The other day I was looking at Darling 1 and noticed that he has gotten so big and tall lately, not roly-poly, cuddly and chubbly like Darling 2 still is. I asked Darling 1 "How did you get so big?" He answered, "All your kisses made me grow big." Awww! Doesn't that just melt your heart?! And he's right in a way. I water my Darling boys with love and kisses, healthy foods, knowledge from books, experiences, explanations and discussions and time to run and play outside, and they grow both physically and mentally. I take that for granted. Some parents do all of these same things and their children still struggle to reach each developmental milestone. I salute these saints, otherwise known as mom, dad, grandma, grandpa, etc, who have far more grace, endurance, patience and humility than I, who are raising exceptional children with special needs despite the daily hurdles they encounter.
April is Autism Awareness Month. The Autism Society has been celebrating National Autism Awareness Month since the 1970s as a chance to educate the public about autism and issues within the autism community. There are many ways you can support Autism Awareness and numerous special events and activities taking place over the course of the month all over the country. I will give you some ideas of how you can participate and contribute in Wednesday's post. While this post is more specifically focused on autism, the information regarding estate planning with your special needs child in mind pertains to any child (minor or not) that will need care and support to some degree throughout his or her lifetime.
As a parent of young children, I feel that autism spectrum disorders are widely known about and discussed since it is now estimated to affect 1 in 100 births. However, I wanted to give some general information about autism spectrum disorders. Children with a form of autism generally have problems in social interaction, language and behavioral development. Autism symptoms vary greatly from one child to another; children with the same diagnosis may act quite differently and have strikingly different skills. In most cases though, the most severe autism is marked by a complete inability to communicate or interact with other people.
Many children show signs of autism in early infancy. Other children may develop normally for the first few months or years of life but then suddenly become withdrawn, aggressive or lose language skills they've already acquired. Some of the comm0n signs of this disorder are: failure to respond to name; poor eye contact; resists holding and cuddling; starts talking later than other children; loses previously acquired ability to say words or sentences; may repeat words or phrases verbatim, but doesn't understand how to use them; performs repetitive movements, such as rocking or spinning; becomes disturbed at the slightest change in routines or rituals; unusually sensitive to light, sound and touch and yet oblivious to pain. Of course, there are many explanations if your child has one or more of these traits, but if you are concerned, call your child's physician.
There is no known single cause for autism, but it is generally accepted that it is caused by abnormalities in brain structure or function. Brain scans show differences in the shape and structure of the brain in children with autism versus neuro-typical children. Researchers are investigating a number of theories, including the link between heredity, genetics and medical problems. While there is no known cure for autism, there are treatment and education approaches that may reduce some of the challenges associated with the condition. Intervention may help to lessen disruptive behaviors, and education can teach self-help skills that allow for greater independence.
A few weeks ago I wrote about the importance of parents having a last will and testament, a trust for the financial support of minor children, choosing guardians, etc. The same holds true in the situation of parents with a special needs child. One difference is that the special needs child might need care and support throughout his or her life rather than just until the age of majority. Another difference is that if your special needs child receives state or federal aid, you will have to be careful how much and in what way you leave your estate to your child so your child does not lose eligibility for essential government benefits.
First, let's consider the types of government benefits:
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The first type is not affected by the financial resources available to the beneficiary. An example of this type of aid is Social Security Disability Insurance (SSDI). SSDI will be received by the beneficiary regardless of financial need;
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The second type is affected by financial resources. Examples of this type is Supplemental Security Income (SSI) and Medicaid. To be eligible for this type of aid, a person cannot have too many assets or too much income or he or she will be ineligible for the aid.
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The third type of aid is also affected by the financial resources of a person, but the amount of income a person has does not disqualify him or her, but it does determine whether a person must pay for the available services and how much the person must pay.
With these government benefits in mind, you must structure your estate distribution in such a way that is the most beneficial to your special needs child.
There are several approaches to handling your estate. If you have modest assets and your special needs child's financial requirements are fairly great, the best approach may be to disinherit your child. Yes, that sounds cruel, but in reality it really might be the best for your child if it means that he or she will be eligible for the essential government benefits that are necessary for his or her care and support. Another option is to establish a trust for your child. A special needs trust could be the most effective way to help your child financially without disqualifying him or her for government aid.
A special needs trust is set up for a person with special needs to supplement any benefits the person with special needs may receive from government programs. A properly drafted special needs trust will allow the beneficiary to receive government benefits while still receiving funds from the trust. There are three main types of special needs trusts: the first-party trust; the third-party trust and the pooled trust. All three name the person with special needs as the beneficiary. A first-party special needs trust holds assets that belong to the person with special needs, such as an inheritance or an accident settlement. A third-party special needs trust holds funds belonging to other people who want to help the person with special needs. A pooled trust holds funds from many different beneficiaries with special needs. Here is a look at the three types of special needs trusts:
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First-Party Trust: In order to qualify for SSI, an applicant or beneficiary can have only $2,000 in his own name. If the person has more than $2,000 in his own name, (typically because of excess savings, an inheritance or an accident settlement), the government allows him to qualify for SSI so long as he places his assets into a first-party special needs trust. The trust must be created by the beneficiary's parent or grandparent, or by a court, but it cannot be created by the beneficiary, even though his assets are going to fund the trust. While the beneficiary is living, the funds in the trust are used for his benefit, and when he dies, any assets remaining in the trust are used to reimburse the government for the cost of his medical care. These trusts are especially useful for beneficiaries who are receiving SSI and come into large amounts of money, because the trust allows the beneficiary to retain his benefits while still being able to use his own funds when necessary.
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Third-Party Trust: This trust is most often used by parents and other family members to assist a person with special needs. These trusts can hold any kind of asset including a house, stocks and bonds, and other types of investments. The third-party trust functions like a first-party special needs trust in that the assets held in the trust do not affect an SSI beneficiary's eligibility for benefits and the funds can be used to pay for the beneficiary's supplemental needs beyond those covered by the government aid. The difference is that a third-party special needs trust does not contain the "payback" provision found in first-party trusts. This means that when the beneficiary with special needs dies, any funds remaining in his or her trust can pass to other family members or charity without having to be used to reimburse the government.
- Pooled Trust: A pooled trust is an alternative to the first-party trust. A charity sets up this type of trust. A pooled trust allows beneficiaries to combine their resources for investment purposes, while still maintaining separate accounts for each beneficiary's needs. When the beneficiary dies, the funds remaining in his or her account reimburse the government for his or her care, but a portion also goes towards the non-profit organization responsible for managing the trust.
Many financial planning businesses do offer qualified special needs planners that can assist you with setting up the right trust and organizing your estate so that your special needs child is provided for throughout his or her life.
On Wednesday, I will post ideas for educating yourself and your children about autism spectrum disorders and ways in which you can support Autism Awareness Month. I will also provide you with a Web site for finding out more about autism and a link to a helpful supplementary document for estate planning when you have a special needs child. Over and out…
Anna
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