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Planning Considerations for Families with Special Needs

Part of any effective estate plan is considering the possibilities of special needs of immediate or extended family member.

Did you know:

  • One out of 9 children under the age of 18 in the US today receive special education services;

  • Out of 72.3 million families included in the 2000 Census, about 2 in every 7 reported having at least one member with a disability;

  • 20.9 million families have members with a disability;

  • Of the 20.9 million families reporting at least one member with a disability, 5.5 percent have both adults and children with a disability;

  • One in every 26 American families reported raising children with a disability;

  • One in every three families with a female householder with no husband present reported members with a disability;

  • An estimated 2.8 million families were raising at least one child aged 5 to 17 with a disability.*

* Source: “Disability and American Families: 2000”, US Census Bureau, July 2005 Report.

With data like this, it is extremely important to consider the current and future needs of potential estate beneficiaries. Often this will include the creation of an independent special needs trust or a special needs trust as a sub trust of a larger estate plan.

To distinguish a special needs trust, a first party special needs trust is one that is created with the special needs individual’s own funds and with court approval. A first party special needs trust will require a state Medicaid payback upon the death of the beneficiary. In contrast, a third party special needs trust is created with a third party’s funds (e.g. parent, grandparent) and does not require court approval nor a state Medicaid payback, as long as the trust corpus is not considered a countable resource for needs based state assistance.

Care should be taken in the preparation of any special needs trust to insure if necessary that court approval is sought. In cases where court approval is not necessary, proper planning will insure that the trust corpus does not become a countable resource for state and federal benefits that may be available for those with special needs.

Jeffrey Burr Ltd. has a full service Elder Law division that is available to assist you in proper special needs planning and is happy to answer any questions you may have.

 - Attorney Robert Morris