Florida Elder Law & Estate Planning Blog

7 Mistakes To Avoid When Planning For Your Special Needs Child

October is Special Needs Law Month. If you are parent of a child who has special needs, you no doubt want to be sure that when you are no longer around, your child will have the financial and other supports necessary for a decent quality of life. Achieving that goal requires meticulous planning. In this post we discuss common mistakes you should avoid when planning for your child with special needs.

Mistake 1: Relying On Less-Than-Qualified Professionals For Assistance

Our attorneys are sometimes asked to review plans that are supposed to protect a special needs child. If the plan was designed by a legal generalist, it is not uncommon for us to find that the plan fails to cover all the bases. When planning for a child with special needs, the stakes are high; all t’s must be crossed and i’s dotted. You can end up with an incomplete or ineffective plan if your advisor is not familiar with the legal fine points. You should not skimp on securing good legal counsel when it comes to creating a plan that protects your child in his adulthood. Make sure you use an experienced estate planning attorney familiar with this specialized area of the law.


Mistake 2: Assuming You Can Rely On the Child’s Sibling For Care And Support

You may have children who deeply love their brother or sister with special needs. They would clearly do anything to protect their sibling. Their devotion is unquestionable, but the reality is that no one can predict future events. Suppose you leave your daughter Mary money to be used to care for her special needs brother. If Mary is involved in an auto accident and is sued, that money might disappear. And as  time goes on, Mary’s circumstances may change. Her health or demands on her time may make it difficult for her to care for her brother as no doubt she, and you, would like. It is a trap to assume that even the most loving child will always be willing and able to be there for a sibling with special needs.


Mistake 3: Disinheriting Your Special Needs Child To Preserve His/Her Public Benefits

Some parents are advised to disinherit their special needs child in order to ensure the child’s eligibility for government benefits. Yes, Medicaid and SSI can be important components of your child’s maintenance in the future. That said, a plan predicated on your child’s reliance solely on these benefits is not wise. Government benefits alone are nowhere near enough to provide the quality of life you probably envision for your child.


Mistake 4: Forgetting You Named Your Child as Beneficiary of Certain Assets

Parents and other family members should not make the child the beneficiary of a payable-on-death account. Doing so means that when the child receives a direct inheritance, his governmental benefits may be cut off. You and other family members should review accounts, including insurance policies, to be sure your child is not the beneficiary. Any monies from these accounts should be earmarked to go into a Special Needs Trust that you set up to benefit your child. Your estate planning lawyer will advise you about the Special Needs Trust.


Mistake 5: Selecting The Wrong Trustee For Your Child’s Special Needs Trust

It may seem logical to choose a sibling or other relative as trustee of your child’s Special Needs Trust, but keep in mind that administering a special needs trust is time-consuming work. The trustee must know the complex rules that govern permissible expenditures and provide detailed periodic accountings. A trustee who runs afoul of the rules could end up jeopardizing your child’s benefits. This is why we usually recommend that parents name a corporate trustee who is experienced in this area and can do the administrative heavy lifting. If desired, a sibling or other relative can be named  co-trustee.  If in the end you choose not to use a corporate trustee, make sure the trustee you do name knows that it is imperative to seek guidance from an attorney who is experienced with special needs trusts. It goes without saying that parents should talk candidly and openly with the trustee they are considering, as well as other caregivers, before assigning them any roles in their plan.


Mistake 6: Not Having A Plan To Fund the Special Needs Trust

Parents may not be overly concerned about leaving an inheritance to typical children, but the special needs child is a different situation. It is advisable to get a life insurance policy on  yourself and make the Special Needs Trust the beneficiary. Recognize that the younger you are when you secure life insurance, the less expensive it is. This is true for both whole life policies and term policies. Also, you may want to look into “second to die” policies that can be even less costly. Second-to-die policies pay out only after the second spouse passes away and there is no parent left to care for and support the child.


Mistake 7: Neglecting To Include A Letter of Intention 

Once you have attended to the formal legal and financial details of your plan, do not forget to give a Letter of Intention to the trustee of your child’s Special Needs Trust, and to everyone who may care for him/her going forward. The letter is sometimes referred to as a Memorandum of Intent, or a Continuity of Care Letter. This letter is a written summary of your child’s needs and your expectations. In it you may describe your child’s personality; what he likes and doesn’t like to do; your preferences for religious affiliation and education; your child’s specific health issues; location of key documents; list of current therapists, doctors, etc. The letter must be updated as needed to reflect your child’s current circumstances and needs. Although not legally binding, your Letter of Intention can be an invaluable guide for those providing for your child when you are no longer around.


Questions? Contact the Karp Law Firm’s estate planning attorneys for guidance on how to provide for your special needs child. Call (561) 625-1100 or email klf@karplaw.com.