Special Needs Planning
What is Special Needs Planning?
The main concern for parents raising a child with special needs is what will happen to that child once mom and dad can no longer provide their care, financial support, advocacy, and oversight. From planning their transition to adulthood to planning for your child’s entire life without you.
One of the biggest transitions for our special needs children is the transition to adulthood, but there are others. For example, the transition from living with parents to living elsewhere, and the transition from parents as primary advocates and care managers to a time when the parents are no longer living or can no longer do the job.
Matters that must be addressed in special needs planning include:
Setting up legal authority, such as guardianships (or possibly powers of attorney)
Securing public benefits, working with adult services agencies, and setting up supports
Elements of adult living – Where and with whom will your child live; Who will have authority to advocate for your child; Teaching and learning independent living skills; exploring employment opportunities
Trusts and providing adequate lifetime financial resources
What is a Special Needs Trust?
One (one of many) important aspect of that planning is a Special Needs Trust for your child. Contrary to popular impressions, a special needs trust is not limited to spending money on disability-related products and services for the beneficiary.
It is simply a trust that gives the trustee complete discretion, and so does not require the trustee to support the beneficiary or, importantly, does not have language that Social Security or TennCare could misconstrue as requiring the trustee to support the beneficiary.
If you see mandatory distribution terms in your trust for your special needs child, or language in your trust such as “health, education, maintenance, and support,” your trust could be considered a countable asset and disqualify the beneficiary from public benefits that have a countable asset limitation. (For example, SSI and some forms of TennCare have a countable asset limit.)
There are two types of Special Needs Trusts:
Third-Party Special Needs Trust.
These are created and funded by someone other than the person with special needs. Most commonly, it is created by the parents, and funded by them when they die. In other words, it is funded with the child’s inheritance.
Self-Settled Special Needs Trust (“d4A Trusts”).
“Self-settled” means the trust is funded with the disabled beneficiary’s own assets. Those assets could come from accumulated SSI benefits or wages, an unexpected inheritance, or a personal injury lawsuit. In order to be non-countable for TennCare and SSI, the trust must be created by the beneficiary, the beneficiary’s parent, grandparent, or guardian, or a court. The trust must also have a provision that pays back Medicaid (TennCare) on the death of the beneficiary.