Many clients with special needs beneficiaries struggle when it comes to how they should design their estate plans and ultimately provide for their beneficiaries. While individuals with special needs are often eligible for financial assistance and healthcare benefits from the government, without proper planning, inherited assets can disqualify a beneficiary from receiving governmental assistance. Additionally, a special needs beneficiary’s own assets can disqualify them in the event their particular benefit program changes in the future.
For many clients with special needs beneficiaries, we see two common goals: First, they want their beneficiary to continue to have access to the critical government benefit programs that have helped to support them; Second, they want to continue to provide, after their death, additional financial support and assistance beyond what is covered by the government. The difficulty comes with balancing these two objectives.
First, if assets are left directly to the beneficiary they will likely lose some or all of their governmental benefits because many of these programs are designed with asset limitations.
Second, if the client were to disinherit the child or leave all their assets to another child who will in turn provide for the special needs beneficiary, the client may create a bigger problem. Those assets that were intended for the special needs beneficiary are now tied into the life of the sibling. The sibling could go through a divorce, lawsuit, or simply fail to carry out the moral obligation they promised their parents they would see through. Additionally, if the sibling died, his or her assets could pass on to their spouse or children who may have no obligation to provide for the special relative. This leaves the special needs beneficiary with no financial resources.
The answer to this problem is through proper planning utilizing a Supplemental Needs Trust and potentially a d(4)(a) Trust for the special needs beneficiary. These trusts provide a vehicle, if utilized and managed properly, to allow a beneficiary to maintain their governmental benefit program and have a pool of assets available to support them and cover the shortfalls of the governmental programs.
Assistance with Special Needs Estate Planning in Massachusetts
The attorneys at Simmons & Schiavo can help you design, implement and maintain a comprehensive estate plan that provides for the long term support of a loved one with special needs. Please contact us to schedule an appointment so that we may learn more about your planning goals and objectives.