Important Legal Documents You Should Have in Place When Your Child Has a Disability or Health Condition

September 17, 2021

Planning for the future is critical to ensuring that you will be able make sure your disabled child has all their needs met. If parents do not plan ahead, when they die, their children can lose access to important resources or even get taken advantage by people who want only to gain from them. So, if you have a child with special needs, you must understand now what they will need in the future to provide for them emotionally, physically, and financially, if you can’t be there to do it for them.

When creating your estate plan, there are two major considerations for you to focus on: 1) Who would care for your child if, and when, you cannot (also known as guardianship), and 2) How will their financial needs be met without your being around to meet them.

a mother hugging her daughter with roses in the background

Naming the Best Guardian to Care for Your Child

If you’re concerned about the future well-being of your child with special needs, then it is essential to name both short, and long-term legal guardians who can take custody in event that you die or become incapacitated. This may feel like an overwhelming responsibility that will likely last for your child’s lifetime. But the reward for taking care of your child now by naming short-term and long-term guardians and knowing that your child will be cared for the way you want is often an immense sense of relief.

An experienced Family Business Lawyer™ can help you create customized plans that provide the kind of careful instruction your child’s guardian will understand – and may even be incentivized – to provide the level of care that you want for your child. For example, your plan can include special compensation for the named guardian to take your child on weekly trips to a park, or a dinner, or participating in other activities your child enjoys. But for parents who don’t provide that kind of clear instruction (and perhaps compensation) these kind of fun activities for your child are often neglected if you are not there.

How to Protect Your Child’s Future with a Special Needs Trust

Financial resources are the key to allowing your special needs child to live out their life in an appropriate manner. While it may sound like a straightforward task, providing for them financially can be tricky due to many factors that could arise along with having more extensive needs than most kids do. Without experienced counsel, sifting through the confusing web of complex issues that surround caring for a loved one with special needs can be frustrating. It can also be a Catch-22 situation: you want to leave your child enough money for care and support, but when it is direct payment into their hands, without any special needs qualifications, they may lose out on much needed government benefits.

Fortunately, the puzzle can be solved. You can use a special needs trust to provide supplemental financial resources for your child without affecting his or her eligibility for public healthcare and income assistance benefits. Of course, the rules are complicated and vary greatly by state. So, to create a comprehensive special needs trust that is properly structured for your child’s situation, working with experienced counsel is wise.

Setting Up The Trust

With a special needs trust, your funds cannot go directly to your child. Instead, you put the funds in the trust which is managed by a trustee. Usually, you will name yourself as the trustee. In any event, you determine and always know who is controlling what you have put into the trust. If you cannot, or do not, want to be trustee, you will also provide instructions for who will be. And after the funds are in the trust, the trustee – whether it’s you or someone else you have named – is legally required to follow the instructions you have created for the trust to make sure the funds are only used for your child’s benefit.

If you are not the trustee, you may want to name a person who is not the legal guardian of your child. Having someone else as trustee other than the named guardian is a good way to avoid conflicts of interest and overburdening the legal guardian with responsibilities for your child. Also, the legal guardian and the trustee work together as a kind of check and balance system to make sure your child is getting the best possible care.

Naming multiple successor trustees who can serve in your place is also smart planning. If you have named a person or persons as your first choice to be your successor but cannot think of anyone else you know that you want for the important role, you can always name a trusted bank or other professional fiduciary like an accountant or lawyer to be backups.

Setting up a special needs trust is typically done in one of two ways. One way is to include it in a revocable living trust for you. Then, when you die, the special needs trust becomes effective for your child, and assets in your revocable living trust get used to fund your child’s special needs trust.

The other way is to create the special needs trust immediately. Done this way, you put assets in it right away and can add assets to it going forward. This option often makes sense if you have other family, like grandparents, who may want to make gifts to your child sooner rather than later.

How much money do you need for your child’s special needs trust? The short answer is: You will want the trust to have sufficient funds that will last for your child’s lifetime. The money can come from you, friends, or family. They can do it with gifts. They can include in their will your child’s trust as a beneficiary. And perhaps the most common way is for parents or others to name your child’s special needs trust as a beneficiary of their life insurance policies. Deciding the best approach is often an important part of the conversation you should be having with your lawyer as you create your own estate plan.

What Does the Trustee Do?

Once your child’s trust is funded, the trustee’s job is to make sure that your child gets the money from it without jeopardizing other benefits your child may be entitled to from the government. To do this, the trustee needs to: a) know how eligibility for government benefits work, and b) stay up-to-date on what the laws are. The trustee also has to pay taxes and keep records. And the trustee will have to invest the trust assets and stay in touch with the needs of the beneficiary.

It’s a big responsibility. If you are the trustee, you will want to be working with a professional or professionals like lawyers and accountants to advise you. If you have named someone else to be trustee or your successor trustee, it should be someone who understands the law and how to protect both your child and the assets you have put into the trust.

Work with a Trusted Source for Special Needs Planning

I have close family with special needs. From my personal experience, I know how important this planning is to my family. From my professional experience, I know how important it is to your family. It’s a big reason I became a Family Business LawyerTM. That’s why The Gordillo Law Firm offers counseling on how to use the law to accommodate the unique needs of families with special needs children.

Together, we can ensure that your child will live the life you hope for them to live. We’ll make sure they get the benefit of everything you can give while preserving their full eligibility for their government benefits. We will also support you in finding and naming the legal guardian and/or trustee who will best be able to carry out your instructions on how to protect and care for your child the way you want after you die or become incapacitated. To work with us, if you are in Nevada or Ohio, contact us today.

This article is a service of Greg Gordillo, Family Business Lawyer™. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by scheduling a Family Wealth Planning Session via our online scheduler and mention this article to find out how to get this $750 session at no charge.

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