Glenn Matecun (517) 548-7400 helps clients plan for the care of their special needs child. Call or send an email for a free consultation.
The mere idea wrenches the heart of any parent: if untimely death or disability strikes, who will care for your children? Most of us recognize the need for an estate plan, preferably one that appoints a suitable guardian for our children, sees to their financial needs, and avoids probate. In the best of circumstances, it’s a task requiring clear thinking and good legal advice. But when a child has special needs, the challenge intensifies.
A Page from Oliver Twist
“A ward of the court” may sound like something out of the nineteenth century. But that’s precisely what becomes of children whose legally disabled or deceased parents have failed to plan for their care. Unless you’ve created an estate plan that spells out who should assume responsibility for your child, the courts will step in. And that’s true whether you’ve left behind an estate worth millions or nothing at all.
The court will appoint a guardian to assume responsibility for your child’s personal and medical care. To oversee your child’s financial affairs, the court will appoint a conservator. The conservator may be an individual, or it may be an entity like a bank or a professional money management institution. Probate judges have tremendous discretion in appointing conservators. In fact, if qualified family members aren’t available or deemed suitable, the judge may very well appoint a professional guardian or conservator who is a stranger to you and your child.
3 Important Reasons For Special Planning
Clearly, every parent has a responsibility to plan for the unthinkable. But when your child has physical, emotional or mental challenges, careful estate planning is even more crucial for three important reasons.
- The simple fact that your child has greater needs. Depending on the degree of their disability, they may require specialized treatment that encompasses therapy, housing, education, adaptive equipment, and in-home care, among many other costly services. The need for this care may extend throughout their childhood and last well into adulthood, or even their entire lives. Providing the appropriate degree of care requires careful financial planning.
- It is the only way to ensure that you can provide for your child without jeopardizing the child’s eligibility for government and private benefit programs.
- Estate planning is the only way to protect the child’s financial interests today as well as in the future, when you may no longer be on the scene.
A Painful Dilemma
It’s a painful dilemma that parents of special children often face: to keep a disabled child eligible for important federal and state benefit programs, the child can have few assets. That leaves parents with a difficult choice: provide a legacy for their special child and hope it will be sufficient for all his needs, or make the child a virtual pauper and retain his or her eligibility for government assistance. Fortunately, there is a simple answer within reach of nearly everyone: the Special Needs Trust.
How a Special Needs Trust Works
The Special Needs Trust allows a parent, grandparent or guardian to provide funds for a disabled child without disrupting the child’s eligibility for government aid. Setting one up is a fairly simple process.
Working with your estate planning attorney, you appoint Trustees for your child’s Trust. The Trustees will manage the assets you transfer to the Trust for your child’s benefit. In the event of your disability or death, the Trustees will also supervise your child’s finances.
During your lifetime, you can serve as Trustee and remain in complete control over your child’s finances. Should you die, however, your Successor Trustees will step in and take care of your child’s finances on your behalf.
Unlike the conservator a probate court might appoint, your Successor Trustee is someone you know and trust. Relatives or close family friends can be appointed to supervise your child’s finances. To work with financial institutions and manage the estate, you may also want a trusted financial advisor to serve as Trustee.
As part of setting up your child’s Special Needs Trust, you will provide detailed written instructions to direct your Trustees’ activities. By law, Trustees must follow these instructions. So you can rest assured your child’s education, housing, and other needs are being taken care of.
Best of all, the Special Needs Trust will preserve your child’s eligibility for federal, state and charitable benefit programs. This is accomplished by providing that the funds can only be withdrawn from the Special Needs Trust for purposes other than those covered under the governmental and private benefit programs.
Buyer Beware: Estate Planning Short-Cuts That Can Derail Your Goals
While acknowledging the need for estate planning for their children, some parents take short-cuts that create as many problems as they solve.
One of the biggest mistakes parents make – and it happens with alarming frequency – is naming their minor children as beneficiaries of their insurance policies, IRAs, stocks, and other investments.
Unfortunately for these parents and their children, neither the financial institutions or the probate courts will hand that money over to minor children. Instead, the money will be turned over to a conservator who will hold the money in trust for the child. If you haven’t appointed a conservator, the probate court will do so for you, and once again, you’ll have little guarantee that those in charges of your child will be the people you would have selected.
We Are Here to Help
As difficult a subject as it might be, all parents owe it to their children to ensure that they’re well cared for, come what may. Parents of special needs children face an even greater imperative to do this essential planning. We have the training and experience needed to help you ensure that your special needs child is appropriately cared for – the way YOU have planned and decided.
Glenn Matecun is a Michigan lawyer focusing on estate planning, special needs planning, elder law and senior Veterans’ benefits. Click the following link for a Free Case Analysis. Offices in Howell, Michigan and Clinton Township, Michigan, serving all of Southeastern Michigan.