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Planning for Loved Ones with Disabilities

According to The National Center for Education Statistics, about 35% of children ages 3-21 have some kind of learning disability. About 20% have a speech or language impairment. More significantly, about 9% of this population has autism, 6% have an intellectual disability, another 6% have developmental delay, 5% have some kind of emotional disturbance, and 2% have multiple disabilities. About 13% of the total public school population is served under the Individuals with Disabilities Education Act (IDEA).

Having children with disabilities, for many, is a lifelong commitment and labor of love. They need special care and special consideration while they are young, and they need special attention when they become adults, especially when it comes to estate planning.

To be clear, when you have a child with disabilities, you need to take those disabilities into account when doing your estate planning. We can add mental health issues and other disabilities that are not developmental in nature to the list of considerations that need to be made when doing your estate planning.

Basically, anyone who is eligible, or may be eligible, to receive government means-tested benefits needs to be addressed differently than someone who does not have a disability. If you leave assets to a loved one who is receiving governmental means-tested benefits, they will become ineligible to continue receiving those benefits if you have not planned properly. If you don’t plan correctly (or don’t plan at all) your assets will be wasted.

The good news is that you can leave an inheritance for your loved one with a disability without making them ineligible to receive the benefits they are getting, but you have to do things properly. Doing the right planning allows them to have the benefit of the assets you leave them without causing them to stop receiving government benefits.

The primary tool for accomplishing your goal of providing for your loved ones with disabilities without making them ineligible for the benefits they receive is through a Special Needs Trust, also known as a Supplemental Needs Trust. You can create a Special Needs Trust for your loved one with disabilities that is funded during life, or after your death. You can create a Special Needs Trust in your Will, or you can create a Special Needs Trust in a Living Trust that you create for yourself.

Trusts are, in effect, a contract between yourself and other people in the future, including successor trustees who you name in the Trust instrument and beneficiaries. When you place your property “in” a Trust, that property becomes subject to the terms of the Trust you create. The successor trustee that you identify is required by law to carry out the terms of your Trust for the beneficiaries that you name in your Trust.

A Special Needs Trust is a particular kind of Trust that is designed to provide assets for people with disabilities who are eligible and/or receiving means-tested governmental aid. The terms of the Trust are specifically designed so that the assets in the Trust are only available to pay for the special needs or supplemental needs of the beneficiary. The trustee is prohibited from paying for basic needs, basic support, basic healthcare, and other things that the beneficiary receives through the government benefits.

If the Trust is drafted correctly in accordance with the law, the trustee will have the ability to make funds available to supplement the basic provisions the beneficiary receives from in the form of government benefits. The Trust can also provide for the eventual distribution of those assets that remain in the Trust after your loved one with special needs passes on. In this way, you control the assets for the benefit of your loved ones with disabilities and for people who come after them.

A Special Needs Trust can significantly enhance the quality of life for your loved one with disabilities. A Special Needs Trust is a powerful tool that will help them enjoy a life that they could never enjoy on their own with the limited funding provided by the government.

If you have children with disabilities or other loved ones with disabilities, special needs planning should be at the top of your priority of things to consider when doing your estate planning.

If you don’t do any estate planning, or if you don’t do proper planning, leaving your loved ones with disabilities assets will not benefit them at all. They will become ineligible until they have spent your assets down. After that, they will become eligible again for government benefits, but there will be no assets available to supplement those basic benefits to enhance their lives.

If you have a loved one with disabilities and have not done your estate planning or have not addressed their special needs, you should contact an attorney with a good reputation who has experience in special needs planning in your area.  The expense you will incur to do the right planning will be more than paid back by preserving your assets for your loved one’s benefit so they don’t have to use your assets for their basic needs. Your assets will be there to augment their basic needs, while their basic needs continue to be met by the government benefits they receive.

The right planning will allow your loved on with disabilities to have the life they could never hope to live on their own with nothing other than government benefits to live on.

Kevin G. Drendel
Drendel & Jansons Law Group
111 Flinn Street
Batavia, IL 60510
630-406-6179 fax
[email protected]