-5294 | LawyerLisa.com.
