An essential feature of any estate plan involving a special needs child is the special needs trust, also known as the supplemental needs trust. Additional documents that should be considered and integrated into your plan include designation of guardianship and a letter of intent.
The Special Needs Trust
There should be what is known as a “third party” special needs trust, as a skilled estate planning and special needs trust lawyer Houma LA trusts can explain. That is, a trust that can only receive assets from people other than the beneficiary. Make sure any wills leaving any assets to the child leave it to this trust instead of the child directly. This kind of trust avoids special rules imposed by Medicaid such as the Medicaid pay-back provisions after the beneficiary’s death. If the beneficiary has assets that already belong to him or her, the assets will need to go into a separate special needs trust called a “self-settled” or “(d) (4) (A)” trust.
Designation of Guardianship
As for any minor child, if something should happen to you, you need to have a plan in place to swiftly shift guardianship to a person you trust to care for your child. Often, this plan has two parts: designation of a “short term” guardian and a “long term” guardian. The issue is complicated by the amount of support services your guardian will need and complex responsibilities they will undertake with a special needs child.
The Letter of Intent
The letter of intent serves as a set of instructions and a guide for your designated guardians and trustees. It contains all of the information, “how’to’s,” lists, instructions, and other resources they will need to provide the kind of care for your child you want. While the trust and the guardianship papers are the “muscle” of your plan, the letter of intent is the “heart.”
To prepare a letter of intent, start with a simple, bulleted list of instructions you would give a caregiver who is watching over your child for a weekend. Then, over time, expand it from there.
Thanks to our friends and contributors from Allison & Allison, LLC for their insight into considering special needs children in estate planning.