Creating an estate plan is one of the most important steps you can take, even if you are young. As you go through life, you can update your estate plan as life events occur. If you have a special needs person in your life, whether a child, a sibling you are caring for, or even a parent or another relative, creating an estate plan is even more essential.
While planning for the future, you must consider certain factors, such as safeguarding your loved one’s government benefits and providing financial stability. An estate planning attorney at France Law Firm can help you create an estate plan that benefits your unique situation.
The Impact of Inheritance on Benefits
One of the primary reasons for creating an estate plan when you have a loved one with special needs is to provide for him or her. However, a direct inheritance can jeopardize your loved one’s eligibility for Supplemental Security Income (SSI) or Medicaid.
It takes special planning to provide for a loved one after your death without jeopardizing his or her much-needed government benefits. Florida law allows for special trusts that protect your loved one’s government benefits.
Key Estate Planning Tools for Special Needs
Some of the key estate planning tools to protect your loved one’s benefits include:
Special Needs Trusts
A special needs trust (SNT) creates a fiduciary relationship that allows a special needs person to receive income without reducing or removing his or her ability to receive government disability benefits from Supplemental Security Income and Medicaid programs.
It does not replace benefits but supplements them instead. Proceeds from the SNT can pay for medical expenses, transportation costs, caretakers, and other needs.
The trustee, a person you trust implicitly, controls the trust and oversees its management, including the disbursement of funds.
Third-Party Special Needs Trust
A third-party special needs trust can pass to other heirs after the beneficiary dies. Someone other than the beneficiary funds a third-party trust.
First-Party Special Needs Trust
The beneficiary funds a first-person SNT with assets, such as a settlement or an inheritance. After the beneficiary dies, the trustee may have to use any remaining funds in the trust to pay benefits back to the state.
Pooled Trusts
Some nonprofits manage pooled trusts for multiple beneficiaries. These trusts are generally helpful for smaller amounts if a private trustee is unavailable.
ABLE Accounts
Another estate planning option for a special needs person is an ABLE account, a savings or investment option created by Section 529A of the Internal Revenue Service tax code. These accounts allow someone whose disability began before 26 the age of to save money without affecting federally funded benefits.
The growth in these accounts is not subject to taxation. Beneficiaries can pay for qualified disability expenses.
Steps to Creating an Estate Plan for a Special Needs Person
Always consult with experienced asset protection attorneys when creating an estate plan, especially when the plan must include an SNT.
- Do not name a special needs person as a direct beneficiary on retirement plans, financial accounts, or life insurance.
- Update your will and beneficiary designations.
- Fund an SNT with life insurance.
- Appoint a guardian where applicable.
- Create a letter of intent that details the special needs person’s routines, medical information, preferences, and care instructions.
Review and Update Your Estate Plan Regularly
You must update your estate plan each time you have a significant life change, such as marriage, divorce, the birth of a child, a death in the family, or a substantial investment. If you do not have a significant life change within three years of your last life change, contact France Law Firm to update your estate plan, as probate and federal taxation laws change frequently.
Don’t Leave Your Loved Ones in a Bind
Contact a wills and estate lawyer at France Law Firm at 850-224-1040 or by completing our online contact form for a consultation to create or update an estate plan or to create a special needs trust.
