A special needs plan is an essential piece of any estate plan for people who have special needs family members. Whether you have a child with disabilities, or an adult child or relative who is unable to care for his or her personal or financial responsibilities because of a disability, special needs planning is something you need to approach with care.
As part of creating a special needs plans, you want to avoid the most serious mistakes that can derail your efforts. Though your estate planning lawyer will provide you with detailed guidance during the special needs planning process, here are three of the biggest mistakes you’ll definitely want to avoid.
Mistake 1. Relying solely on family.
Many parents of special needs children believe that their child will be adequately cared for by other family members should the parents die or be unable to provide care. Though this may be true, it’s not something that should serve as the foundation of the special needs plan. Your child with disabilities needs the security that special needs planning can provide. Establishing a plan that does not rely on your family members to spend their own money to care for the person with disabilities is essential.
Mistake 2. Forgetting to fund special needs trust.
In most situations, a special needs trust will form the basis of any plan you create to protect someone with disabilities. Special needs planning and special needs trusts go hand-in-hand. The trust will own property for the benefit of the person with disabilities, but simply creating a trust document is not enough. You have to make sure that you transfer your property into the trust’s name. This is called funding. Without completing the funding process successfully, your special needs trust is seriously flawed. Depending on the type of property you choose to transfer to the trust, this funding process can involve one or more specific steps. You must ensure you take the proper steps or the trust may not be properly funded.
Mistake 3. Not beginning the special needs planning process.
The most serious mistake you can make is to put off special needs planning until a later day. The reality is that every child or adult with disabilities will benefit from having a special needs plan in place as soon as possible. In the worst case scenario you will be rendered incapacitated, or killed, before you can put together a complete plan. When this happens, the special-needs child or adult for whom you care will be left to rely on others. If there is any disagreement about who should be responsible for that person’s care, this can lead to lengthy and costly court battles.
To learn more, please download our special needs trust in North Dakota report here.
- Advantages of Using a “Grantor Trust” in Planning - August 3, 2021
- Plan Now for the Incredible Shrinking Exclusion - July 29, 2021
- SSI vs. SSDI — Understanding the Difference - July 27, 2021
