By Stanley Vasiliadis, Esq.,
Certified Elder Law Attorney
Parents of a developmentally-disabled or otherwise incapacitated child bear a life-long burden of care.  In fact, after their child turns 18, it gets harder.  As an adult, the child is not permitted to continue participating in many programs that were available during school-age years. And adults with special needs encounter many challenges not faced as children.  So, what happens to the child after parents have passed away, or, due to their own incapacity, cease providing essential care and supervision?  Are there other persons who are both willing and able to step up and assume what could become for them, as well, a life-long burden?  Will the child have enough money to pay for his or her unique and often challenging medical, housing, social and vocational needs?

Stanley Vasiliadis, an attorney with the Lehigh Valley law firm Vasiliadis Pappas Associates LLC, and a member of the Academy of Special Needs Planners, recently discussed this topic in an interview with LifeStyles Over 50.  “Unfortunately,” noted Vasiliadis, “the most common solution is to saddle this responsibility on an often less than enthusiastic and frequently unprepared sibling. Even when successful, this takes an unnecessarily severe toll upon the care provider and his or her family. That’s not to say observed Vasiliadis, that a sibling or other family member shouldn’t play an active role.  On the contrary, family members are uniquely qualified to provide important guidance to a trustee, guardian or other professional who does possess the needed expertise.”

Here are some important estate planning measures every parent of a special- needs child should consider:

Supplemental Needs Trust.  A Supplemental Needs Trust, or “SNT” is essential.  Assets held by a SNT are not considered “available resources” to the incapacitated beneficiary for purposes of public benefits eligibility.  Accordingly, the beneficiary can draw upon the trust fund for supplemental needs not provided by public benefit programs while retaining eligibility for those needs-based programs, such as Medicaid and Supplemental Security Income (SSI).  Any other trust would need to be totally exhausted before a beneficiary could re-qualify for those benefits.  A SNT should be administered by a corporate trustee who is sophisticated and experienced in caring for special needs beneficiaries. A responsible and caring sibling or other family member should be named in the SNT as a “trust protector” to monitor and guide the trustee and replace the trustee, if appropriate. A SNT can be incorporated as part of a parent’s Will, be set up as a separate stand-alone entity, or included as part of a parent’s revocable living trust.

Revocable Living Trust.  For many, a revocable living trust, or “RLT,” is the best means by which to implement a SNT. Unlike a Will, which does not take effect until after parents have died, a SNT within an RLT ensures continued care for the child of a parent or parents who, due to the infirmities of old age or chronic incapacity cease providing care.  Typically, the parents serve as trustee and while at least one parent is alive and able, the RLT is not funded.  So, parents, if they wish, and most do, remain fully involved as caregivers, just as before. Should that stop, a corporate entity, named in the RLT as successor trustee, steps in and provides care for their child and for the parents as well.  Other concerned family members, such as siblings of the special needs child, can maintain a supervisory role as trust protector over the care for both the parents and their special needs child without bearing most of the burden.

Last Will & Testament.  Even parents with an RLT will still need a Will.  This ensures that when a parent passes away, his or her assets outside of the RLT, if any, “pour” into the RLT, which will serve as the main vehicle for distribution of the estate.  For those without an RLT, the Will must provide for distribution of the incapacitated child’s inheritance into either a SNT included as part of the Will, or, alternatively, to a stand-alone living (inter vivos) SNT that the parent established while living. As in the case of an RLT, an inter vivos SNT, typically names the parents as trustee and remains unfunded unless and until the parents have passed away or otherwise cease providing care.

Power of Attorney and Health Care Directive. Many fail to realize that not even a spouse or adult child has legal authority to step in and handle one’s financial affairs absent a written legally-compliant power of attorney. Similarly, as regards to health care, immediate family members have only limited medical decision-making authority.  Most people today recognize the need for these legal tools, same as with Wills.  Special needs children, promptly upon attaining age 18, should appoint parents or others serving as caregiver as power of attorney for the child’s financial and health care affairs. The young adult special needs child, unless so severely cognitively impaired as to lack requisite mental capacity, can execute these powers of attorney.    

Financing Options.  Parents of special needs children should incorporate into their retirement and estate planning financial measures to fund their child’s SNT.  This might include second-to-die life insurance that pays out to the SNT after both parents have passed away.  Also, very importantly, the second-to-die parent must designate the SNT as primary beneficiary of life insurance, qualified retirement plans such as IRA or 401(k), and deferred annuities.

As you can see from the forgoing discussion, prudent parents of a special needs child must consider and implement a variety of unique estate planning measures. The lawyers at Vasiliadis Pappas Associates LLC can help.

About the Author: Stanley Vasiliadis is an attorney with the Lehigh Valley law firm Vasiliadis Pappas Associates LLC, and a member of the Academy of Special Needs Planners.

Contact Vasiliadis Pappas Associates to learn more about your options and other measures to protect yourself.