How to provide for a child
with special needs is an
issue for about 20% of US families.
Additionally, there are 77 million disabled
persons in the US for whom care must also
be provided, and many families are lost as
to how to even begin to formulate a plan.
According to Nadine Vogel, a vice
president for Metropolitan Life Insurance
Company’s division of estate planning for
special kids (MetDESK), the best
approach to preparing a plan involves
utilizing the knowledge of a team of
experts including health professionals, a
fee-only financial planner, an estateplanning
attorney, an accountant or tax
professional, and possibly an insurance
agent.
Ask the health professional to define the
type and duration of care. Once you have
an idea of what’s needed, you can begin
meeting with the other professionals to
ensure funding for the level of required
care.
Although there is no “one-size-fits-all” solution, one possible avenue for
providing financial resources is an
irrevocable trust. There are different types,
but each reserves funds specifically for the
care of the disabled individual and details
how and when the funds are to be used.
One appeal of these special needs trusts
(SNTs) is they can be as flexible or as
specific as your needs dictate.
A legal professional is needed to draft the
trust to avoid having trust funds disqualify
the disabled person from receiving
government assistance (such as Social
Security disability payments) for which
they may qualify. Additionally, a lawyer
can provide guidance related to avoiding
triggering taxes that can result from
funding the trust.
Even if a trust is not deemed to be the best
approach in a particular situation, the
overall estate plan should have provisions
for meeting the needs of the disabled
individual.
Source: Bloomberg.com, 3-13-06
