1. Write a Letter of Intent
A letter of intent will act as a guideline for the caretaker of your child, or loved one, after your death. The letter includes a wide range of information, including current contact information for doctors, teachers, and other professionals. It also contains the likes, dislikes, work plans, living situation, dreams, desires, and other information you believe is important for the primary care givers to know about your child. The letter should be updated on an annual basis and kept with your other important documents. You should also hare it with future caregivers today. Make it a living document which changes & grows as needs change & grow.
2. Set up a Special Needs Trust
Consult an attorney to have Wills and/or a stand-alone Special Needs Trust drafted. The Trust is needed to protect the government benefits, provide for the supplementary needs and assure the quality of life you have chosen for your loved one. A Special Needs Trust can be drafted within a Will, or can be drafted as a stand-alone Trust. It becomes the recipient of lifetime gifts or bequests to your child from you or other family members, protecting your child's eligibility for governmental benefits.
3. Consider Life Insurance
Take a look at your current financial situation and estimate how much money your child with special needs will need in the future. Evaluate whether you should obtain life insurance to make sure that your child has sufficient assets at your death. If you do acquire life insurance, make sure that whatever portion of the policy is allocated to your child, is allocated to the Special Needs Trust for that child.
4. Remove Your Child's Name from Assets
In most cases, make sure that your child with special needs does not own assets in his or her own name. Assets held in a child's name can disqualify such a child from governmental benefits. This is a primary purpose for a Supplemental Special Needs Trust, which allows assets to be saved as a secondary source of benefits for the beneficiary, after all available government benefits have been exhausted.
5. Seek Legal Guardianship of Your Adult Child
If your child is not able to handle his or her own medical or financial decisions as a result of his or her special needs, you as a parent should apply to become legal guardian. Without that, once your child obtains the age of 18, you will have no legal right to make decisions on his or her behalf. The process of applying for guardianship differs in each state, therefore, you should consult an attorney in your state who has expertise in this area. If guardianship is appropriate for your child, it is important to start the process as soon as possible, and also designate a successor guardian, who takes over guardianship responsibility if you should pass.
With all these details, it’s important to take great care in educating other family members about the things you DO want and DON'T want for your child. Many parents and guardians assume that the siblings understand everything. Experience shows that this is absolutely NOT the case.
As the parent, guardian, or caregiver of an individual with special needs, you have complicated and often conflicting financial goals.
Special Needs Planning is something you know you need to think about, but getting around to it is another story. And when you do get around to it, it’s difficult to know where to begin.
Here’s a list of 5 important steps to consider.
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