Day-to-day care giving demands are significant for children with special needs. Thinking ahead to their future and long-term financial security, as well as legal protection, can be overwhelming to consider.
To quiet understandable concerns about your child’s future, don’t put off learning about the legal tools, savings vehicles, and proactive planning methods available to parents. An experienced estate planning attorney with knowledge of trusts and guardianships can create a network of safeguards that will make a difference in your child’s quality of life.
Careful Construction Can Ensure Stable Benefits and Longterm Care
Special needs planning can be complex. It’s usually based on government programs that support special needs individuals with Supplemental Security Income (SSI) and Medicaid. These programs are means-tested, so eligibility depends on assets of no more than $2,000. That means an inheritance can easily cause the loss of SSI benefits and access to related programs. Therefore, planning for a special needs child’s financial future requires careful sequencing using specialized financial tools.
Special Needs Trusts are estate planning tools that allow people with disabilities to receive government benefits along with supplemental funds for quality of life. These trusts can accept and manage assets that would otherwise be an inheritance, paying the proceeds to schools, living facilities, and caregivers for maintenance of the special needs member.
A third-party SNT is the vehicle most commonly used by Illinois families to care for members with special needs. This trust is funded by assets from parents or other family members and managed by a trustee with discretion to spend income or principal to care for the special needs family member. The assets are earmarked as supplemental to government benefits, not in place of them. When the intended recipient dies, the remaining funds may be disbursed to other family members or designated recipients.
Some of the expenses eligible for payment from a SNT include:
- Education
- Medical expenses
- Recreation
- Transportation
- Personal care attendants
- Technology, equipment maintenance, and replacement
Pooled Trusts are administered by Illinois nonprofits on behalf of adults with disabilities, allowing families of modest means many of the same benefits of an SNT but without high administrative costs.
Illinois Able Accounts are tax-advantaged savings tools that work with an SNT. These accounts are designed for individuals with qualifying conditions that began before age 46. Annual account contributions can be made as financial gifts that are currently limited to $19,000 per person, annually. A portion of the contributions can be tax deductible. Those who receive SSI must also comply with specific account balance limits or risk suspension of benefits.
While trusts are managed by a trustee, an ABLE account allows for more personalized and immediate access by the individual, including with a debit card if desired.
Planning for Adulthood
When an individual turns 18, their parents are no longer the default caregivers. Guardians or powers of attorney are substituted (parents can have power of attorney) to aid the individual’s care.
Guardianship may be necessary for special needs individuals when they turn 18. In Illinois, a guardian must be appointed by the circuit court if a person is unable to make or communicate decisions about their needs and care. Each guardianship situation is determined individually, including the level of supervision/intervention required.
Successor guardians are planned in advance. Parents and family members may identify successor guardian preferences in a letter that also outlines the family member’s history and daily needs.
Supporters, a status created by the Illinois Supportive Decision-Making Agreement Act, are non-guardian assistants that enter into agreements directly with capable special needs individuals to perform specific tasks or assist with living arrangements as needed.
Structuring Your Estate With Special Needs in Mind
Estate planning takes on new meaning when planning for the future of a family member with special needs. An estate planning expert from Legacy & Life Law can ensure that the federal and state rules are followed accurately, protecting your family member with lifelong guardianship, financial support, and care arrangements.