Family Communication Is Essential For A Successful Special Needs Trust


Estate planning is never pleasant, especially when a child with special needs is involved. Like most parents, you probably hate imagining a situation where you are no longer around and your children, special needs or not, have to progress through life without your emotional and financial support.

You also do not want to burden your children with discussions of estate planning either, remembering your painstaking efforts to secure public benefits like Social Security Income (“SSI”) and Medicaid. Maybe knowing a bit about estates and trusts yourselves, you even incorporate a Special Needs Trust (“SNT”) into your estate plan to help protect your child’s public benefits. (For an introduction to Special Needs Trusts, see "A Short Introduction to Special Needs Planning").

Now, however, think of the scenario where your other children begin working, and not knowing about the SNT, they start generously sending checks to your special needs child, or name your special needs child as beneficiary of a life insurance policy or 401(k). These good natured gifts or bequests could have disastrous consequences and disqualify your child for the same public benefits you fought so hard to procure.

A special needs professional would have advised your children to name the SNT, and not your special needs child personally, if they wanted to provide assistance beyond SSI and Medicaid. And although an experienced special needs attorney can help with correcting the situation, such as the creation of a self-settled trust (otherwise known as a (d)(4)(a) trust), your child’s benefits may nonetheless be suspended and further court action could be required. (It’s important to remember that every family is different and planning will vary from family to family).

Seeking advice from special needs professionals early on can help your family avoid making similar well-intended, but devastating mistakes. A planner can help choose appropriate wealth transfer strategies and, potentially, even realize tax benefits. Most importantly, coordinating estate planning efforts with the whole family (including grandparents and aunts and uncles) can help maximize the funds available to enhance and enrich your child's life.