Estate Planning for Heirs with Special Needs

Helping Those Who Can’t Help Themselves

We all know the cast of characters that make up our families can be as varied as the shells that wash up on the beach. Sometimes that cast includes persons with special needs; needs that prevent them from being able to take care of themselves; needs that prevent them from wisely managing significant sums of money. For such heirs, there are estate planning tools available to help them manage an inheritance without excluding them from the estate.

The most severe special needs include those who rely on government services for their health and well-being, including social security-disability and Medicaid. For those beneficiaries, a significant inheritance could mean the end of government benefits. To avoid such a disastrous result it would be better to leave the inheritance to a special needs trust; a trust which exists solely to supplement their lifestyle, as the trustee sees fit, to fill in the gaps where other benefit programs fall short. The trust also serves as a resource of last resort if all other benefit programs fail for any reason.

A special needs trust is a purely discretionary trust in which the trustee decides when and how to disburse benefits, although you can specify criteria to guide the trustee. Typically, the trust specifies that the trustee is to provide for the beneficiary’s supplemental needs, including entertainment and comfort beyond what the benefit program provides. For example, the trustee may be allowed pay for additional health care workers, or to buy the beneficiary a new television, or pay for a trip to an amusement park; activities or services that enhance the beneficiary’s quality of life without supplanting the benefits of the enrolled benefit program.

Beneficiaries with special needs aren’t limited to those on benefit programs, however. Beneficiaries with substance abuse problems, or just those with fiscal management issues, also have special planning needs. For those beneficiaries it is just as unwise to hand them a substantial inheritance as for more severely disabled heirs. For such heirs, the estate plan can be customized to specifically address the condition at hand.

Andrew Grant
Andrew Grant
For example, an heir with substance abuse issues may not receive distributions unless sobriety tests are satisfied. A beneficiary who blows through money may be constrained to a set stipend every month. An heir who makes poor relationship choices may not receive any funds at all, but the trustee provides for the basic needs of rent, food, and utilities directly so no one can take advantage of them.

In the end, we can only do so much to protect our loved ones from themselves, but with thoughtful consideration an estate plan can be crafted to address any concern to give you some certainty that your loved ones will receive the best benefit of their inheritance. If you have concerns about your heirs, you should consult with your attorney to make sure your estate plan addresses those concerns.

Written by Andrew C. Grant and published with permission by www.findingassistedliving.com


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