Signing a Last Will and Testament document

Whether they are establishing a basic last will and testament or crafting a complex, multi-faceted estate plan, everybody who makes legal arrangements for the future of their inheritors naturally is motivated by unique personal priorities. In certain straightforward cases – such as providing an equitable split of assets among inheriting siblings – the decision of “who gets what?” can be much easier. Even in families where some of the benefactor’s children may have greater financial needs, dividing one’s estate in equal parts can definitely avoid a number of problems.

However, the estate-settlement situation gets more complicated when special-needs individuals are to be included as beneficiaries. The phrase “special needs” can refer to a great many mental and physical conditions – for example, cognitive impairment (autism, brain injury, schizophrenia, dementia, etc.), birth defects (such as cerebral palsy or fetal alcohol syndrome), and various others – but in general discussion terms, we can use the definition of an individual who must rely on someone else for financial support, due to their own limited abilities.

In 2015, the U.S. Census Bureau cited the statistic of 14.2 million American adults (ages 18 or older) who were considered to have special needs because they were physically, mentally, or emotionally unable to perform basic tasks required for living independently.

Some people with special-needs disabilities have no family support network, and they often end up relying on government social services for their care. However, at the opposite end of the spectrum, there are many special-needs adults whose parents and/or siblings (or other relatives) provide for them. That can lead to the issue of what happens when those guardians are no longer around. In other words, who will continue to financially support a disabled loved one following the death of his or her benefactors?

Assuring a more comfortable future for a relative with special needs is an excellent reason to have a comprehensive estate plan, or at the very least, a solid will. A properly established last will and testament clearly designates in advance how someone wants their assets to be distributed among their heirs.

Conversely, when people die without a will or other estate plans, all of their property—including homes, cars, investments, savings accounts, valuables, etc. — ends up intestate and can find itself in a lengthy and costly probate court battle. That makes it extremely difficult for intended beneficiaries to take possession for their inheritances.

Carefully specify necessary allowances in an estate plan

There are many different ways to make accommodations for special-needs beneficiaries in a will or trust, but careful planning is crucial when preparing those documents. One especially sensitive consideration is evaluating the financial circumstances of the benefactor(s), both currently and projected long-term, when determining how the assets will eventually be applied to support the disabled loved one.    

If the estate represents substantial value – thereby meaning a beneficiary essentially is “set for life” financially – it becomes less of an issue. But in many cases, the will must make provisions for necessary government subsidies. Programs such as Medicaid and Supplemental Security Income (SSI) are vital in providing support for millions of special-needs recipients, but qualifying for that assistance is based on financial needs. If an inheritor’s assets exceed a certain threshold, he or she could be disqualified for entitlement benefits.

One strategy for maintaining eligibility in government programs is to establish a “special needs” or “supplemental needs” trust for the disabled beneficiary. In such a case, the benefactor’s transferable assets go into a protected trust for the special-needs inheritor, rather than directly to the individual. That allows the beneficiary to still have access to federal benefits.

Creating such a trust for a special-needs individual also calls for the naming of an appropriate trustee to be responsible for managing the inheritance.

In some instances, a disabled person may have his or her inherited assets added to a group trust which is overseen by a responsible third party, such as a nonprofit organization. The understanding is that the administrators of the pooled trusts will then allocate each inheritor’s respective funds on an as-needed basis to provide for the various special-needs beneficiaries in the group.

Seek the advice of an experienced attorney

Given the unique circumstances which often come with estate planning for special-needs beneficiaries, it is imperative to work with knowledgeable attorneys and financial advisors.

The experienced elder law attorneys at TuckerAllen specialize in affordable smart solutions for wills, trusts, Power of Attorney documents, and other essential aspects of estate plans, including long-term provisions for special-needs adults.

TuckerAllen also offers complimentary educational webinars, where we explain a range of estate plan options and asset protection programs, all in terms that are easy to understand.

Providing for Beneficiaries With Special Needs