Special Needs Planning in Austin, Texas
While a typical child could recover from a parents' failure to plan ahead, a child with special needs may never recover.
Nickerson Law Groups counsels many families in and around Austin who have children with special needs. Ms. Nickerson has been deeply affected witnessing the struggles her brother and sister-in-law go through raising their autistic son and daughter with cerebral palsy. Our firm is passionate about helping families with special needs children plan ahead legally. We are also passionate about giving back to the Austin community — Julia voluntarily speaks at seminars specifically designed to assist families with special needs, our firm participates in Eanes ISD work-study program providing students with an IED to assist in our office and we partner with several charitable organizations supporting special needs children.
For many families who have a child with a special need it is important to set up a special needs trust as part of the overall estate plan. A Special Needs Trust is a trust that can supplement the needs of a special needs beneficiary while allowing the beneficiary to maintain his or her governmental benefits, including Supplemental Security Income (SSI) and Medicaid.
There are so many questions parents with a special needs child have regarding government assistance, where to turn to for help, what happens when your child turns 18, where your child is going to live as an adult, who will take care of your child if you can't, and on and on and on.
10 Step Planning Process for Families with
Special Needs Children
Step One: Name Guardians
If you have a child under age 18, designate a guardian and give clear legal authority for designated caregivers to take custody of your children immediately if there is an emergency. If your named guardian does not live near you, name a temporary caregiver.
Also, make sure the people you've given legal authority to know they are going to be called on if something happens to you and make sure they know just what they should do in that situation (i.e. call your attorney).
Step Two: Identify the Need for Future Care Planning
Once you've named guardians for your children, identify whether you need to do future care planning. If your child is an adult with disabilities, you probably have a good idea of both your child's abilities and what kind of assistance they will need. If your child is able to support themselves, you might still need to consider future care planning, but on a more limited scale.
If your child won't be able to be self-sufficient as an adult, you'll need to make plans to secure their future. Without a plan, it is possible your child will join the ranks of the millions of people in this country with disabilities who live in poverty.
Step Three: Consider Adult Guardianship and Alternatives at age 18
When your child reaches age 18, you will no longer be entitled to make decisions about your child's finances or personal care unless you petition a judge to become your child's legal guardian. Although your child might not be capable of making decisions about their wellbeing at age 18, the law presumes that your child is capable.
Guardianship is a legal means of protecting a person who is not competent to make decisions about their personal care and/or finances. Because a full Guardianship takes away your child's rights to make important decisions, the decision to petition for Guardianship of your child at age 18 should not be automatic. If your child is capable of making some decisions, but not others, a limited Guardianship may be more appropriate.
Likewise, there are certain alternatives to Guardianship that may be sufficient. If your child has the ability to make their own decisions, they can empower you to make health care and financial decisions by signing the appropriate legal documents.
Step Four: Plan for and Secure Government Benefits at Age 18
Your child will be eligible for government benefits at age 18, but you must prepare to preserve much needed benefits. There are four programs available for adults with special needs--Medicare, Social Security Disability Insurance (SSDI), Medicaid, and Supplemental Security Income (SSI). Medicaid and Medicare provide health insurance; SSI and SSDI provide monthly cash assistance.
SSI and Medicaid are means-tested programs, which means these programs have restrictions and limitations on the amount of income and assets that the special needs recipient can own in order to receive benefits.
Generally speaking, the first and most important means-tested government benefit program for a special needs child is SSI, which is a federal income supplement program administered by the Social Security Administration and is funded by general tax revenues (not by social security or self-employment taxes). SSI is important because in thirty-nine states, including Texas, the recipient of SSI automatically qualifies the SSI recipient to Medicaid benefits.
Medicaid is the portal to healthcare benefits and many other programs that provide a multitude of ancillary services that benefit a special needs child. If your special needs child owns more than $2,000 of non-exempt assets, they will not qualify for SSI, and in turn, not automatically qualify for Medicaid. This is extremely important.
In addition, if you die and your money doesn't go to your child the right way, your child will not be eligible for Medicaid or SSI. Even if you think that your family can provide for your child's lifetime needs, it is probably wise to position your child to qualify for Medicaid. Many programs that enhance the recipient's quality of life--including supported living and work environments—are only open to participants who have a Medicaid card.
Step Five: Prepare a Legal Plan that Will Work
Make the transition of your financial wealth as easy as possible for your family. Without an estate plan in place, your loved ones won't inherit your assets in the way that you want. For families with special needs children, this is especially important because you will also disqualify them for valuable government assistance. Because none of us knows when we might die or become incapacitated, it is important to plan early for your child with special needs, just as you would for any minor child. However, unlike most beneficiaries, your child with special needs may never be able to compensate for your failure to plan. Make sure your estate plan provides for all the people you love. Doing so will ensure that you leave a positive legacy for your entire family.
Step Six: Establish a Special Needs Trust
If your child requires or is likely to require governmental assistance to meet their basic needs, do not leave money directly to your child. Instead, establish a Special Needs Trust. Unless the trust your attorney prepares for your child is designed with your child's special needs in mind, it may render your child ineligible for government benefits. A Special Needs Trust is designed to manage resources while maintaining the individual's eligibility for government benefits. Planning is important because many adults with disabilities will rely on government benefits for support. If the disabled person owns more than the limit (currently $2,000), they will lose eligibility.
Moreover, Medicaid and other public benefits programs will not pay for everything your child might need. A Special Needs Trust can pay for items not provided by government assistance and other resources. But not all special needs trusts are the same. Some require any unused assets in the trust to be paid back to the government upon the death of the beneficiary. This is commonly referred to as a "payback provision." These "pay-back provisions" are necessary in certain types of special needs trusts.
Step Seven: Coordinate your Retirement Account and Life Insurance Beneficiary Designations
If you name a special needs child as the beneficiary of your retirement account or life insurance, you will probably disqualify them from the government benefits. There are ways to ensure your special needs child is able to receive the benefits of your retirement accounts without disqualifying them via a Retirement Benefits Trust that includes Special Needs language. This is a complex area of the law which requires professional advice; however, you could turn your retirement account into a lifetime legacy for the benefit of your family.
Far too often families disinherit the special needs child—the one who needs the family's money the most to help them through life. Instead of disinheriting your child, seek professional advice and ensure your beneficiary designation won't disqualify your special needs child.
Step Eight: Build a Team
During your life, you can manage your child's special needs and be the trustee of a special needs trust. When you are not able to serve as trustee, you can designate who will serve next. You may choose an individual, a trusted team of family members, or a trusted team of professional advisors. Whoever you chose should be organized, comfortable making financial decisions and, most importantly, highly responsible.
Step Nine: Provide Enough Financial Resources
As a parent, it is your responsibility to provide enough financial resources to make sure that whoever is raising your children will not struggle financially. If you don't have sufficient savings and investment resources, then make sure you have enough life insurance. Life insurance is one of the best ways to get money into a Special needs Trust. In fact, many parents purchase life insurance solely for the purpose of funding the trust.
Work with a trusted advisor to determine exactly how much savings or insurance would be sufficient to support your family if something happened to you. Term insurance is inexpensive but it expires after a certain period of time without building up any continued value. Permanent insurance is more expensive, but if you have a child with special needs, you may want to consider it to guarantee that needed resources will be available for your child upon your death. Remember that life insurance passes by a beneficiary designation form, so make sure that form is consistent with your overall plan and designates a special needs trust so government benefits are not lost.
Step Ten: Pass on More than Just Your Money
Think of the knowledge you have gained spending a lifetime caring for your child. Be sure to write or record a complete set of instructions to guide future caregivers and trustees as they take care of your child. Include information regarding residential preferences, medical concerns, preferred doctors and therapists, essential therapies, and social activities. Although such instructions are not legally binding, they can reflect your thinking on a range of issues and provide a plan for the caregivers to follow.