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Estate planning and your loved ones long-term care

Ensure your family member with special needs is cared for after you’re gone.

As a caregiver of a loved one with special needs, you may be concerned about how they’ll be cared for after you’re gone. If you know your loved one will need long-term care due to a physical or mental impairment, that care should be a central topic in your estate planning.

You can set up your estate to ensure not only that your loved ones’ needs will be taken care of to your specifications, but also that your own wishes will be carried out as you envision. Planning considerations will take some extra attention, especially if your loved one is receiving needs-based benefits, but you’ll be able to rest easy knowing your that their well-being will be in the right hands. Here are two key components to a comprehensive plan.

Special needs trust

A special needs trust is a legal arrangement wherein one person or entity – the trustee – is charged with protecting the interest and assets for the benefit of another – the beneficiary. The trust allows an individual with a disability or special needs to benefit from the income and principal of the trust without reducing their eligibility for government assistance such as Supplemental Security Income (SSI) or Medicaid.

Given the longevity of administering a special needs trust, it’s important to consider the best-qualified person or corporate trust company to serve as trustee. Properly managing a special needs trust means understanding the disabilities of your loved one and communicating effectively with caregivers or guardians. The trustee must be able to prudently manage the assets held for the loved one’s benefit and understand the governmental regulations and how to work within them.

While government support is designed to provide for the basic necessities such as food and shelter, the funds in a special needs trust are more flexible. Common uses include personal care attendants, home furnishings, out-of-pocket medical and dental expenses, education, recreation, vehicles and physical rehabilitation.

Letter of intent

An important companion piece to the special needs trust is a letter of intent. While the special needs trust holds the power and funds to carry out care for your heir, the letter of intent provides detailed instructions on how to do so.

This letter should include everything your trustee needs to know about your loved one – from likes and dislikes to functional abilities and daily routines. It should describe special diets, include doctors’ names and share plans for your family member’s future.

While this can seem daunting, it’s essential to equip a future caregiver with the knowledge they need to continue providing the lifestyle you desire for your spouse or child. It will serve as the foundation for a comprehensive life-plan and aim to maximize their quality of life after you’re gone.

Because conditions can change, you should re-evaluate your estate planning regularly to ensure it still meets the needs of you and your loved one. Speak to your advisor about how to make considerations for your loved ones’ specific circumstances in the estate planning process.

If you are concerned about the long-term care of a loved one after you’re gone:

  • Speak to your advisor about your specific situation
  • Consider a special needs trust to continue providing for your family member
  • Always include a letter of intent with detailed instructions for future caregivers

Sources: specialneedsalliance.org; specialneedsalliance.org; cnbc.com; dandblaw.com

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