You just might need a special needs trust

This is the true joy in life: being used for a purpose recognized by yourself as a mighty one. Being a force of nature, instead of a feverish, selfish little clod of ailments and grievances complaining that the world will not devote itself to making you happy. I am of the opinion that my life belongs to the whole community, and as long as I live it is my privilege to do for it whatever I can.— George Bernard Shaw, Irish playwrite

Do you have a family member with special needs?  A child, perhaps, or a sister, brother, mother?  Have you created a special needs trust as part of your own estate plan? Why not?

Actually, I probably know why not.  Your neighbor told you they are expensive, and “never work the way they are supposed to.”  Your hairdresser told you that there are other less complicated ways to accomplish the same thing.  At Senior Moments, I’ve heard many reasons and many lengthy explanations of excuses for failure to act on this critical matter.

Today, let’s look at a few of them and offer some possible answers to common objections.  Keep an open mind, and read on.

          I don’t have enough money to need a special needs trust. Really? You don’t have $2,500 in total assets?  (What about your car?)  Because that’s all you have to leave to your child or relative outside a special needs trust to mess with their SSI and Medicaid eligibility.

          I can’t afford to pay for the special needs trust. It’s true; it can be expensive to get good legal help. Have you heard of “penny wise and pound foolish?”  The cost of preparing a special needs trust for a beneficiary is likely to be much less than the cost of providing a couple month’s worth of care. That is what is likely to happen if you die without having created a special needs trust, since it will take several months of legal maneuvering to get an alternative plan in place. Even if there is no loss of benefits, the cost of fixing the problem after your death will be several times that of getting a good plan in place now.

          I’ve already named my child as a beneficiary on my life insurance/retirement account/annuity. Ah, yes – a favorite alternative to good planning. If your child is named directly as beneficiary, you may have avoided probate but complicated the eligibility picture. Their loss of benefits will occur immediately on your death, rather than waiting the month or two it would have taken to get the probate process underway.

          It’ll all be found money to my kids. I’ll let them take care of it if I die. Here’s bad news for you: “if” is not the right word here. If this is what really bothers you, you should make sure that you are very familiar with Maryland’s law of intestate succession.  Remember, Maryland has written a will for you, and it is used if you didn’t take the time to write your own.  If your child on public benefits gets an equal share of your estate, you will probably need to either (a) spend it all quickly or (b) put it into a “self-settled” special needs trust. That means more restrictions on what it can be used for. The rules are so much more flexible if you plan in advance.

I’m young. Really?  Maybe it’s not too likely that you will die in the next, say, five years (that’s about the useful life of your estate plan, though your special needs trust will probably be fine for longer than that). But “not too likely” is not the same as “it can’t happen.” You cut down your salt and calories because your doctor told you it’d be a good idea — even though your high blood pressure isn’t too likely to kill you in the next five years, either. It’s time to address the need for a special needs trust.

          I’m going to disinherit my child who receives public benefits and leave everything to his older brother. That might work.  “Might” is the key word here. Is his older brother married? Does he drive a car? Is he independently wealthy? These questions are important because leaving everything to your older child means you are subjecting the entire inheritance to his spouse, creditors, and whims. And have you thought out what will happen if older brother dies before his dis-abled sibling, leaving your entire inheritance to his wife or kids? Will they feel the same obligation to take care of your vulnerable child that he does?

          I don’t like lawyers. I understand this objection. Some days I’m not too fond of some of them myself. But lawyers are just one entry on a long list of people we’d rather not have to deal with but do: doctors, auto mechanics, veterinarians, pest control people, dentists, parking meter maids, etc. I do understand, though, that if I avoid my doctor when I am sick the result will not be positive. Same for the Dentist when I have a bad toothache or the auto mechanic when my car won’t start.  Lawyers are like other professionals.  We listen carefully to your explanation of your need, ascertain your goals, and give our best advice about the options available to you.

Senior Moments is grateful to the Arizona law firm of Fleming and Curti for ideas used in today’s column. The content from Fleming & Curti, PLC can be found on their website at http://www.elder-law.com/. For more in depth information, please check out their Legal Issues newsletter at http://issues.elder-law.com/.

Thanks for reading.  Stay well.  See you next week.