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Financial Planning Mistakes: Protecting Your Special Needs Child

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Parents of special needs children can get overwhelmed by their children’s day-to-day needs.  In turn, some really important matters may be overlooked.  The biggest mistake families make is delaying estate planning or using standard estate planning tools that are not tailored to children with developmental disabilities.  See our March 1, 2016, post, A Special Needs Trust for Special Needs Children, regarding the importance of establishing a Special Needs Trust for a developmentally disabled child.

Potential Mistakes

In addition to Special Needs Trusts that serve to supplement financial government assistance for your special needs child, other matters must be addressed.  The following are 3 areas that are frequently overlooked:

A. Beneficiary Designations

In order for your special needs child to receive government assistance (for medical, educational, and housing needs, etc.), he or she may not have more than $2,000 in personal assets.  If you have listed your special needs child on beneficiary designations and, in so doing, have increased that child’s assets above the $2000 limit upon your death, you have made a serious mistake.  In all likelihood, your child will lose his/her government aid.

The same applies to friends and family who include your child in beneficiary designations.  Their generosity may actually result in a bad outcome.

B.  Last Will and Testament

As with beneficiary designations, when preparing or updating your Last Will and Testament, do not make the mistake of bequesting assets outright to your special needs child.  This may result in your child’s assets exceeding the $2000 limit, and in your child losing government assistance.

Here too, other people may inadvertantly stop government assistance to your child through their bequests.

C.  Legal Guardianship

Parents lose their legal guardianship status once special needs children turn 18 years old.  This can lead to complications and problems when trying to advocate on behalf of your child with regard to government assistance programs.

Avoiding Mistakes

In order to avoid the above mistakes, it is highly advisable that you work with an attorney who specializes in special needs issues.  He or she will be able to advise you regarding the best vehicles for making bequests that will not interfere with your child’s  government assistance; and, he or she can prepare all necessary legal documents, including those required for retaining legal guardianship of an adult child.  Additionally, an attorney who specializes in this field can help you identify other potential pitfalls (such as bequests by others) that may negatively impact your child.

Getting Legal Help

Experienced Estate Planning Attorney, Elga A. Goodman, can work with you on all your special needs issues.  She can guide you and help insure that your special needs child is best served. Contact us today at 973-841-5111.

 

 

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