Life Care Planning

Contact Us Name State Phone *E-Mail Questions Or Comments:

PLANNING FOR YOUR CHILD’S FUTURE

There are many legal and financial decisions a parent must consider when planning for a disabled child’s future needs.  A child with cerebral palsy may always be dependent. Which means you should think about what happens when you are not here or can no longer provide care.  Having a plan in place can give you peace of mind.

Consideration should be given to various factors including

• The need for additional life insurance.
• Are there relatives will to provide care or assistance.
• What government benefits will be available.
• The disadvantages of directly giving or bequeathing to a disabled person.
• How setting up a fund or trust will affect government benefits.
• Can you get funding from a private party (ie. hospital/doctor) who may be responsible for your child’s condition (see section on Benefits for Life).

Can you rely solely Government Benefit?

While there are various services available through government benefit programs (e.g., medical coverage through Medicaid), the cash benefits are generally small.  In fact, if an individuals only source of income were government sources they would live way below the poverty level. This means that in order for someone with a disability to have a comfortable lifestyle they will need assistance from family, local charities or other private sources.
However, consideration must be given to the nature of supplemental assistance so it does not decrease the amount of government benefits that will be available. As long as the family's contributions are supplementary in nature, as opposed to duplicating government benefit, they are permitted. However, the government regulations are very strict and should be followed closely.

Special Needs Trust

A special needs trust is created to ensure that beneficiaries who are developmentally disabled can enjoy the use of funds or property which is held for their benefit. The trust is managed by a third party (trustee) for the disabled persons needs. In addition, the use of a trust may also avoid beneficiaries losing access to essential government benefits. In essence, the family leaves whatever resources it deems appropriate to the trust and the trustee distributes the funds/assets at his sole discretion in accordance with the terms of the trust document. While government agencies recognize special needs trusts, they have imposed some very stringent rules and regulations upon them. This is why it is important to consult an experienced attorney who is very knowledgeable about special needs trusts and current government benefit programs.

Intervivos Trust

Many attorneys experienced in estate planning for persons with disabilities will advise the family to prepare an Intervivos Special Needs Trust. This means that the trust functions now, while the parents are still living. The trust can be set up as a checking account at a local bank. Families can place funds into the trust every month and use these funds to cover the normal supplementary expenses of the person with the disability, as well as to save for the future.

Funding a Special Needs Trust

Establishing the trust only part of the process.  Obviously, someone has to have or find the funds to place in the trust, and make sure that there are sufficient funds to last the lifetime of the disabled person. Typically you would want a  financial planner involved in this process.

• Standard government benefits.  Parents often delay filing for SSI due to their then-current ability to pay expenses. But filing for SSI and having access to Medicaid- funded services can free up other funds for long-term planning or more life insurance. The SSI check ($564 in 2004) will be reduced by one third if the child is still living at home, but parents may prevent this one third reduction by establishing rental or expense sharing arrangements.
• Savings. The government benefit programs have never provided enough for even poverty level existence. A regular savings program is essential to meet the person's supplementary needs in the future.
• Family assistance. Family members may wish to provide residential care, supervision, and supplemental assistance in the future.
• Settlement proceeds.  If you make a claim against a hospital or doctor for malpractice on your child’s behalf these funds can be placed in the trust.
• Insurance.  Life insurance may be the only way that you can leave a large lump sum for the future by making small monthly payments.  It is especially helpful to insure the lives of multiple care givers and advocates to generate funds that will help replace the personal services that such care givers and advocates provide.
• Parents' estate. Parents may leave a portion or all of their estate to the trust. To keep peace in a large family, parents should leave something for the other children as well.
• Inheritances. Relatives or friends who have expressed an interest in the person with the disability should be given instructions and assistance on how to leave a gift to the trust.
• Property. Some families want their loved one to live in the same house. The house can be placed in the trust and managed by a local nonprofit agency for the benefit of the person, or expanded into a group home setting.
• IRAs, Certificates of Deposit or other investments can be directed to the trust.
• Military benefits. Some families have elected a Survivor Benefit Option (SBO), so the person with the disability will always have some income and medical care. They may still want a special needs trust to manage the other resources which will supplement the military benefits.

With proper legal and financial planning, the family can guarantee that the person with the disability will enjoy a comfortable lifestyle after the parents are gone.