What Legal Steps Should Parents Take to Protect a Child with Special Needs?

Do You Have a Loved One With Special Needs?

By planning for the future with estate planning tools, you can plan for a variety of situations and determine the best way to pass your life’s work on to your children. But if you don’t use the right tools or give the proper forethought, you may be leaving gaps in your estate plan or even doing harm to your loved one with special needs.

Cava & Faulkner provides a variety of estate planning services, and we guide our clients through the entire process. If you are just starting your estate planning journey, you may not know there are specific methods you can use to provide the care your loved ones with special needs need.

Read more about the steps you should take to protect all of your children.

What is a Life Care Plan?

When planning around a child’s special needs, the first thing you should do is ensure your child has a comprehensive life care plan. This plan acts like an instruction manual for anyone who may have to take over caring for your child when you are unable to do so yourself.

Include things like their medical needs, educational goals, daily care, and their future care, including housing.

Can You Establish a Trust to Care for Your Child?

When planning for a child who does not have special needs, you can often create a trust, fund it, and not have to worry about anything else, knowing the trust will care for them when you are unable to do so yourself.

When it comes to your children with special needs, a simple trust can actually do more damage than not. That’s because most people with special needs rely on government benefits for their insurance and Social Security Payments. These benefits are governed by strict income limits, meaning an improperly planned inheritance can cause them to lose their benefits and the care that they provide.

Instead of leaving your child assets in your will or in a trust, create a Special Needs Trust (SNT). This type of trust holds and manages assets for the benefit of people with disabilities. More importantly, since the trust and not the individual own the assets, they are not counted against those strict income limits that determine eligibility. 

There are two primary types of SNT: first-party and third-party.

First-Party SNT

This type of SNT is funded with the disabled person’s own assets, often from a lawsuit settlement or an inheritance. Strict federal rules and regulations, including a payback provision govern these trusts. A payback provision requires the reimbursement of Medicaid expenses using the remaining assets in the trust.

Third-Party SNT

This type of SNT is funded with assets from someone other than the beneficiary, usually a parent or grandparent. It is more flexible and does not require a Medicaid payback clause. It is often established in a family’s estate plan to hold future inheritances or gifts.

What Can an SNT Cover?

As previously mentioned, an SNT has strict regulations. Following these regulations will ensure your child’s benefits are protected, while deviating from these rules can possibly cause them to lose eligibility for their benefits.

An SNT can cover the following:

• Out-of-pocket medical or dental expenses
• Therapy not covered by insurance
• Personal care professionals
• Education and tutoring expenses
• Adaptive technology and medical equipment
• Vacations and recreation
• Home furnishing and accessibility modifications

An SNT cannot be used for things like direct cash payments to the beneficiary, food, shelter, gifts, spending money, or non-approved expenses. Using trust funds for any of this can result in the beneficiary losing the eligibility protections the trust offered.

Who Will Care for Your Child?

When your child turns 18, they are considered an adult, regardless of their cognitive or developmental disabilities. That means you will no longer have the automatic legal authority to make decisions on their behalf. You may need to rely on a guardianship or conservatorship.

In California, a conservatorship allows someone, typically a parent or close relative, to make decisions regarding another individual’s health care, housing, and personal needs. Certain types of conservatorship may also allow a person to manage someone else’s assets, spending, and property.

In a conservatorship, you can also nominate a successor conservator, someone who will be able to care for your child after you are gone, even if they are over 18 years of age.

While planning your estate, you may wish to address guardianship of your minor child. This person is someone you trust who will be able to assume the position of legal guardian should something happen to both parents. 

It is important to note that just because you nominate a conservator or guardian, the courts do not have to honor it. Suppose circumstances change, or the nominated conservator or guardian is no longer deemed fit to serve. In that case, the court may find an alternative solution that ensures the best interests of your special needs child.

Can a Lawyer Help You?

Estate planning without a special needs child is already a long, complex legal process. Planning for the future of a child with special needs requires legal scrutiny and experience.

Cava & Faulkner can help you with all of your estate planning needs. We will ensure the future needs of all your children are met and that any government benefits your loved one depends on are protected.

Call 916-831-7565 to schedule a free consultation with an experienced estate planning attorney.