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what is a special needs trust & why you need one

Before my wife Emily and I welcomed our son Luca into the world, my knowledge of the special needs world was very limited.  Sure I had spent years working as a Financial Planner but I could count on one hand the number of clients that I had who had a child, sibling, or grandchild with special needs.  So when we received a surprise visit from the NICU pediatrician just a couple hours after Luca was born and she let us know that he had “several soft markers for Down syndrome”, it scared the shit out of me.


At first, we were in complete denial.  The most prominent soft markers she pointed out we simply dismissed as genetic traits passed down from the two of us.  I have a very similar lack of a bridge in my nose and the single crease horizontally across his hand (palmar crease) was something that Emily shares. We had just gone through quite a traumatic experience to get to the point of having our baby and all of the joy and excitement that we felt once he was finally delivered was seemingly sucked away and replaced with fear and worry just a couple hours later.  This day that was supposed to be a celebration had suddenly become one of endless Google searches and conversations with doctors.  We were unprepared.

“when you have a child with special needs, getting your Estate Planning documents executed is all caps URGENT”

Over the next few weeks, we hardly left the hospital.  Luca had to stay and receive treatment for an infection initially but then had to stay until he could reach feeding and desat benchmarks.  We of course ended up receiving confirmation that Luca does indeed have Down syndrome but we were so blessed that he did not have heart complications or serious gastrointestinal issues like so many babies with Down Syndrome do.  Eventually we were allowed to bring our son home and that is when we began to tackle some of the other responsibilities that come with having a child with special needs.


In my 9-5, the one area of special needs planning that I had extensive experience with was on the Estate Planning side.  I had worked with several clients to establish Special Needs Trusts for their children and I was familiar with that process and the benefits of setting one up.  As soon as we received confirmation on the FISH Test for Luca, I knew that would be one of the first things we would need to do ASAP.


For most “typical” families who do not have a child with special needs, Estate Planning is certainly necessary but it is not usually treated as urgent.  While everyone should have a Will, especially those who have others depending on them, the legal system is set up so that if you were to die “intestate” (not having a Will), your assets would pass through a hierarchy established by the state.  Typically everything would pass to your spouse (if applicable) or get split evenly between your children which is often how many people write their Wills anyway.  When you have a child with special needs, however, getting your Estate Planning documents executed is all caps URGENT.


On top of deciding who you would like to be the guardian for your minor children and how your assets should be split, there are a slew of other considerations that you have to plan for when you have a child with special needs.  For example, for many people with Special Needs, especially those with Intellectual and Developmental Disabilities, they will need someone in their lives well past 18 to help them make financial and other decisions.  Many of these individuals will be eligible to receive government benefits once they reach adulthood in the form of Supplemental Security Income (SSI) and Medicaid.  The issue with planning for those individuals, though, is how the government has set up these benefits and the eligibility requirements.


Over the years, there has been a lot of villainization of the welfare system and people who “take advantage” of that system to not have to work.  We have all seen this depicted in movies and TV shows like Shameless where someone fakes an injury in order to claim or continue claiming disability benefits.  Though I am sure there is some level of fraud in the system, as in anything, Frank Gallagher and others should not be the face of what many people think of for benefits for people with disabilities.


Since the government uses the same benefits system and rules to determine benefits eligibility for individuals with IDDs and someone who lost a finger working in a factory, a lot of the eligibility requirements are unnecessarily stringent.  For example, if a person is trying to qualify for SSI and has more than $2,000 to their name, they will likely not be eligible to receive benefits.  So, as a Financial Planner, when I was trying to consider and plan for the worst case scenario, I knew that if something were to happen to my wife and I and all of our assets were passed down according to the Will we had in place before having Luca, everything would have ended up in his name and he never would have been able to qualify for the government benefits that could amount to hundreds of thousands of dollars over his lifetime.  Not to mention I would not have been able to add guidelines and protections to ensure that someone would be there to help Luca on the financial side after we were gone.


A Special Needs Trust is a tool that the government allows for where you can leave much more than $2,000 to your child with special needs and appoint a ‘trustee’ who will provide them with funds as needed over the course of their lifetime.  There are many more benefits and additional functionality that a Special Needs Trust provides which is outlined in detail in the following articles, but I hope this points to the urgency via the possible consequences of not having one.

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