"Estate planning" is one of those things most parents of children with special needs know they need to think about, but actually getting around to it is another story. To give us all a little jump-start on this important step to ensuring our children's future, I asked Mary Browning, an attorney who focuses her practice on estate planning, including special-needs planning, to tell us the first five things to do. Her recommendations:
1. Write a Letter of Intent. "A Letter of Intent is a letter that will act as a guideline for the caretakers of your child with special needs after your death," Browning explains. "The letter includes a wide range of information including contact information for doctors, teachers, and other professionals. The letter also contains the likes and dislikes of your child as well as any other information that you believe is important for the caretakers to know about your child. This letter should be updated on an annual basis and kept with your other important documents." To get started: Follow the Sample Letter from the book More Than a Mom.
2. Set Up a Special Needs Trust. "Consult an attorney and have Wills and/or a stand-alone Special Needs Trust drafted for you," suggests Browning. "Any assets passing to your child with special needs at your death should go into a Special Needs Trust in order to protect your child's eligibility for governmental benefits. A Special Needs Trust can be drafted within a Will, or can be drafted as a stand-alone Special Needs Trust, which can become the recipient of lifetime gifts or bequests to your child from you or other family members." To get started: Find an expert qualified to help you with a Special Needs Trust; Browning suggests using the referral service offered by the National Alliance on Mental Illness (NAMI).
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," Browning says. "Think about whether you should obtain life insurance to make sure that your child has sufficient assets at your death. There are many life-insurance agents that specialize in helping families with children with special needs. I recommend consulting with a life-insurance expert to determine if this is an affordable option for you. If you do acquire life insurance, make sure that whatever portion of the policy is allocated to the special-needs child is allocated to the Special Needs Trust for that child." To get started: Find a life-insurance company with a special-needs division -- Browning mentions Guardian, MetLife, The Hartford, and Mass Mutual as four that do.
4. Remove Your Child's Name from Assets. "Make sure that your child with special needs does not own assets in his or her own name," warns Browning. "Assets held in a child's name can disqualify such a child from governmental benefits. One option is to transfer the assets to a first-party Special Needs Trust for that child's benefit. This type of trust allows the money to be used for the child's benefit and does not disqualify him or her from governmental benefits. However, unlike the third-party Special Needs Trust discussed above, in a first-party Special Needs Trust, at the child's death, Medicaid must be paid back from the trust assets. You should consult an attorney to discuss your options." To get started: The NAMI lawyer referral service can help you find a qualified attorney in your area.
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 of the child," Browning advises. "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." To get started: If you're not already working with an attorney, see if the agency in your state that helps people with developmental disabilities offers assistance with guardianship.
You can read more helpful advice from Mary Browning on the New Jersey Law for Special Needs Children blog.