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Special Needs Planning: Some Things to Consider

Chantelle Hickman-Ladd


  • The planning for individuals with special needs involves tools like transition planning, guardianship, government benefit considerations, special needs trusts in estate planning, beneficiary designation review, and a letter of intent detailing crucial information for future caregivers or trustees.
Special Needs Planning: Some Things to Consider Wackerhausen

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When planning for a child or family member with special needs there are certain planning tools and milestones that one must consider. Clients with special needs or a client’s family member with special needs can range from a child to an older adult. The planning will differ from client to client and depend on where each individual with special needs is in his or her life. Therefore, an attorney will consider different planning tools for each client:

Transition Planning

When a child reaches around 14 years old, parents of a child with special needs may want to begin considering what their child's life will look like after their child completes school. Planning ahead can allow the parents time to set up a plan to transition their child into an adulthood that will allow for as much independence as possible.

More specifically, the child's "Individualized Education Plan (IEP) should begin addressing the academic, social, and life skills that will be needed." These considerations may include thinking about living arrangements or career options.


If a child or family member with special needs is unable to make decisions on his or her own, a guardianship may be necessary. In the case of a child, when the child reaches majority age, "parents will not be able to access an adult child's health records or take an active role in their IEP meetings unless they take legal action."

A guardianship will allow someone to look over and protect the individual with special needs if they are unable to make decisions for himself or herself. However, a health care power of attorney and durable power of attorney may be a less restrictive alternative to a full guardianship under certain circumstances.

Government Benefits

Once a child turns 18, eligibility for government benefits is based on his or her own income and assets. It's important to consider whether government benefits are needed to help care for a child or family member with special needs and to plan accordingly.

Many government benefits have income and asset limits that contribute to determining eligibility to receive the benefit. Receiving a sum of money or inheritance could jeopardize an individual's eligibility for any government benefits. However, having a plan in place may help prevent disturbing any benefits the individual with special needs is currently receiving or may receive in the future.

Estate Planning and Special Needs Trusts

A special needs trust may be an option to protect against the unknowns. A person with special needs or other authorized individuals may be able to establish a special needs trust to ensure the individual with special needs is taken care of if he or she is unable to care for himself or herself and in order to help that individual remain qualified for certain government benefits. For example, a person living with a qualifying disability might be the beneficiary of a personal injury lawsuit or be the named beneficiary of a parent's IRA or other investment. A trustee (individual or corporate) would manage that person's assets for their sole benefit while making sure not to penalize or disqualify the beneficiary from their benefits. In order to maintain qualification for those disabilities or to preserve the potential qualification in the future for benefits, the special needs trust might be the appropriate estate planning tool.

On the other hand, a client may want to leave a portion or all of his or her estate to a child or loved one that is or may eventually receive government benefits. This is where the supplemental needs trust comes in. Instead of leaving it to that individual outright, the estate planning document could set up a supplemental needs trust for that individual's share. This type of trust can safeguard government benefits that the individual might be receiving by not putting the assets into that person's name outright.

Similarly, in this situation, a third-party trustee is designated to manage the trust assets and the individual with special needs is the beneficiary. The trustee is given discretion on when and how much to distribute from the trust. Because of this, it is important for the trustee to be someone who will correctly look after the beneficiary's needs and keep up to speed on the individual's government benefits and requirements (if applicable). It could also be useful to designate a corporate trustee depending on the situation. As with all jobs, the corporate trustee would have to be delicately chosen so that the right company and person is chosen for the job and is up to the task of serving as the trustee of a special needs trusts.

Because the beneficiary of a special needs trust and supplemental needs trust does not have control over and access to the trust assets, the trust is not considered a resource for government benefits eligibility. If a person wants to leave money to a special needs family member who was on government benefits, an outright bequest could disqualify the family member from continuing to receive those benefits. By including provisions in the person's trust to distribute the family member's share into a supplemental needs trust, the trustee of the supplemental needs trust can continue to provide for that individual's care, not interfere with his or her government benefits, and not have a Medicaid payback provision wherein any assets remaining in the trust must be paid back to the state agency upon the death of the beneficiary.

A care manager may also be employed in these situations, so that the special needs beneficiary has someone to advocate for him or her when that person is unable to. The care manager would ensure the beneficiary's needs were being met and that the beneficiary was receiving the services he or she needed.

Review Beneficiary Designations

After getting estate planning done, it is important to check all beneficiary designations to make sure they all work with the estate plan. As previously mentioned, a person living with a qualifying disability might be the named beneficiary of a parent's IRA or other investments and life insurance policies. Inheriting these outright could interfere with maintaining or qualifying for government benefits.

Letter of Intent

A letter of intent is a great way for a parent or family member caring for an individual with special needs to document important details about the individual to help a guardian or trustee when the parent or family member is no longer able to care for the individual with special needs. The Special Needs Alliance recommends including things such as: "medical and educational history, the individual's likes, dislikes, and habits, and aspirations concerning the loved one's future, including living arrangements, career, and lifestyle."