Parents of children with autism know that just getting through day-to-day life requires careful planning. Many parents do not consider that financial planning for their child with autism also requires careful and special planning, especially when the child may not be able to support or care for himself when the parents are gone. The thought of ever predeceasing a child with significant special needs is frightening. So frightening that parents may do everything they can to try not to think about it. Who wants to face their own mortality? Who wants to face it especially when they are consumed with the day-to-day challenges that go into raising a child with autism? Nevertheless, there will most likely be a time when parents will predecease their child with autism, and it is absolutely essential that a financial plan be put in place to ensure that the child is cared for in the manner the parent wishes.
While there are many government benefits that children with autism may qualify for, for the purpose of this article, we will review the two that are most widely used for people with developmental disabilities and are available in all 50 states. These are: Supplemental Security Income (SSI) and Medicaid. It is imperative for parents to realize that eligibility for SSI and Medicaid are critical for their child with autism. Eligibility for these two benefits is often necessary to be able to receive services as an adult. For example, in several states, group homes and other community residences are covered by these benefits; along with most day habilitation, some job training programs, and other essential adult services for your child.
Medicaid and SSI are in a category of government benefits that are called “means-tested” benefits. This means that in order to qualify for these benefits, not only does an applicant have to meet the criteria to be considered “disabled,” but must also have extremely limited assets and income. For example, for SSI, an applicant can have no more than $2,000 in assets to be eligible. Because the income and asset threshold are so low, a parent or well-intentioned relative should not put money in, or leave money to, the child with autism. If the child has assets over the eligibility amount they will not qualify for these important benefits. If those assets are transferred out of the child’s name, then there will be a waiting period imposed by SSI and Medicaid before the child will be eligible for those benefits. Thus, they will have to do without certain benefits for an extended period of time if proper planning is not done.
While obtaining eligibility for government benefits is necessary to receive services as an adult, these government benefits alone will not provide all that a child with autism will require in the future; and in no way will provide the “extras” that a parent would want their special child to have. Further, most parents are not pleased with the fact that they have to disinherit their special needs child in order for their child to access government benefits.
Supplemental Needs Trusts
Fortunately, there is a very important tool that parents can use to allow a child with autism to remain eligible for government benefits, but also have all of the “extras” that parents would want them to have. This important tool is the Supplemental Needs Trust (hereinafter referred to as SNT), which is sometimes referred to as a Special Needs Trust. An SNT holds assets for the benefit of the special needs child without those assets being included in determining eligibility for government benefits. Generally speaking, monies in the trust can be used to pay for items that are not provided by the governmental benefit systems. Thus, the assets in the SNT are used to “supplement” and not “supplant” or replace governmental benefits.
SNTs can provide a number of items and luxuries. They can be used to provide for education, vacations, electronics, companions, insurance and many other life-enhancing services not provided by government benefits. In addition, an SNT has the ability to hold everything from cash and investments, to real property.
The beauty of a properly drafted SNT is that there is no “pay-back” of funds to Medicaid after the beneficiary (the child with autism) passes away. This means that after your child’s death you can direct where the remaining funds in the SNT go.
How to Fund a Lifetime of Need
As friends worry about how they will pay for college, parents of children with autism have financial worries that extend for their child’s lifetime. This is daunting and fear of the future can stop parents in their tracks. As discussed, creating an SNT will enable a child with autism to remain on public benefits and still have the “extras” parents want them to have. However, ample funds must be available to take care of the child for life.
How much money needs to be saved for the child? While that is not an easy question to answer, a parent can begin to think about what kind of care their child may need and estimate what it may cost on a monthly basis. Then, think about how much this could cost over your child’s lifetime. It is also important to consider the effects of inflation on the purchasing power of the assets in the trust. While not an exact science, going through this process will give you a good ballpark estimate of how much money will be necessary to fund the trust.
The dollar amount you come up with may seem staggering. How will parents ever be able to save enough money to provide the care the child is going to need for the rest of their life while trying to fund one’s own goals?
The most common method to funding this type of long-term care is through life insurance. As discussed above, the SNT is a legal entity that can hold assets in which a person with autism is the beneficiary and not disturb their important and necessary government benefits. The SNT created can be the recipient of life insurance proceeds. Life insurance can often be structured so that funds can be used to provide for a child while keeping the rest of the parent’s estate intact.
There are a number of different types of life insurance, and your specific situation will ultimately determine what is best for you. It is extremely important that you work with your attorney that creates your SNT to ensure that the beneficiary forms are properly filled out. Your special needs attorney can also recommend good insurance brokers who work specifically and well with families with special needs.
While there are other ways to create wealth, life insurance (if you are able to qualify) used together with an SNT is typically the easiest and least expensive way to generate funds for an SNT in the event of an untimely death of the parents.
Where to Find Help
People are always concerned about having to use an attorney and the costs involved. The possibility of your child with autism losing their public benefits, not having enough money to live on, and the possibility of leaving your child’s future caregivers with no direction will be a much higher cost that your vulnerable child will have to bear after your demise if you do not plan. This planning needs to be done correctly and by a highly qualified special needs planning attorney. Please visit the Special Needs Alliance www.specialneedsalliance.org to find a qualified special needs planning attorney in your area. This is not something every attorney or even a general estate-planning attorney can do. You need to find a professional in your state that specializes in special needs planning so you can assure your child is protected. This is not something you want to bargain hunt for! Not doing the planning correctly can end up costing so much more than using the right qualified attorney. Your qualified attorney can recommend life insurance brokers and investment personnel who can work on your team to get a solid financial plan in place for your child.
While planning for your child with autism’s financial future cannot give you complete peace of mind (as nothing can), a proper plan can be put in place, and there are fabulous tools available to ensure that your child will have adequate funds after you are gone. Not planning will put the child you want to protect more than anything in the world in jeopardy and in a vulnerable position. Many people feel they are young and healthy and that nothing is going to happen to them any time soon. Do not wait until it is too late to do the planning. If you are reading this article you are ready to do the planning. Mahatma Gandhi said, “Learn as if you were going to live forever. Live as if you were going to die tomorrow.” We cannot be sure what tomorrow will bring. The time to plan is now!
Nothing in this article should be construed as legal advice. Please consult with your own attorney before relying on the information contained herein.
About Littman Krooks
Littman Krooks LLP provides sophisticated legal advice and the high level of expertise ordinarily associated with large law firms along with the personal attention and responsiveness of smaller firms. These ingredients, which are the cornerstone of effective representation and are necessary to a successful lawyer/client relationship, have become the foundation of the firm’s success.
Littman Krooks LLP offers legal services in several areas of law, including special needs planning, special education advocacy, elder law, estate planning, and corporate and securities. Their offices are located at 655 Third Avenue, New York, New York; 399 Knollwood Road, White Plains, New York; and 300 Westage Business Center Drive, Fishkill, New York. Visit the firm’s website at www.littmankrooks.com.