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5 items to add to an estate plan for a child with special needs

Parents who have a child with special needs face unique challenges in all aspects of their lives. This is especially true for when it comes to estate planning.

When it comes time to start developing your plan, you may be wondering what needs to be included to ensure your child is financially protected and receives the same quality of care they have now, regardless of what happens to you. Here are five things to make sure your estate plan includes.

Guardianship

An estate plan should address guardianship while your child is a minor, once they reach age 18 and upon your death. Who should assume parental obligations if you can no longer do so? If parental obligations are no longer necessary, who should have the power to make legal, financial and education decisions on your child’s behalf? You can assume guardianship yourself when the child turns 18, but you will need to name someone to take over those responsibilities if you can no longer perform them.

Powers of attorney

If guardianship is not the right route, you can choose instead to name medical and financial powers of attorney, which gives individuals the responsibility for specific types of decision-making on your child’s behalf.

Letter of intent

A letter of intent (LOI) isn’t a legal document, but it can provide a roadmap for guardians, trustees and other on how to care for your child when you are no longer able.

Special needs trust

A special needs trust (SNT) is made specifically for the benefit of beneficiaries who lack the mental capacity to manage their own finances. You can create an SNT with the specific needs, lifestyle and desired future of the beneficiary in mind.

These are generally created to protect the existing government benefits your child is receiving if something should happen to you. You can name a trustee to use the trust assets to purchase necessities for the child that are not covered by a government program.

There are three types of SNTs:

  • First party or self-settled, which is created with assets belonging to your child
  • Third party, which is created to hold assets provided by someone other than your child
  • Pooled, which is when sub-accounts belonging to many beneficiaries are managed as a single entity. This gives families access to highly skilled trustees.

An estate planning attorney can help you determine which SNT is right for you and your child, and conduct a benefits assessment to determine continued eligibility for government assistance.

Will

A will provides detailed instructions for how your property is to be distributed upon your death, including what is allocated to your child, what is allocated to an SNT and what is allocated elsewhere.

Creating an estate plan for a child with special needs can include a lot of extra steps, but it is simpler with the help of an estate planning professional who knows all of the pieces that need to be added to the plan. Start planning early to ensure everything you want covered for your child is included and their quality of life isn't lost when you are no longer their primary caregiver. 

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