Special Needs Estate Goals

Taken From “The Simple Guide to Special Needs Estate Planning”

“No, you can’t,” the woman was loudly saying. “You can’t leave money to an autistic child! Are you crazy?”

I usually enjoy attending conferences and informational fairs, and my office often gets a table at these events. Unfortunately, there are a lot of misconceptions surrounding certain areas of planning, and a little knowledge is a dangerous thing. Not often, but every once in a great while someone decides to confront me armed with only the most limited and basic of facts and an attitude that anything more complicated than their simple experience must be impossible.

“Actually, it can be done if it is done the right way,” I said, referring to the fact that trusts can be used. “You just have to first decide what you want the money to be used for, and then...”

“No, you’re wrong,” she was telling me, leaning across the information table and waiving a handout we had prepared about special needs estate planning. “I have an autistic grandchild and I looked it up on the state’s Medicaid website. It says that someone receiving Medicaid can’t get an inheritance. It disqualifies them from Medicaid. I can’t believe that an attorney doesn’t know that you can’t leave money to an autistic child.

I started to respond to her, but she cut me off, too angry and self-assured in her small piece of knowledge to listen to how trusts work.

“I’m getting Carol,” she said on her way across the community center.

She was obviously off looking for the organizer of the event. I just had to shake my head. Carol, on the other hand, was the sister of a client and personally invited me to put information out on special needs planning to because I helped her brother plan for his daughter who had Down’s Syndrome. Maybe Carol would be able to get her to listen to the right information. But if she wasn’t even open to a discussion on how trusts work in special needs planning, why would she be open to discussing the specific goals in putting the right kind of trust or trusts together?

No one needs money.

Seriously, if you think about it, no one actually needs money. You don’t eat money, breath money, or use money to shield you from the elements. You don’t drive money to the store, and you don’t inject money to cure a disease. We don’t need money. We only need what money can buy.

And that is the correct mindset when thinking about what kind of inheritance a special needs beneficiary requires. They need a place to live, not money. They need food to eat, not money. They need healthcare, not money. They may even need a vehicle, but not money.

But as we saw in the previous chapter there are some basic needs handled by government programs, so even housing, medical care, food, and other necessities may be taken care of for special needs beneficiaries. However, there may be a wide range of items and services that are not strictly needed but can greatly improve the quality of life of a special needs beneficiary. Medicaid often pays for dental care, but not for aesthetic orthodontic care. Basic housing may include a room, a bathroom, and heating and air conditioning, but it may not include cable TV. Allowances may be made for travel to and from a job, but not for vacation trips with siblings.

I had the opportunity to speak with a swimming instructor who focuses on helping special needs children learn to swim. Children who work with her experience, over time, increased confidence, socialization skills with other children, and a greater sense of self-worth. While we may not be able to put a price on these benefits to a special needs child, it is clear that the government won’t pay that price. At least not at a level that will adequately compensate swim instructors specializing in this area. But those lessons and other “non-necessities” are exactly the types of activities and experiences that parents want their children to have.

And so while necessities must be taken care of, if there are benefits and programs to provide the necessities, then most parents want to improve quality of life. Here are some of the main items and services that parents of special needs children want to provide for with an inheritance:

Medical Care Not Considered Necessary

Having proper medical care is important, but the basics may not be the only thing needed. And what is “needed” should not be left exclusively to a definition developed by government bureaucrats. While massage therapy may not be strictly necessary, depending on the type of work or activities a special needs beneficiary engages in, it can provide a great amount of relief. Braces may not be strictly necessary, but they can greatly improve someone’s smile. And even some wheelchairs may be medically approved for purchase, other, better chairs may not be paid for through government programs.

Having additional funds to help pay for these medically recommended but not medically necessary items are at the forefront of a parent’s mind when they think about how they want to have their children protected if they are no longer there to take care of things themselves. In an ideal world, all medically recommended procedures, care and equipment would be included in Medicaid and other government programs for people who qualify for assistance, but until they are, parents will want to make sure they leave an inheritance to handle them.

Improved Housing

Depending on the needs of the beneficiary, different kinds of living arrangements are required. Full time nursing home care is what most people think of when they hear the term “Medicaid.” This means 24 hour supervision in a setting where meals and healthcare are present, typically with basic activities. But within the facility there are often different types of rooms, and the same may go for group housing. But Medicaid and other programs will only pay for a certain level of housing.

Money that you leave behind can often pay for “upgrades” in housing with the program funds paying for the basic level. Semi-private rooms may be the norm for reimbursement to a facility, but a few hundred dollars more per month can probably be paid directly to the facility for a private room. Basic furniture may be supplied with the room, but better furniture can be purchased for the beneficiary’s use.

Depending on the resources available, it is also possible to have a house, condominium, or townhouse available for the use of the beneficiary. It is not a good idea to necessarily buy a house and put it in the name of the beneficiary because program rules may limit the amount of equity in a house before being disqualified from the program. A better solution would be to buy the house in the name of the trust established for the beneficiary so the house is not technically owned by the beneficiary.

A number of years ago I was working with the parents of a special needs beneficiary who was 20 years old, and the parents seemed to be fighting me at every turn when I tried to provide flexibility in their trust. They kept saying, “but we’re not going to let our daughter go to a group home, so there is no reason to have provisions in the trust that allows that,” and “we’re not going to buy a house for our daughter, so the trust doesn’t need to allow for that.” Despite my advice, provision after provision designed to give the trustee flexibility was deleted.

What they were saying is that they knew what they wanted in terms of housing for their daughter, but what they failed to realize is that they wanted a certain kind of housing for their daughter right now and under the current circumstances. Sure enough, about six months after they signed their trust they came back to me because they “had an incredible opportunity” to pool resources with a few other parents of adult special needs children and buy a home where all of their children would live under the supervision of a paid social worker. “It’s exactly what she needs to be able to socialize more and become more independent.” However, the attorney handling the purchase of the house in the names of the various parents and special needs trusts told my clients that their trust needed to be amended to provide more flexibility in the trustee’s ability to purchase and hold housing for the trust. The two main points of this story: 1) there are nearly limitless options for housing for a special needs beneficiary, and 2) you have to allow the authority and flexibility for a trustee to take advantage of housing opportunities that can benefit the beneficiary throughout their life… and not just under the conditions right now.

Better Education and Training

Despite rules on income and assets, many programs allow for a special needs beneficiary to work as long as the income retained does not push assets above certain limits, the income is not above certain limits, and contributions from the income are made towards care. These rules vary with the programs and will change over time so people receiving special needs program assistance should seek advice from a legal professional before beginning employment. But the point is that work is sometimes good for the special needs beneficiary because it is active, often social, and it provides purpose. However, training and education to get a job may not be covered by assistance programs. This is where inheritance money can be used to improve quality of life.

In addition, education in itself is a worthy way of improving quality of life. But not all education is handled by the various state and federal assistance programs. College and community college, special education tutoring, and other education is not typically covered or at least not in full. Having financial assistance to pay for these services is also a good use of inheritance money to improve quality of life.

Trips and Entertainment

If not all education expenses are covered by assistance programs, then vacations and entertainment certainly are not. Trips with all of the kids, going out to dinner, even going to a shopping mall as a family. All of it costs money, but it is not considered essential by any disability program. But for many parents of special needs children, these are exactly the kinds of memories they want to leave with their child, and they want all of their children and the extended family to keep building those memories with their special needs child for the rest of their lives.

Having these funds available for a special needs child becomes just as critical as housing, food and medical care. In fact, it is all the more important because even in the worst of situations those necessities will be provided even if at the most basic level. But the things that make life worth living are what the right kind of planning can provide.

Summary

In my many years of life and estate planning, I have seen a lot of nuanced goals and aspirations for special needs children. Protection, comfort, activity, interaction. I have seen how the right kind of legal and financial planning can bring these results and more.

For more information, please check out the free webinar at www.specialneedsplanningwebinar.com or the Kindle version of The Simple Guide to Special Needs Estate Planning here: https://www.amazon.com/dp/B09BBGDQG4