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What to Consider When Selecting Backup Financial Caregivers for A Special Needs Loved One

When planning for a loved one with special needs, it’s important not just to consider the here-and-now, but also the rest of their lives. Although it can be hard to think about, this includes, planning for a time when his or her parents or guardians are no longer alive.

It’s a scary thought, but not one without options. Chief among them, are Special Needs Trusts, a critical part of estate planning.

These trusts are legal arrangements designed to financially support special needs individuals without compromising their ability to qualify for valuable important government benefits. These benefits can include monies and benefits through Supplemental Security Income and Medicaid. Further, the trust can outlive a parent or guardian and hold and manage property for special needs beneficiaries. This trust can provide for them but will not give them direct control over their assets if they lack the legal capacity to handle their own affairs.

Special Needs Trusts can be established at any time but will require a trustee to make decisions on the special needs person’s behalf. Often, a parent or guardian who knows the disabled individual best will first serve in this capacity.  Bear in mind, if the trust grows, it may become more complicated to manage. Furthermore, if parents or guardians can no longer serve as the trustee, or if they become ill or pass away, selecting the right back-up could be the single most impactful decision affecting the special needs person’s future.

Here are several questions to consider when choosing a back-up financial caregiver:

  • Does he or she understand the special need beneficiary’s situation and needs?
  • Can he or she maintain communication between the special need person, caregivers, and service providers?
  • Is he or she able to hire and regularly monitor agents and service providers?
  • Will he or she be able to pay bills, help secure housing, and medical care?

Other items that may require technical expertise, and involve a conversation with your estate planning and elder law attorney, include:

  • Becoming knowledgeable about the language and intent of the trust.
  • Establishing accounts for management of trust assets.
  • Collecting income and prudently managing  investment assets.
  • Receiving and conducting periodic inventories of trust assets.
  • Preparing and filing annual federal and state income tax returns.

This can be a lot to consider. Keep in mind a trustee does not have to be a family member or friend. A trustee can also be an independent professional, or even an institution like a bank or a trust company.  Choose wisely, whoever you select will have almost complete discretion about how to make payments and distributions from the trust on behalf of the disabled beneficiary. We know this article may raise more questions than it answers, please do not hesitate to contact us with your questions.