Estate Planning for Parents of Children with Special Needs
Third Party Special Needs Trusts
A third party special needs trust is an essential part of estate planning for families with a child who has special needs. Loved ones can create this type of trust for a child or family member with special needs, funding it through their will, life insurance, or other estate planning tools. By placing assets in the trust, families ensure the beneficiary remains eligible for government benefits. without proper planning, a child with special needs could lose these benefits upon receiving an inheritance.
A third party special needs trust is a discretionary trust designed for individuals with disabilities. When drafted correctly, a supplemental care SNT does not replace means-tested government benefits, but rather allows the beneficiary to remain eligible for these programs. There is no Medicaid “pay-back” requirement, no strict definition of “disability,” and no age limit for these trusts.
Special needs trusts can be used to cover expenses that government benefits do not, such as purchasing a home, specialized wheelchairs, handicap-accessible vehicles, or mechanical beds. They also pay for limited travel, personal attendants, and other recreational or cultural experiences.
The Letter of Intent
A special needs trust is a formal legal document that imposes legal duties on those managing the trust. However, a letter of intent is a valuable supplement. It does not create legal obligations, but provides important information about the beneficiary’s needs and wishes. This letter helps guide caregivers and trustees in making decisions that align with the beneficiary’s best interests.
A letter of intent should include details such as: – Residential care needs (past, present, and future) – Educational background and goals – Information on teachers, friends, and extracurricular activities – Medical history, accommodations, and support systems
By including as much information as possible, you help future caregivers make informed decisions, maximize your child’s quality of life, and reduce confusion or errors if you are not available. The beneficiary can also be involved in preparing the letter, ensuring their wishes are understood and respected.
Advice You Can Rely On
Estate planning is not a one-time event. Review and update your plan and letter of intent regularly, especially as your child’s needs or your financial situation changes. If you are interested in learning more about estate planning for special needs, contact Shalloway & Shalloway, P.A. at (561) 686-6200 or visit shalloway.com.
