Planning for Beneficiaries With Special Needs

Planning for beneficiaries with special needs requires special attention and special drafting of estate planning documents. Much has been written about special needs trusts in the Medicaid arena, where the planning is done with the beneficiary’s own assets (from a personal injury settlement, for example). But of more importance to a growing number of families is planning to set aside assets (for instance, on the death of a parent) for a child with special needs.

The term “special needs” has many meanings. Each parent or grandparent has to develop his or her own criteria for determining whether the intended beneficiary has special needs. Special needs trusts are commonly used for people with physical or mental disabilities or substance abuse problems. And although usually the older generation plans for the younger one, children are increasingly planning for the possibility of their parents being beneficiaries of the children’s estates—and those parents may have special needs of their own, such as Alzheimer’s disease.

Much special needs planning attempts to preserve or qualify for public or private assistance (whether or not with the beneficiary’s own assets), but the more important goal should be assuring that the beneficiary’s special needs are addressed. In addition to careful selection of trustees and trust advisors, guardianship issues should not be ignored, since the former are responsible only for financial matters. And since these fiduciaries may not have lived with the special-needs beneficiary, the estate planning document should provide guidance to those who will become responsible for providing for the special-needs beneficiary.