How to Make Financial and Legal Decisions for My Child with Special Needs

This guest post is from Benjamin Rubin.

Estate planning for parents of a child with special needs is, regretfully, a very complex process. In order to provide for a “special needs” child’s financial security to assure that he or she remains blog-legal-and-financial-main-landscapequalified or able to qualify in the future for government benefits such as S.S.I. and Medicaid, and to protect any inheritance or gift from claims of the government for reimbursement for benefits provided to him or her prior to our death or receipt of the gift, parents must properly plan now. More importantly, we must plan differently than other parents who do not have a child with special needs.

The facts are that in Illinois, as is the case in most states, without proper wills and trusts, a child with special needs may inherit property or receive gifts only to be then disqualified from receiving government benefits. Additionally, without proper planning and drafting of estate plan documents, the government may claim reimbursement from the child’s inheritance or gift for benefits provided to the child prior to the parent’s death or receipt of such a gift. This result is true even with “traditional” family trusts with “spendthrift” provisions that many attorneys use for all parents. One of the primary objectives in estate planning for parents of a child with special needs is to assure that the child remains qualified and eligible for government entitlement programs, while protecting the family’s assets, and the child’s inheritance, from seizure by the government as “reimbursement.”

My parents, like nearly all parents of a child with special needs, do not want my brother to rely solely upon the government to provide the level of care that they, my sister and I desire for him. The good news is that there are viable alternatives. A special form of a trust has become the appropriate and preferred estate planning document for families such as mine. Illinois law provides that such a trust established for the benefit of an individual with special needs shall not be liable to pay or reimburse the State (and by current regulations, the Social Security Administration), or any public agency for benefits received. Illinois law also provides that property, goods and services purchased or owned by such a trust for and or used by or consumed by the beneficiary, are not to be considered assets of the beneficiary.

The second type of trust “option” is commonly referred to as an OBRA or “pay-back” trust. This second form of a special needs trust is needed to preserve government benefits and still receive personal injury or medical malpractice settlements, inheritances left directly to a child with special needs, or assets already in his or her own name.

As family members we must become familiar with the laws concerning “guardianship of an adult disabled person.” Parents must also attempt to educate their “chosen” people who will act as Custodial Guardians and Trustees about the relevant laws, regulations, programs and entitlements affecting or benefiting their child with special needs, as well as about their “plans” and desires, including the estate plans.  Parents must consider the school district, “residential alternatives,” special recreation association, religious programs available to individuals with disabilities and vocational or workshop opportunities available in the vicinity of their chosen custodial guardians.

Parents must also convince grandparents and other relatives that they are not doing their “special needs” grandchild or relative any favor by treating them the same as other beneficiaries in their own wills and trusts, but that they should leave the “inheritance” to the special needs trust that parents have created for such purpose.

There are many, many other topics that a family of a child with special needs may need to consider which we plan to cover in future blog topics, including:

  • When using the newly permitted ABLE Accounts might make sense and what states currently make them available to Illinois residents.
  • If the parents are divorced and child support is being paid to an adult child with special needs, how must the child support be paid to ensure benefits are protected and what other considerations such as life insurance and health insurance even after age 26 might need to be brought up in the marital settlement agreement?
  • If one or both of the parents has a public pension such as TRS, SURS, the Judges Retirement System Pension, police pension, fire department pension, and the US Military retirement pension, among others, many are permitted to be left as a continuing annuity to a special needs trust for the benefit of an adult child with special needs for their entire lifetime so long as there are certain, sometimes very specific, provisions in the trust.
  • What if the parents need skilled nursing care and are worried they will spend all of their assets and have nothing left to leave to their child’s special needs trust? How can the special needs trust be drafted to allow the parents to use their child’s trust to qualify themselves for Medicaid to pay for their own skilled nursing care?
  • What should be in a “letter of intent” document to educate the “future team?”

NSPT offers services in Bucktown, Evanston, Highland Park, Lincolnwood, Glenview, Lake Bluff, Des Plaines, Hinsdale and Milwaukee. If you have questions or concerns about your child, we would love to help! Give us a call at (877) 486-4140 and speak to one of our Family Child Advocates!

New Call-to-Action
bnrbarmjrBenjamin Rubin limits his law practice, as does the firm of Rubin Law, to Special Needs Legal and Future Planning for his fellow families of individuals with special needs. Benji serves as Vice-Chair of the American Bar Association’s Special Needs Planning Committee, is a member of both the Academy of Special Needs Planners and, by invitation, the Special Needs Alliance, the national not-for-profit association of special needs planning attorneys, is President of SIBS (Supporting Illinois Brothers and Sisters), the Illinois chapter of the national Sibling Leadership Network, which is an organization of adult siblings of individuals with intellectual disabilities, developmental Disabilities, mental illness, among other special needs, is a member of the Board of Directors of The Arc of Illinois, is a member of the Clearbrook Associate Board (Clearbrook is an agency serving over 7,000 children and adults with intellectual and developmental disabilities, one of whom is Benji’s brother Mitchell), is a member of the SEDOL (Special Education District of Lake County) Foundation Board of Directors, and serves on the Advisory Council of Encompass a joint venture that in partnership with Jewish Child & Family Services, Jewish United Fund, JVS Chicago, JCC Chicago, Keshet, and The Center for Enriched Living and Center for Independent Futures, seeks to provide adults with I/DD a full array of financially sustainable, community-based services and supports.

Having Mitchell as a brother profoundly shaped who Benji is today, and thus the type of law he chose to practice. His personal experiences as a sibling offer a unique perspective into the responsibilities that come with caring for a sibling with special needs. Now, as an adult, those sometimes present and future responsibilities he will share with his older sister regarding his brother’s care, are a concern that he shares with all brothers and sisters of individuals with special needs.