Apr 14, 2013

Your child with autism: Legal planning to secure his future

April is National Autism Awareness month.  A 2011-2012 survey by the Centers for Disease Control estimates that 1 in 50 schoolchildren falls somewhere on the spectrum. If your child is affected with autism and is unlikely to be able to manage his own finances and affairs when he reaches adulthood, you should seek the advice of an experienced elder law attorney. Your elder law attorney - ignore the word "elder" for a moment - will help you set up the financial and legal framework that will secure your child's future and give you, his siblings and the rest of the family peace of mind.

The core of that legal framework is a Special Needs Trust. Here's how it works: You place property (cash, stocks, bonds, real estate, etc.) in the trust. A trustee you select will manage the trust for the benefit of the child. The child can have no ownership interest in the assets. The trust can be funded during your lifetime, or at your death. Because the money is held in the trust, not directly in your child's name, the funds will not be used by the government when it asses your child's eligibility for benefits, such as Medicaid or SSI. The trust provisions must state that the money is to be spent only for supplemental services and items, NOT on services and items provided by government benefits. For example, trust funds could be used to provide your child with a personal attendant, specialized home furnishings or equipment, supplemental therapies, transportation, etc.

Grandparents and other family members may also contribute to the trust, and you should make it clear to well-meaning relatives that contributing to the trust is the ONLY way to assist financially, since giving money directly to the child could jeopardize his government benefits.

Some parents create the special needs trust prior to their own demise, and prior to their child attaining the age of majority, naming themselves as trustees and selecting one or more of the child's siblings to serve as successor trustee(s) of the trust. Setting up the trust in advance thus gives grandparents and other family members a place to park funds for the child's benefit now or upon their own death. Frequently grandparents would like to have the ability to leave funds to a special needs grandchild, but if there is no special needs trust in place, they will simply "cut out" that grandchild.

If the trust is properly drafted and administered, the state and the federal government will have no claim to the assets and upon the death of the beneficiary, and the remaining trust assets can then be distributed to persons or entities of your choice, be it surviving siblings, a charity, etc.

The above is a third-party trust, and is the most frequently used legal tool to protect a child with special needs, but there is  another possibility: a pooled trust. A pooled trust is set up and run by various nonprofit organizations. As the name suggests, monies from various families are put into one general fund administered by the organization. Pooled trusts are always operated by a nonprofit entity. The advantages of a pooled trust may include:
  • Reduced administrative fees.
  • A better rate of return.
  • Access to professional financial management.
  • Access to professional legal management familiar with the rules governing disbursement of funds, thus ensuring your loved one's access to public benefits is not jeopardized.
  • If there are limited funds, creating an individual Special Needs Trust can be economically impractical, given the costs of setting it up and maintaining it. A pooled trust can be a cost-effective way to set aside funds for a special needs individual.
However, a pooled trust also has a big disadvantage: When the beneficiary passes away, any funds remaining in the pooled trust will not be returned to the family, but instead will be used to reimburse the government for what it has expended on the beneficiary. 

For more information on the Karp Law Firm's Special Needs Trust, click here.

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