It is imperative that families of individuals with disabilities and special needs get appropriate advice when it comes to their estate planning. Special needs trust planning can provide a family significant peace of mind knowing that their children will not only continue to receive the government benefits that they are entitled to, but also access to the money that they are leaving them in a special needs trust.
It is often a shame to see mistakes that families make in this area. They often are the same mistakes and I would like to assist today by shining a light on them. Although there are many more, here are just a few of the biggest mistakes that we see families making in the special needs context:
1. Taking the cheap way out – In light of how easy it is to get documents done online or in the age of every attorney believing that they “do that too” it is very easy for consumers to believe that quality does not matter. Although I have written many other blogs that talk about why quality does matter in all planning context, it certainly matters in the special needs context more than ever. Many of your online drafting companies as well as your inexpensive local attorney options are usually not people who specialize in this area. Special needs planning, more than any other area, requires knowledge and skill to ensure that a beneficiary does not get disqualified from any governmental benefits. Avoid the temptation of taking the inexpensive or cheap way out and get the planning done correctly.
2. Waiting until it is necessary – We often see people in this context who do not want to come to grips with the fact that they need to get the planning done sooner rather than later. They often will wait until the moment is perfect or until they have every answer to every question that they may ever need to know. Because of what is at stake, it is essential not to procrastinate and to get the planning done as early as possible. If you die without the correct planning in place, the risk is loss of benefits to your child, not only from their government benefit perspective, but loss of access to all the money that you are going to leave them as well. Avoid the temptation to be perfect and get documents placed that will protect your family. You can always update and make changes later to make it “perfect” but don’t procrastinate and take a chance on it being too late.
3. Failing to name an appropriate trustee or co-trustee – The selection of a trustee is an extremely important decision in all trusts. However, this decision is probably more important in the special needs context than in any other context because of all the stringent rules that are required for special needs trust administration and the fact that one mistake or one improper distribution can have an individual lose their SSI benefit or Medicaid benefit. It is imperative that the trustee be up on the law and know the rules that apply to special or supplemental needs trusts inside and out. We typically recommend a corporate trustee in this instance and many of them are non-profit organizations that will act as trustees and do so as a profession on a normal ongoing basis. If you have a family member that you would like to name, consider adding them as the co-trustee with a corporate fiduciary. It is difficult for a corporate fiduciary to stay on top of all of the real changes in the social security context through the POMS and in the Medicaid context through case law and regulations, which makes it impossible for an individual to stay on top of all of those regulations. Our recommendation is to find a corporate fiduciary that you are comfortable with and then add a family member as a co-trustee to allow a family member to be involved.
4. Getting it done early and forgetting about it – As I stated above, getting it done early is imperative, but you also don’t want to get it done and never update it. These are living, breathing documents and there are a lot of things that can change in our lives that would affect the documents themselves. Make it a plan to touch base with the attorney who drafted the documents at least once a year. There are often changes in the special needs arena and we recommend making updates as changes in the law and changes in the social security POMS occur on at least an annual basis. Don’t fall trap to creating the documents and never reviewing them.
We hope that these common mistakes to avoid when drafting special needs trust planning was a valuable use of your time. If you would like to learn more about special needs trust planning, please contact our office to learn more information about our special needs trust workshop.
If you would like to have additional information or to discuss this further, please give us a call at 717-845-5490.
