Estate planning is important for securing what will happen to your child or adult family member with a disability when you are gone. A person’s estate is what he/she owns or possesses, such as a home, car, money in savings or checking accounts, stocks and bonds and other personal possessions. Estate planning is the process of planning how these possessions will be divided and distributed when the person dies.
The Metropolitan Life Insurance Company explains that estate planning falls into three main categories: wills, guardianships and special needs trusts. A will declares how you want your estate to be distributed when you die, and allows you to select a guardian for your child after you’re gone. Children with special needs who receive assets in excess of $2,000 may jeopardize their government benefits.
A guardianship—or conservatorship, depending on the state—is a legal mechanism that grants an adult legal power to make decisions for another person, one who is considered incapable of making decisions themselves. Generally, guardianship will terminate when the child turns 18 or, in some states, upon marriage if the child marries before age 18. There is a general guardianship and limited guardianship, each of which grants the guardian or conservator different powers.
A letter of intent is an important accompanying document for guardianships. Although it is not legally binding, it provides direction for the person(s) who will care for your child.
Parents need to be aware that an inheritance may cause many problems for their child. As mentioned above, any inheritance of more than $2,000 disqualifies individuals with disabilities from most federal needs-based assistance. Special needs trusts offer a means for protecting your child’s eligibility for benefits, while addressing the ongoing care and needs of your child. The primary advantage a special needs trust offers over a direct gift or inheritance is that, if arranged properly, the assets in the trust do actually belong to the beneficiary. The trust holds title to the property.
Metropolitan Life also suggests financial planning in regards to savings, investments, life insurance and educational needs, as spelled out in the Individuals with Disabilities Education Act (IDEA). IDEA requires that parents have an Individualized Education Program (IEP), which is a written statement about your child’s abilities and impairments. It is developed by you, school district personnel and educational professionals who have evaluated your child’s abilities.
For more information about estate planning and its related topics, contact the MetLife Center for Special Needs Planning at:
MetLife Center for Special Needs Planning
Phone: (877) 638-3375
The National Information Center for Children and Youth with Disabilities (NICHCY) reports that the nature and severity of a child’s disability will affect the nature of the estate plan that parents must develop. If your child has a physical disability or health impairment that does not affect their ability to manage financial or other affairs, the primary influence on planning your estate should be whether your child receives (or may one day need to depend on) government benefits such as Supplemental Security Insurance (SSI), subsidized housing, personal attendant care or Medicaid.
On the other hand, you may have a son or daughter with a physical disability or health impairment who is not eligible for or who is not receiving government benefits. In this case, you may be able to dispense with elaborate planning devices and merely leave your child money outright, as you would not to a nondisabled child. If you are concerned that your son or daughter with a disability may not responsibly handle an inheritance, then you can utilize a trust, just as you could for a nondisabled heir.
If you have a child with a cognitive disability or mental illness, the need to create a special estate plan is more obvious. Mental illness and cognitive disabilities often impair a person’s ability to mange his or her own financial affairs, while simultaneously increasing financial need. As a result, you must take to ensure that there are assets available after your death to help your son or daughter, while also providing that the assets are protected from his or her inability to mange them.
The NICHCY provides more extensive information about estate planning, such as reported by Metropolitan Life above. Contact the NICHCY at: National Information Center for Children and Youth with Disabilities (NICHCY)
P.O. Box 1492
Washington, D.C. 20013-1492
Phone: (800) 695-0285
National Council on Disability
Phone: (202) 272-2004
Web site: www.ncd.gov
The Arc - National Headquarters
Phone: (800) 433-5255: (817) 261-0553 (hearing impaired)
Web site: www.thearc.org
Special Needs Advocate for Parents (SNAP)
West Coast Phone: (310) 201-9614
East Coast Phone: (973) 236-9887
Web site: www.snapinfo.org
Disabled and Alone/Life Services for the Handicapped, Inc.
Phone: (800) 995-0066; (212) 532-6740
Web site: www.disabledandalone.org
Toll Free: 800.995.0066
Web site: http://www.advocacyinc.org/
The Family Village
Web site: www.familyvillage.wisc.edu/general/estate.htm