Key Documents for Parents of Children With Special Needs

Takeaways

• Estate planning for children with special needs is crucial for their future protection.
• Documents such as a will, guardianship nomination, and special needs trust are vital components of this planning.
• Guardianship documents and powers of attorney are also important, depending on the person's needs and capacity for independent decision-making.

One in five children in the United States have special needs, per the Annie E. Casey Foundation. These include children with physical, developmental, and behavioral disabilities.

Beyond day-to-day responsibilities such as taking a child to medical appointments or providing direct caregiving at home, caring for a child with special needs can also involve creating an estate plan. This plan ensures that the child is protected and provided for in the future, even if the parents pass away first.

Estate planning for a child with special needs involves creating several key legal and related documents. Having these documents in place can help ensure a more secure future for the child. They include the following:

Last Will and Testament

Having a will in place is a fundamental first step for estate planning for parents of children with special needs. A will is a legal document in which a person decides who receives their assets upon their death.

The person making the will, called the testator, leaves their estate to people known as beneficiaries, typically their spouse and children. They can also make specific bequests, such as leaving a family heirloom to a particular child. For special needs estate planning, a will can lay a solid foundation and be an essential part of planning.

Guardianship Nomination

One crucial part of a will for special needs families is the guardianship nomination for minor children. Parents can nominate a trusted individual to become the guardian of their child if they were to pass away. This offers a layer of protection for the child with special needs because the parents have selected the individual they believe is best equipped to care for their child.

Letter of Intent

To provide more information for future caregivers, a special needs letter of intent can be included with estate planning documents. This nonbinding, nonlegal document can provide key details about the person with a disability, such as their allergies, medical history, routines, and preferences.

Special Needs Trust

Another key legal document, a special needs trust (SNT) holds funds for a person with a disability, preserving their ability to qualify for public benefits such as Medicaid and Supplemental Security Income (SSI) that support people with disabilities who have limited income and resources.

When a disabled child who is a recipient of needs-based government benefits obtains a large sum of money, such as an inheritance or a personal injury settlement, the windfall could make them ineligible for such benefits. A special needs trust can hold the funds for the child while the child maintains benefits eligibility.

Generally, the funds in an SNT cannot pay for things that SSI benefits are intended to cover, such as shelter. However, they can enrich the individual’s life in other ways, such as by funding education.

Several types of special needs trusts exist. Parents may opt to create a third-party special needs trust for a child with a disability. They can fund the trust during their lifetime to provide financial support for the child into adulthood or have their will fund this type of trust upon their death, allowing the child to benefit from an inheritance while maintaining their benefits. Rather than leaving assets to the child directly, their will can state that the trust receives the portion of the estate the child would inherit.

In addition to the trustee, a conservator or guardian of the estate may manage the trust fund. Whether a financial guardian is necessary depends on the mental capacity of the person with a disability.

Guardianship or Conservatorship Documents

Some children with special needs will continue requiring comprehensive support upon reaching adulthood, with a guardian or conservator making personal and financial decisions for them. (Note that different states use different terms.) For instance, a child with a significant intellectual or developmental disability may not be able to live independently, make personal or health decisions, or manage finances. When a child with a significant cognitive disability turns 18, parents who wish to continue making decisions for their child must petition the court for guardianship.

Several important documents are central to guardianship cases:

• The petition is the document in which the person seeking to become the guardian of an adult with a disability asks the court to be made guardian. This legal pleading includes details about the parent or other concerned individual seeking guardianship, called the petitioner, as well as details about the person with a disability, known as the proposed protected person or ward. The guardianship petition is filed with the court and reviewed by the judge in the guardianship case.
• The doctor’s report, also termed the report of physician, is a medical evaluation of the person with a disability. It must be recent enough to shed light on the individual’s current needs and functioning. In a typical report, the doctor describes the nature of the individual’s disability and highlights areas where the individual might need a guardian as well as areas of independence.
• Those who become legal guardians of an adult with a disability must file an annual report with the court. This report describes how the adult is doing, where they are living, what services the guardian provides, and financial accounting. Failing to file the annual report can cause the court to remove the guardian.

Powers of Attorney

While some people with disabilities need a guardian to manage their affairs, many others can make independent decisions. When these individuals turn 18, they may be able to execute power of attorney documents. These documents give someone else the power to make health or financial decisions for them. Having power of attorney documents in place can help special needs families prepare for emergencies.

The two main types of power of attorney are health care and financial. Parents of a young adult with complex medical needs will need their adult child’s authorization to step in and make medical decisions in an emergency, so having a health care power of attorney can be essential. A financial power of attorney allows a trusted person to pay bills or manage public benefits when an adult is unable to do so.

Additional Resources

To learn more about estate planning for people with disabilities, check out the following:

• Estate Planning for Parents of Children With Mental Illness
• 10 Tips to Consider for Special Needs Planning
• How Can I Use a First-Party SNT?
• Making Gifts to Special Needs Family Members