National Alliance for Caregiving: Circle of Care Guidebook for Caregivers of Children with Rare and/or Serious Illnesses
The Conversation Project: Toolkit For Caregivers of a Child with Serious Illness (English, Spanish, and Chinese)
Estate Planning for a Child with Lifelong Caregiving Needs
Planning for the Care of Your Child
The first planning steps are standard for every caregiver of a child, but additional steps should be taken if the child will have lifelong caregiving needs.
Every caregiver of a child should engage in estate planning for the child should the caregiver die or become unable to help the child before the child becomes an adult. This includes nominating a guardian to make personal, health care, and financial decisions for the child. You should also create special plans for an inheritance – often the creation of a trust to hold asset until the child reaches adulthood or some more mature age. This is routine estate planning that estate planning attorneys do for clients every day.
If the child you are caring for will have a lifelong need for help because of a disability your planning should include who will provide care and your estate planning needs to be customized to provide for your loved one, without disrupting critical income supports, benefits, and medical benefits. Click on the terms below to learn more about different strategies and decisions to consider.
This is a specialized area of estate planning, and you should seek advice from a lawyer who has expertise in your state. There are two major considerations:
- Will the child as an adult be able to make and communicate financial decisions?
- Will an inheritance interfere with means tested benefits such as income supports, income-based housing or health care benefits?
If possible, work with your child to help them select people that they know and trust to help them with choices across their lifespan. An increasingly popular model for this is Supported Decision Making. The ABA Commission on Law and Aging has publications here and here describing decision supports.
Some programs and benefits that provide a critical safety net for adults with disabilities severally limited what the person can own and receive help. If the child receives or is likely to receive in their lifetime Supplemental Security Income (SSI), to live in housing where their rent is based on their income and assets or have health care paid for by Medicaid special efforts need to be taken in estate planning to prevent disqualifying the person from those programs. This is a complex area of the law, don’t try to navigate planning on this one your own, talk with an expert. The rules vary from state to state, and you will need help from an expert in your state. The ABA Commission on Law and Aging has a consumer tip sheet on how to find legal help. It is common for an inheritance to be just enough to make the person ineligible for benefits, but not enough to make them financially independent.
ABLE Accounts. This is a relatively new option. To work the person must have a lifelong disability that started before age 26.
There are annual limits on how much can be contributed to an ABLE account, and an overall limit on how much can be in the account that varies from state to state. There are limits on what the money can be spent on. ABLE accounts are a low-cost easy to establish alternative to trusts. For more information visit:
This is an emerging and very specialized area of the law that allow for money or other assets to be set aside to improve the quality of life of a person receiving means tested benefits such as SSI, income-based housing, or Medicaid, while not counting as income or an asset to disqualify the person from the benefits. The law on this varies from state to state so consult an expert lawyer in your state. There are a variety of first party trusts, third party trusts, self-settled trusts, and pooled trusts, so what works best is very fact and law specific. There is a membership organization of attorneys who regularly work on these issues called the Special Needs Alliance. Visit their website to search their directory of attorneys.
Decisions & Action Steps
A guardian is someone who has the legal authority and duty to care for another’s person or property because of infancy, incapacity or disability.
You can nominate or appoint a guardian for your children, rather than have the court select one for you.
Several things are important to consider when making plans for a guardian:
- Consult with the person you name to be sure he or she wants the job, and name an alternative guardian in case your first choice changes his/her mind or dies before the child is grown.
- Discuss with the guardian your views on education, moral upbringing, religion, and any other matters important to you.
- Make plans to ensure the financial security of the guardianship arrangement.
In some states you can go to court now to have a person named standby guardian—which means the person doesn’t become guardian until a specific event happens, such as your incapacity. For more information on standby guardians, talk to a lawyer. In other states, you appoint the person in your will or other document, and the court formally appoints the named person as guardian at the time needed and a petition is filed for appointment.
Trusts, which enable property to be used and managed properly for a beneficiary, can be very helpful in planning for the care of a disabled child or other person with disability. However, trust planning must be handled carefully in cases where the disabled individual relies on public benefits, such as Medicaid or Supplemental Security Income.
An outright distribution to the disabled individual of assets, or general instructions to use the trust for support, could cause the disabled individual to lose eligibility for public benefits. In these situations, a special-needs trust should be considered. A special-needs trust allows the beneficiary to receive goods or services paid for by the trust, without jeopardizing his or her eligibility for public benefits. It serves to supplement public benefits.
The law imposes strict requirements and limitations on these kinds of trusts. Therefore, you should have an attorney experienced not only in trust law but also in Medicaid, Social Security and public-benefits law give you advice and draft the trust. Any trustee appointed should also have some understanding of the relevant public benefits programs.
To protect beneficiaries from themselves, their creditors, ex-spouses and others, you should consider establishing a spendthrift trust. In such a trust, money is set aside and managed for a particular beneficiary rather than given to them outright.
Properly established spendthrift trusts prevent the beneficiary’s creditors, ex-spouses (or soon-to-be ex-spouses or other in-laws you don’t trust) and future lawsuits from reaching the funds. This money will be used for the benefit of the beneficiary in the ways you direct– for example, to pay for education or a down payment on a home.
The most important thing to consider when establishing a spendthrift trust is who will oversee the management of the assets (the trustee). The trustee should be: someone you trust, someone familiar with your values and what you would like to see done with the money, and someone who can say “no” to the beneficiary.
Resources & Tips
Online resource centers like Nolo Press’s Guardianship of Children, can be useful. This website includes articles and Q & A on the subject of guardianship of children. Available online.
There are a few professional associations of attorneys who do special needs work and which provide information and attorney referral information:
Online resource centers like Nolo Press’s Special Needs Trusts, can be useful. This website includes articles and Q & A on special needs trusts.