Financial
Caring for a family member with special needs can be a commitment for a lifetime and beyond. A major concern for most families is what the future looks like for the loved one with special needs. Having a plan in place for your loved one can help bring peace of mind.
While every family’s needs will be unique, here are some basic considerations for any plan.
Last will and testament
A will is the foundation of any estate plan. Without one, your assets will be distributed according to your state’s intestacy laws. Usually this means that, upon your death, some or all your assets may be distributed directly to your children.
This may cause your loved one with special needs to be ineligible for government benefits if he or she is your child. Also, the state will determine guardianship of your minor children and of any adults with special needs who are incapable of making medical or financial decisions for themselves.
With the help of an attorney, a properly written will (in conjunction with other estate planning documents), can help ensure that your loved one with special needs is taken care of properly, and by the guardian of your choice, without jeopardizing any government benefits or assistance they qualify for. This may include discussion of establishing a special needs trust.
General durable power of attorney for financial affairs
Your loved one may not be able to make key legal decisions for their own future. This may require you to establish a durable power of attorney (DPOA).
A DPOA is a written document that gives another person you entrust the power to manage your loved one’s financial affairs and property should you become incapacitated. A general DPOA typically allows the person you designate as your agent or “attorney-in-fact” to do every legal act that you could do.
Durable power of attorney for health care
The durable power of attorney for health care is a limited DPOA created solely for the purpose of making health care decisions. It gives your designated person the power to make medical decisions for you when you have lost the ability to do so. This may be necessary when your loved one with special needs requires help with decisions about their health and medical care.
Now that you have the basics of a plan, planning an estate for a family that includes an individual with special needs requires extra steps like these to provide for the individual’s future:
Drafting a letter of intent
The durable power of attorney for health care is a limited DPOA created solely for the purpose of making health care decisions. It gives your designated person the power to make medical decisions for you when you have lost the ability to do so. This may be necessary when your loved one with special needs requires help with decisions about their health and medical care.
Now that you have the basics of a plan, planning an estate for a family that includes an individual with special needs requires extra steps like these to provide for the individual’s future:
Creating a guardianship
A guardian is a person lawfully given the power and duty of taking care of a person who is considered incapable of administering his or her own affairs. Designating a guardian and successor guardian(s) is a critical aspect of drafting a will.
An individual with special needs may still need a guardian upon reaching the age of majority. Typically, once children reach the age of majority, they become their own legal guardians, regardless of their ability to manage their lives or financial affairs. If yours is incapable of making medical or financial decisions, you will need to file with the court for legal guardianship.
You will want to give special consideration to who you name as guardian, and power of attorney for financial decisions, as they require different skills.
Providing financial security
Individuals with special needs may require higher out-of-pocket medical and/or educational expenses than those without. Many of the available government benefits are need-based.
If there are countable assets and/or income in excess of certain dollar amounts owned by an individual with special needs, their benefits may be jeopardized or payback for benefits received may be required.
Planning for the financial security of an individual with special needs should involve consideration of any impact to qualification for government benefits. A special needs trust funded with life insurance may be the right solution.
Next steps
Planning for the future of your loved one with special needs is a big task, but assistance from a financial professional can make all the difference.
This material provides general information that is designed to be educational in nature and is not intended as specific tax or legal advice to any particular individual nor the law of any particular state. Please seek the advice of a qualified tax or legal professional for your specific situation.
Products are issued by AuguStar Life Insurance Company and AuguStar Life Assurance Corporation. Product, product features and rider availability vary by state. Issuer not licensed to conduct business in NY.
