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A mother learning How to Plan for a Loved One with Special Needs

Whether you’re a parent with a special needs child or an adult caring for an elderly or special needs loved one, creating a comprehensive Special Needs Plan is crucial. Careful planning ensures that the individual with special needs has clear financial security upon your death as well as specific goals to address the needs of your child or loved one so that they can be successful in the future. From ensuring that you have completed your foundational estate planning to creating a special needs trust and drafting a letter of intent for your disabled child, each element of a special needs plan plays a crucial role in ensuring a secure and fulfilling future for your loved one with special needs. Working closely with an attorney experienced in special needs like Jacksonville Estate Lawyer Bill O’Leary ensures that you will tailor a plan that meets the unique needs of your disabled loved one without jeopardizing their public benefits.

Protecting the Future of a Loved One with Disabilities

Foundational Estate Planning

When planning for a loved one with special needs, it’s crucial to start with foundational estate planning. This involves ensuring that your own estate plan is in order, including having a will and, if appropriate, a living trust. A living trust is often more effective than a will in providing for a special needs loved one.

Elder Law Attorney Bill O’Leary explains in his video, “How to Plan for a Loved One with Special Needs – Part 1,” how to begin the steps of planning to protect a loved one with special needs.  He explains that leaving money directly to a child receiving means-tested government benefits, like Social Security Supplemental Income (SSI) or Medicaid, could make them ineligible for these programs. In most states, beneficiaries of either program are only allowed to have a few thousand dollars in assets, with the specific amount varying by state.

Direct Inheritances Appropriately to a Special Needs Trust

Because the financial support from government programs only goes so far, many special needs families want to set aside money for their child’s future medical and lifestyle supports. Before planning for a disabled child, it’s important to consider both their medical and supplemental needs, explains Special Needs Answers’ article: “What To Know Before Beginning Special Needs Planning.”   It’s important to ensure that any inheritance intended for your special needs loved one is directed into a Special Needs Trust, rather than being received outright. This approach prevents disqualification from government benefits. Extended family members should also be aware of the Special Needs Trust and direct any inheritance to it.

What is a Special Needs Trust?

A Special Needs Trust (SNT) acts as a bridge to a better quality of life for the special needs loved one or child who faces unique challenges.  The key is that the SNT owns the assets, not the disabled individual or child who is the beneficiary of the trust. By preserving eligibility for essential government benefit programs, an SNT protects the individual’s assets and money. An SNT navigates the stringent income and asset limits of government benefit programs while still providing for additional life-enhancing needs.

SNTs are managed by a trustee who will make financial distributions to the special needs loved one from the trust.  The funds in the trust can be used to pay for additional medical care or enhance quality of life, such as a cell phone, a vacation, or a private room in a group living facility. The SNT is a means of making sure that a vulnerable family member receives the money and other relatives, such as a sibling, don’t have a financial burden.

Third Party Special Needs Trusts (SNTs)

Third Party SNTs are established by someone other than the beneficiary, typically a parent or relative, for the benefit of a special needs individual. The key advantage of Third Party SNTs is that there’s no limit on the amount of assets they can hold. Importantly, upon the beneficiary’s death, the remaining funds in the trust do not have to be used to reimburse the government for benefits received during the beneficiary’s lifetime. Instead, these assets can be distributed to other beneficiaries as specified in the trust. This type of SNT is a popular choice in planning for a family member with a disability and their long-term care, as it allows for greater flexibility and control over the assets and their eventual distribution.

First Party Special Needs Trusts (SNTs)

In contrast, First Party SNTs are created using the assets of the special needs individual themselves. This type of trust is often used when an individual with existing assets becomes disabled and wishes to qualify for government benefits. In these cases, they can transfer their assets into a First Party SNT. A critical rule for First Party SNTs is that they must include a provision to reimburse the government for benefits paid on behalf of the beneficiary after their death. This reimbursement requirement is a trade-off for allowing the individual to retain their assets in the trust while still qualifying for government benefits. Additionally, First Party SNTs must be established before the beneficiary turns 65. This type of SNT is particularly relevant for individuals who acquire a disability later in life and have accumulated assets that they need to protect while also accessing government benefits. Because each state has different requirements, it’s essential that families work with a knowledgeable estate planning attorney to create a Special Needs Trust.

How Do You Choose a Guardian and Special Needs Trustee?

Selecting a Trustee

The SNT will name and provide comprehensive instructions for the trustee who will manage assets in the trust on behalf of the beneficiary. Deciding who should manage the trust’s finances is crucial. Consider appointing a corporate or third-party trustee for financial management and a family trustee for day-to-day decisions.  While a family member may have emotional ties, a professional fiduciary can offer objective, skilled financial management. This is particularly important in complex situations, such as when the beneficiary has a drug dependency or lacks a strong family network. It’s also prudent to name several successor trustees to ensure continuity. The trustees should be familiar with the needs of your loved one and the rules governing SNTs.

Naming a Guardian

For parents of minors with special needs, it’s essential to name a guardian in your will.  It’s also pertinent to examine the nature of your loved one’s disability and whether they will need the care of a guardian or simply need help making financial and life decisions.  The guardian nomination informs the court of your wishes should you become incapacitated or pass away.  List potential guardians in order of preference, understanding that the first choice may not always be available. It’s essential to have conversations with these individuals to ensure they are willing and able to take on this responsibility.

What is a Letter of Intent?

A letter of intent, while not legally binding, is a vital document in your estate planning.  It is a comprehensive document that provides guidelines for your loved one’s care plan detailing all elements about the individual’s life, medical and disability conditions, preferences, personality, academic and social information.  A letter of intent creates a smoother transition from the guidance of a parent or family member to a new caregiver or guardian when needed.  This document should be regularly updated and shared with the trustee of the SNT and, if applicable, the nominated guardian.

Start by Crafting a Personal Biography

Begin by writing a detailed biography of your loved one with special needs. This should include basic information like their name, birth date, age, likes, dislikes, favorite activities, and relationships with family and friends. This biography serves as a guide, offering a deep understanding of your loved one to anyone who might be involved in their care in the future.

Envisioning Future Scenarios

Next, envision their future in three scenarios: a good future where you are present to care for them, a not-so-great future where they are well but you’re not around, and a bad future. Being specific in these scenarios helps identify potential pitfalls and aids in planning effectively.


Planning for a loved one with special needs requires careful consideration and a thorough understanding of the legal and financial implications. Special Needs Trusts play a pivotal role in this process, ensuring that your loved one’s inheritance enhances their quality of life without compromising their eligibility for government benefits.  Schedule a call with our Jacksonville estate planning team to learn more about how you can ensure your loved one’s future is secure.

Key Takeaways: Planning for a Special Needs Loved One

Understanding Special Needs Trusts (SNTs):

    • SNTs are designed to hold assets for individuals receiving government benefits without affecting their eligibility.
    • They provide benefits like creditor protection and are managed by a trustee.
  • Types of Special Needs Trusts:

    • Third Party SNTs: Created by someone other than the beneficiary, with no asset limit and no requirement to reimburse the government after the beneficiary’s death.
    • First Party SNTs: Established with the beneficiary’s own assets, must include a reimbursement provision to the government, and must be formed before the beneficiary turns 65.
  • Guardian and Trustee Considerations:

    • Consider naming both family member and a corporate trustees, considering the complexity of the estate and the beneficiary’s needs.
    • Ensure the trustee is responsible, well-organized, and skilled in managing money.
    • Choose a guardian carefully, with backups in place, and ensure they are willing and able to take on the responsibility.
    • Discuss with the named individuals your desire to add them into your estate planning and what their role would be in working with your loved one.
  • Letter of Intent:

    • Write a letter for the future caregiver or guardian with a detailed biography of the loved one with special needs to guide future caregivers and trustees.
    • Envision future scenarios (good, not-so-great, bad) to prepare for different possibilities.
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