Is a Will a Sufficient Plan?

Question:

My wife and I already have a will and have left our assets to our high-functioning son with autism to ensure a lifetime of extended care, if needed.  Is this a sufficient plan? – Tim B.

q&a

Dear Tim,

Having a will is a great start to a plan, but just having a will is not a complete or comprehensive plan.  Due to the fact you describe your son as high-functioning, he may have the ability to support himself in the future, but in the event he is not able to 100% support himself financially or on a day-to-day basis it will be vital for a plan to be in place.

Developing a plan for your son should begin with careful thought as to his possible living arrangements in the future.  Will he live on his own?  Will he have a roommate?  Will he live with supports?  Does he need someone to check in on him once in a while or does he need 24-hour supervision?  If your son is still young, you will not know the answers to these questions; therefore, you should consider planning for the highest level of supervision so that the plan can provide for your son’s needs.  By planning for the highest level of need, you will cover his needs even if he ends up requiring less.  Once you understand the lifestyle you want for your son, it is important to translate that lifestyle into a lifetime plan cost.  (Working with a professional is usually helpful in determining this cost).  By understanding the cost of supports, you can then begin to plan appropriately.

As you are considering you son’s lifetime of care, you will want to consider his need for government benefits.  Qualifying for government benefits means that you will “share” in the cost of your son’s support needs, and not have to fund the entire amount yourself.  This cost sharing can be quite a relief.  In order to qualify, you and your son must be financially and legally structured in the proper way.  In your current plan, it seems as though you are leaving all your assets directly to your son, which means he will have too many assets to qualify for government benefits.  In order to for your son to qualify for many government benefit programs you should consider leaving your assets to him in a Special Needs Trust.  This type of trust is a unique legal tool that allows you to provide resources (money) to your son for his lifetime without disqualifying him from certain financially needs based government benefits.  Please remember that many government benefit programs that you will want your son to qualify for have an asset limit of $2,000 (there are certain exempt assets he can own that will not be counted toward that $2,000 limit); however, if you have a properly structured special needs trust, you can provide more than the $2,000 limit for his needs and still qualify for benefits.

Funding of the trust is also critical.  It is important to understand how these trusts work so that you fund them with the proper amount, and the most effective assets.  For instance, tax planning cannot be overlooked.  When funding this trust (many times when you pass away), you want to ensure you fund it with tax friendly assets due to the fact trust tax brackets are compressed. This means that certain assets inside of a special needs trust can be taxed as high as 40-50%.  Again, working with a professional who understands these ins and outs can ensure you avoid this tax trap.

The final planning tool to introduce is a letter of intent.  This tool is not a legal or financial instrument, but instead a communication piece to those caregivers who will be working with your son when you are no longer able or when you die.  The Letter Of Intent is invaluable because it provides information about your son that will be helpful for the next caregivers.  The Letter of Intent can be structured in three sections:

  • Family and medical background and your son’s daily activities
  • Advisors (people in his life)
    • Physician, therapists, teachers, school, employment information, case worker [for government benefits], accountant, attorney, financial planner, etc.
    • Friends, groups that he may be a member such as Special Olympics
  • Your vision and goals for him. Give guidance to the next caregiver as to what you would like to see your son accomplish

I know that I may have described more planning items than you expected; however, for our family members who need support, it is critical to have as many i’s dotted and t’s crossed as possible.  They are relying on us for this help even when we are no longer here to provide it!

As with all Special Needs Planning decisions, please speak to a trained professional before moving forward with specific actions.

For more information on how to prepare for the future, be sure to contact a financial advisor who specializes in serving families with special needs. A Special Needs Plan is driven by what they call Unleash L.I.F.E.™- L.I.F.E. meaning Lasting Independence For Everyone™. This is accomplished with education, action, and support in the creation, implementation, and continued monitoring of a specifically designed lifelong and integrated plan for your family: parents, caregivers, your loved one with special needs and their siblings.

6000 Fairview Road, Suite 400
Charlotte, NC 28210
704-557-9637
www.aspecialneedsplan.com

This article was featured in Issue 35 – Summertime Fun and Safety on the Spectrum

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