FAQ

If your special needs child cannot make medical decisions for himself/herself, you may very well need to obtain guardianship.  Without guardianship, you no longer have the legal right to make these decisions for your child.  You can begin the guardianship process once your child turns 17.

The process for a 17-A guardianship typically takes 6 – 10 months.

You need to take into consideration your short-term, intermediate and long-term goals for your child. What is your child’s life expectancy? People with disabilities are living longer than ever before due to medical and technological advances. This will only continue as we develop new technologies. You may want to refer to my article, “How Much Is Enough?”

If your child is disabled and will not likely be self-supporting, a special needs trust is probably the best way to leave money for your child without adversely affecting government benefits.

These items are dictated by the trust document. If the beneficiary is receiving SSi, the trustee will, in most cases, want to avoid paying for food and housing expenses. There are also some practical strategies for paying for items for the beneficiary so as to avoid affecting government benefits.

Social Security has a $20 General Exclusion and a $65 SSI earned income disregard. In addition, one-half of any earnings over $65 are not counted.

If your child is disabled and will not likely be self-supporting, a special needs trust is probably the best way to leave money for your child without adversely affecting government benefits.

Cash equivalents such as savings and checking accounts, CDs, money market funds and other similar assets are best. However, these type of assets usually represent a relatively small portion of someone’s estate. A home can also be used to fund a trust, although it is less liquid and the value is subject to the existing market. Life insurance is not subject to ordinary income tax and the death benefit is known, so it is often the preferred method. Retirement assets are usually tax-deferred, making them subject to the harsh tax schedule applied to special needs trusts and therefore considered to be one of the least preferable methods of funding a trust.

Yes. There are different types of special needs trusts which are used to accomplish different goals. Also, grandparents or other relatives may wish to leave money to the disabled individual and may want to create their own special needs trust, separate from the one the parents created.

You can, but it won’t offer the same protection. Without a trust, your other children only have a moral obligation to spend the inheritance for the benefit of your disabled child. Also, money left to your other children can be subject to divorce settlements and creditors. A special needs trust offers protection from these situations. There are other reasons as well.

Yes. This is an important issue when considering how to best fund a trust. Tax-deferred assets–the kind in most retirement accounts–are taxed at the highest federal tax rate. When combined with state and local taxes, this could equate to a loss of over 50% of the assets intended for the trust. Life insurance death benefits, on the other hand, are not subject to ordinary income tax.

No, these are separate roles although they can be performed by the same individual. A guardian is someone who has been appointed by a court to make certain decisions and/or manage property for another individual. A trustee is a fiduciary designated by the trust to manage the assets of the trust.

Retirement planning is an integral part of any person’s financial plan. If someone has a special needs child, they need to plan for two generations, not one. Special needs planning, therefore, requires planning for beyond retirement and even beyond the grave if their disabled child is to have the ability to live the fullest possible life.

State-funded group homes (IRAs) options are rare, nearly non-existent except in cases of crisis e.g. parents die or become disabled. Options are being explored, and I expect that we will see alternative solutions as people become innovative and the government responds to political pressure from increasing numbers of families requiring this service. Independent living options are increasing for those disabled individuals capable of living on their own with support.