Special-Needs.jpg

Share This Post

91 / 100

Special Needs Tune-Up for Your Child’s Trust

By Jim Munchbach, CFP®

Special-Needs.jpg

Remember how satisfying it was setting up a trust for your child with special needs? You named a trustee and a successor trustee, signed the paperwork, and paid the legal bills, and then you rested easy at night knowing you had put a plan in place for your child.

Well Done!

Well, not exactly done… Because things change, sometimes gradually and sometimes all at once.

It’s easy to throw your new special needs trust into a drawer and forget about it, especially if you are not planning on funding it until you pass away. Likewise, if your loved one with special needs has executed a durable power of attorney and health care proxy in case of an emergency, she too may squirrel the documents away for use if needed, and feel they never need to be looked at again.

Having a plan in place is a great start, but it will need to be maintained. You wouldn’t buy a nice new car and then never to change the oil…

When it comes to special needs planning, even small changes in circumstance can have major legal ramifications, and the results can be devastating.

Special Needs Change Examples

Here are just a few examples of the types of changes that can have a significant impact on your special needs trust.

Trustees and successor trustees: Maybe because of a major life event such as divorce, physical incapacity, or job loss, they are no longer capable of serving as your trustee. Is the successor you named back in the beginning still up to the job today?

Health care agent:

Is that person still able to jump in at a moment’s notice in the event of any emergency, or has she moved to another state or country?

Does she still have the capacity and willingness to perform this very important role?

Financial Plan:

Think of big changes in your financial picture such as…

  • an inheritance,
  • the liquidation of a family business,
  • the purchase of a life insurance policy,
  • retirement,
  • bankruptcy, or
  • litigation.

You may consider transferring additional funds to the trust, adjusting the language to add an extra layer of protection, or rethinking how the trust assets are managed.

Major life events:

Any significant changes in your own life will have an impact on your child with special needs. These include…

  • losing a spouse to death or divorce,
  • remarriage,
  • the birth of another child,
  • retirement, or
  • relocating to another state where the laws governing special needs trusts are different.

The beneficiary’s situation:

Your special needs dependent could develop more capacity through therapies and medical innovation, or she might need more support and assistance as time goes by.

Or maybe she’s received an inheritance or a settlement from a lawsuit. Or your wishes for your child may have changed with time.

Any of these changes will have an impact on how the trust functions in the beneficiary’s life.

Does the language in the special needs trust even allow provisions to be added or changed to meet any new requirements?

Disability

Then there is the ever-changing world of federal disability benefits, which can be challenging to keep track of. This is where your special needs planner fits in; he or she not only monitors shifts in disability benefits law, but may also be instrumental in shaping new policies on a local, state or federal level. Such new policies may have a direct impact on your special needs plan.

The good news is that special needs trusts are living documents that can be updated and changed on a regular basis. But whatever happens, DON’T:

• Put off reviewing the trust’s provisions. As we all know only too well, everything can change when you least expect it, whether as a result of global pandemics, extreme weather events, financial crises, or other emergencies. Don’t wait for such an event before reviewing the plan; check it at least once a year to make sure everything is the way you want it.

• Think you can do it yourself by making handwritten changes in the margins. Changes must be properly noted and executed through your attorney. If done incorrectly, without a legal review, such amendments could complicate matters for your special needs beneficiary down the line and lead to expensive litigation.

• Assign successor trustees based on assumptions. Do not presume, for instance, that a trustee’s spouse will take over if the trustee passes away. Always plan for contingencies when making decisions.

If it has been a while since you took a peek at your special needs plan, take it out, dust it off, and schedule an appointment with your special needs planner. You may have a lot of work to do—or perhaps none at all—but staying on top of things will pay dividends in the end.

What Issues Should I Consider For My Child With Special Needs?

 

Families who have children with special needs must deal with a unique set of planning issues. In addition to health, educational, and care planning issues, special needs present complex financial issues for families to address.

These planning conversations are as important as they are difficult, and they require a Financial Advisor with the ability to have direct but delicate conversations.

This special needs checklist can be especially helpful for your advisory team members who are not experts with respect to individuals who have special needs.

To help guide your conversations with your Financial Advisory Team about special needs planning issues, we have created this checklist. It covers key considerations, including:

– Qualification for needs-based public benefits
– ABLE accounts and special needs trusts
– Tax planning opportunities
– Estate planning challenges
– Lifelong support considerations

Special Needs Resource Library

To help guide your conversations with your Financial Advisory Team about a wide range of financial planning issues, we have created a robust resource library of flowcharts, checklists, and other downloadable resources.

The Resource Library just one of the ways we help you and your Advisory Team create a compelling plan for your future.

Visit The Resource Library

 
Special Needs Checklist

 

Make Your Money Count

Special -Limited- Hard Cover Edition of Make Your Money Count by Jim Munchbach, CFP® Professional. 

Make Your Money Count features The Blueprint for Financial Success™ and FREE Shipping.

Click Here to Buy Now, $24.95 Free Shipping

IMPORTANT DISCLOSURE:

Investment Advice and Financial Planning are offered through BayRock Financial, L.L.C., a Registered Investment Advisor. BayRock does not provide tax or legal advice. The information presented here is not specific to any individual’s personal financial circumstances. To the extent that this material concerns tax matters or legal issues, it is not intended to be used, and cannot be used, by any investor or taxpayer for the purpose of avoiding penalties that may be imposed by law. Each investor should seek independent advice from a tax professional based on his or her individual circumstances. All content from MissionalMoney.com and SaltyAdvisors.com is provided for general information and educational purposes only. This content is based on publicly available information from sources believed to be reliable. Neither Missional Money nor BayRock Financial, L.L.C. can assure the accuracy or completeness of these materials and this information can change at any time and without notice. Use this material only as general guide to further discussion with your Certified Financial Planner™ professional and/or other Financial Advisor(s).

Recent Posts

Scroll to Top