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June 6, 2017

Estate Planning for Special Needs

Estate planning for special needs

The process of estate planning for special needs children comes with some unique considerations. And in many cases, special needs dependents will be financially reliant on others for most of their lives.

This should be a family-wide conversation. Parents, grandparents, siblings, and even nieces and nephews are all part of the network that lends care and support to a special needs person.

It’s important to involve everyone. This maximizes the likelihood that they will have the opportunity to live a comfortable, meaningful and happy life.

Start the conversation

A good place to start is to discuss how much support the disabled person will need. This involves the family doctor, and any other healthcare professionals involved in their care. The support your special needs relative needs at one phase of his life will different from his needs in another phase.

Extending the plans out into the future will then involve financial and legal advisors. Dividing up an estate between multiple heirs depends on a number of factors. This includes elements like insurance policies or legal settlements.

The conversation will need to be ongoing as life evolves. If you have a special needs relative, you will need to include not just the distribution of wealth, but how your special needs relative care will be provided and who will be responsible for overseeing it.

Establishing a trust

Estate planning professionals suggest families consider establishing a trust to manage assets intended for the care of your special needs family member. Trusts are set up with very particular purposes in mind and limit disbursements of cash accordingly.

But why a trust?

Well, it removes the pressure placed on any one individual. As a precaution, don't give assets directly to a family member to fund the care of your special needs relative. This is so important, even if it is a sibling because problems are certain to occur. Chances are that those assets will be commingled with the sibling's assets. This will create more risks when life’s speed bumps arrive (losing a job, unexpected health care costs, lawsuits, etc).

The second benefit is that monies held in trust won’t block the dependent family member from qualifying for Supplemental Security Income (SSI). Also it does not affect any other federal, state, or local programs designed for the benefit of special needs persons.

You have a variety of ways to establish a trust. Selecting the right one will depend on:

  • Where the assets are coming from
  • How they will be used during the life of the dependent person and
  • What will happen to any assets remaining at the end of the trustees life

There are also pooled special needs trusts that can be looked at.

Each has advantages and disadvantages. Seek the counsel of your CPA or lawyer that is familiar with estate planning so you have do it right.

Government support

You can find details specific to the Supplemental Security Income (SSI) at https://www.ssa.gov/

Currently, Supplemental Social Security Income is up to $735.00 per month. This income depends on the particular circumstances of the special needs person. It’s important when creating financial plans for a special needs person that you ensure compliance with the Social Security guidelines to receive benefits.

Qualification for financial needs for your special needs relative's may be affected by assets under his control. Such assets could include inheritances etc. Therefore, is the family decides to establish a trust, it is important to do so before the beneficiary’s 65th birthday.

Update the plan

It’s important - regardless of your situation - to regularly review all your estate planning documents. When is the last time you checked who is listed as the beneficiary for your life insurance plan? Or your 401(k)?

Technically speaking these accounts are non-probate. This means that these companies will distribute assets to the beneficiary they have on file even if it conflicts with a recently updated living will.

Not surprisingly, there have been cases where assets from a life insurance plan have been transferred to an ex-spouse. This happened simply because the beneficiary hadn’t been updated in decades. Also, consider that if you rolled a 401(k) into an IRA, the new account won’t list your 401(k) beneficiary by default.

If you have established a trust to manage a special needs person’s care, the trust can be listed as a beneficiary in insurance plans and retirement accounts.

The needs of your special needs dependant can change over time. Have his or her conditions changed in a way that will affect how much help they will need? Will they need more resources? Will they need less?

A good rule of thumb is to review your plans every 3-to-5 years. Or anytime your family undergoes a life change (marriages, deaths, etc.). This is the best way to ensure your plans are best suited for your family’s situation.


Some families avoid estate planning because it’s unpleasant to think or talk about. However, when it comes to estate planning for special needs people, it’s essential to have those conversations. The more openly families can talk, the better plans they can make.

AccuPay Systems partners with Estate Planning companies that provide extra help and resources to families that need them. Contact us here for more information.

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Felix Mwania

I live in the intersection of technology and entrepreneurship. I am a technology enthusiast but my passion is helping small businesses succeed, including mine.

When I am not working, you will find me goofing with my wife and kids. When not with family and/or friends, you will find me doing some home improvement projects.

Felix Mwania


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