For many people, the basics of estate planning are simple enough, but for those families with loved ones who are disabled or have special needs, the estate planning process is more involved – and much more critical.

Statistics have shown that at least five percent of minor children have some sort of disability, and the burden of caring for these children make estate planning essential.  In addition to specialized health care, these children usually need special schooling and intensive therapy, all of which comes at a cost.

Here are some tips for parents or care givers facing the need to plan not
only for their own financial future, but also for the future of a loved one with special needs…

Deal with expectations.  Think about the kind of life you envision for your child or loved-one.  Will they have a shorter life span?  Will he or she be able to work or live independently?  The answers to these questions will form the foundation of your plan.

Determine eligibility for public benefits.  In order to meet eligibility requirements for Medicaid and Social Security Supplemental Income programs, a person with special needs or other disabilities cannot have more than a certain value in assets.

This makes it imperative that a child or loved-one who could benefit from these services not have any assets titled in his or her own name – meaning they should not be listed as beneficiaries on life insurance policies, retirement accounts or plans, in regular trusts, wills or pensions.           

Consider a special needs trust.  Assets placed in a third-party special needs trust are not counted as assets toward public benefit program eligibility, but these trusts are governed by strict rules so the counsel of a detail oriented attorney in establishing this trust is necessary.  Parents or care-givers who are unable to fund a special needs trust with cash while they are still alive can do so through life insurance proceeds after they pass away.