If you are a parent of a child with special needs, your to-do list seems endless. The new “not so normal” homeschooling does not make it any easier. You are not in this alone. Our law firm focuses on families with special needs children. We can offer you invaluable advice, options, and some parenting hacks to help with planning ahead. We will walk you through the 5 components of successful estate planning to protect your special needs child – financially and emotionally.

The reality is that something could happen at any moment to leave you or your child at risk. It could be your death, your sudden incapacity, a debilitating illness or serious injury that impairs your ability to care for yourself and your child. These events cause emotional and financial hardship, so the right time to plan is now – while you are healthy. Planning early may seem expensive upfront but will save a lot of money in the long run. Creating a sound estate plan will provide everyone with peace of mind: you, your extended family, and your child. Read on to discover the 5 crucial steps to start with.

1. Is your ABLE Account Set Up?

In 2014, Congress approved legislation to create a savings account called Achieving a Better Life Experience (ABLE) with the objective of encouraging and assisting individuals and families in saving funds to preserve the health, independence and quality of life of individuals with disabilities. This savings account has allowed individuals and their families to pay for disability-related expenses. The money in the ABLE account does not count against the individual’s qualifying for government benefit programs. The bill’s intention is to secure funding for disability-related expenses in addition to those provided through Medicaid, SSI and private insurance.

An ABLE account can be opened online with a minimum initial investment of $25 or less. The person with the disability is the account beneficiary and parents or other authorized individuals have the opportunity of having signature authority on the account owner’s behalf, as would be the case with a minor. Anyone can contribute and these contributions are not federally tax-deductible. The withdrawals are not taxable if they are used for specific treatment expenses such as education, housing, transportation, employment training and support, assistive technology, personal support services, health, prevention and wellness, financial management, administrative services, legal fees, expenses for oversight and monitoring, and funeral and burial expenses, according to the Internal Revenue Service Publication 907.

As with all legislation, there are limitations. An individual is eligible to open an account only if he/she has a significant disability which arose before reaching the age of 26. Those who are already receiving benefits under SSI or Supplemental Security Disability Insurance (SSDI) are automatically eligible to open an ABLE account. In cases where a person is not receiving benefits, they can still open an account if they obtain a letter of certification from a licensed physician.

Another limit to the law is that the account beneficiary can only have one ABLE account and the contributions are limited to $15,000 within a single year. If the account balance exceeds $100,000, the person’s SSI benefits are withheld until the balance falls beneath the allowed amount. For families that do not want these restrictions, another option is creating a Special Needs Trust. These trusts hold larger sums of money and have no limit to the annual contributions or accrued balance. Likewise, a person can have both a trust and an ABLE account. The trust can even transfer a limited amount of funds to the ABLE account, providing the account owner with independence and privacy.

2. Do you Have an Estate Plan in Place?

On the topic of Special Needs Trusts, we cannot say enough about how great an option this is, as part of your overall estate plan. Many people do not realize that the law has many caveats that allow individuals receiving government benefits such as Supplemental Security Income (SSI) or Medicaid to continue receiving these benefits and still be able to get an inheritance, personal injury settlement or divorce settlement. These types of benefits are preserved if the assets or property are titled in a Special Needs Trust (“SNT”).

These types of Trusts come to life upon the death of the second parent and are much more effective than simply leaving behind a lump sum of money for your special needs child. SNT’s generally work like These types of Trusts come to life upon the death of the second parent and are much more his: a person wants to make sure their loved one is provided for upon their death. Instead of leaving a lump sum of money behind in their Last Will and Testament, they will create a SNT to benefit the special needs individual (the “Beneficiary”). The person creating the Trust (the “Grantor”) places certain assets into the Trust and designates who will manage them (the “Trustee”). The assets in the Trust are then managed according to your terms and used to help pay for the beneficiary’s needs. The most important aspect of an SNT Trust is that the assets in the Trust are not counted as being owned by the special need’s individual. This allows them to qualify for or retain their public assistance benefits such as Medicaid and Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI).

This was not always the case and the law has changed several times. Most recently, The Special Needs Trust Fairness Act passed in December 2016 and allowed people with disabilities to create their own Special Needs Trusts without relying on someone else to do this, such as through a guardianship process. Additionally, a close family member such as a parent, grandparent, legal guardian or court still has the ability to establish a Special Needs Trust on behalf of the special need’s individual.

Likewise, if your children are under 18 years of age, your estate plan should include a Last Will and Testament (“Will”) in which you name a guardian to care for your child in case you and your spouse both pass away. The guardians is the person your child would live with and receive their daily care from. Guardians could be an individual, a married couple, or a few different people in succession.

3. Have you Created a Durable Power of Attorney for your Child?

When a child turns 18, the parents’ rights in controlling their child’s affairs become significantly diminished. This is quite a transition because it represents the first time they will be without direct parental supervision. To help provide parents with peace of mind, there are legal documents that allow parents to retain some control once your child turns 18.

A durable power of attorney (“DPOA”) is a crucial legal document that can give parents permission to handle their children’s legal and financial affairs in case of an emergency. It allows your child to select a person (“the agent”) to “step into his/her shoes” from a legal perspective.

With a properly executed durable power of attorney, the agent will be able to make legal and financial decisions, such as contacting your child’s bank, other financial institutions, and social media accounts. Remember, that this is a very trusting responsibility so only parents, a close family member, or trusted friend should be appointed to serve as your child’s agent.

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