Thinking about the unthinkable
Dealing with the needs and demands of a child with a developmental delay or a disability can be overwhelming. So overwhelming, in fact, that it’s easy to overlook planning for the child’s care in the event that the parents are no longer around. The mere thought of meeting with an attorney to develop an estate plan for your family, especially if you have a child with a disability, can be intimidating. But ignoring the issue is one of the biggest mistakes you can make. A properly prepared will, at minimum, is essential for any family with children, but it is doubly important if you have a child with a disability.
There are four basic documents in any family estate plan:
● A will
● Financial power of attorney
● Medical power of attorney
● Directive to physicians (often called a “living will”)
Parents with a child who has a disability should also consider a supplemental needs trust. Let’s look at what each of these documents means and what it does.
A will is a document that states how you want your property distributed at death. If you have a child who cannot make legal or financial decisions, such as a minor child or a child with a disability, the will usually contains guardianship provisions naming someone to take over parental duties if you and your spouse both die. If you die without preparing a will, the State of Texas essentially prepares one for you.
Leaving it up to the State to determine who will inherit can have a devastating effect, especially if you or your spouse have children born outside your current marriage. When a parent with children born outside the current marriage dies, his or her children will inherit all or most of the property, not the current spouse. So, if you or your spouse have a child from another marriage and die without a will, your spouse’s children, including the children born outside your current marriage, will inherit your spouse’s property.
Even if you do not have children born outside your current marriage, dying without a will makes the settling of your estate more complex. It creates the possibility that the needs of your child who has a disability will not be properly considered.
Financial power of attorney
Wills are only effective after death. If you survive a brain injury that leaves you unable to make decisions, such as from a car wreck or a stroke, your will will have no legal effect. A popular misconception is that a spouse has the legal authority to act for you in legal matters. In many cases, this is not true. A financial power of attorney specifically names someone who has the authority to make legal and financial decisions for you if you become unable to make them. If you have a spouse or partner, you can specify that that person has your financial power of attorney. If you are single, you might specify a parent or an adult sibling. (Be sure to discuss this with them first.)
Medical power of attorney
A medical power of attorney is similar to a financial power of attorney, except that it gives the person you name the authority to make medical decisions on your behalf, if you become unable to make them.
Directive to physicians (living will)
A directive to physicians, often called a living will, expresses end of life wishes. If you have a terminal or an irreversible medical condition that has been diagnosed and certified in writing by your attending physician, your living will can instruct your physician not to use artificial methods to extend the natural process of dying. Or you may direct that all available medical means should be used to extend your life for as long as possible. Most people do not want their life extended if there is no quality of life left, but the choice is yours to make. The important thing is you should make the choice and have a living will in place.
Supplemental needs trust
If you have a child with a disability, you should consider a supplemental needs trust, sometimes called a special needs trust. Creation of a supplemental needs trust can be included in your will or it can be in a separate trust agreement.
You need to understand some basic concepts about trusts to understand why a supplemental needs trust might be a benefit to your family.
A trust is a legal arrangement in which one person, called a trust maker or a settlor, gives something of value to another person, called a trustee, to hold for the benefit of a third person, called a trust beneficiary. It might help to visualize a trust as a bag. The person who bought the bag and gave it to someone to hold is the trust maker. The person selected to hold the bag is the trustee. The person who is to be benefited by any property the trust maker puts in the bag is the trust beneficiary.
So a parent who creates a trust for a child is the trust maker. The child (or children) who benefits from the trust is the trust beneficiary. And the person selected to hold or manage the assets placed in the trust is the trustee.
A child with a disability who is receiving governmental benefits, such as Medicaid or SSI, or who might receive them in the future can be found ineligible to receive those benefits if a parent dies and the child inherits assets from the parent. One way to deal with this is to simply disinherit the child. If the child does not inherit, there will be no disqualification. But most parents want to make sure their child has every opportunity in life that they are able to provide. Disinheriting the child means that no funds are directly available to care for the child after the death of a parent.
A supplemental needs trust can allow a parent to leave funds to care for a child without disqualifying the child from current or future government benefits. This trust is a specific kind of trust which allows assets in the trust to be used to supplement governmental benefits. For instance, assets in the trust could be used to provide educational or quality of life benefits that cannot be afforded solely from governmental benefits.
Next step: find a lawyer
To find a lawyer who can help you with an estate plan that incorporates the needs of a child who has a disability, ask for recommendations from family or friends, and from other parents in your support groups.