My wife, Dawn, and I have an autistic son. In 2003, we decided to amend our existing wills and create a third party special needs trust on Aaron’s behalf. Properly drafted, this document will protect Aaron and provide us peace of mind upon leaving the planet.
For this part of my series on providing for a special needs child, I spoke with two legal professionals, Eugene Rudnik and Kirsten Izatt. Gene’s practice includes estate planning and probate, as well as planning for families with a disabled family member. Gene drafted his first special needs trust in 1993. I have done presentations and collaborated with Kirsten of The Estate Planning Law Group, who frequently counsels families in the area of special needs planning.
Question: Gene, what usually stops parents from doing what they need to do?
It’s a reluctance to prepare for their inevitable deaths. With respect to their disabled child, parents typically either do not have sufficient information or don’t know where to turn for sound advice. As a result, they feel helpless, so they do nothing.
Question: Once my son’s special needs trust is complete, can I change it?
A special needs trust is typically irrevocable, which means it cannot be changed or modified once it is complete. That does not mean you and Dawn cannot change the successor trustees. In fact, you already have. Originally, upon death or disability your brother and an independent trust company were named. The trust company was bought out and your brother now has his own children, so we amended the trust. The authority to amend the special needs trust is, however, limited. (For related reading, see: Special Trusts for Special Needs.)
Question: Kirsten, why does my family need a special needs trust?
When a Special Needs Trust is properly drafted, any assets in the trust will not interfere with government benefits. For example, normal assets in Aaron’s name over $2,000 will result in the termination or reduction of SSI and Medicaid benefits. In addition, Medicaid may reclaim from his assets reimbursement for medical care provided. The special needs trust avoids this situation. If the special needs trust exists it can be funded and used now. Anyone except the person with a disability can make deposits into the trust. This is a much better option than writing a testamentary trust inside a will. The trust needs to state it is not intended to replace government benefits. If there is any question as to the use of the funds in the trust, check with Social Security and Medicaid.
Question: What if you have limited resources, emergency circumstances or lack family choices for trustee or co-trustee?
Another alternative is a special planning technique called a pooled trust. These trusts pool resources of many beneficiaries and are managed by a non-profit association. Directories of pooled trusts are available through The Academy of Special Needs Planners, The Special Needs Alliance and The National PLAN Alliance.
The trust we created is titled:
Gregory and C. Dawn Zibricky, Trustees
Aaron Paul Zibricky Supplemental Needs Trust, Dated 2/27/2003
- How will the trust for your child’s benefit be titled?
- Who will act as trustee when you are no longer able?
- How do you select trustees?
The visual that may come to mind when hearing the words trust department or trustee: huge chandelier, marble floors and imposing secretaries. The good news is the trust “business” is more accessible than ever before. Dawn and I decided to have co-trustees. The current plan includes a responsible family member who knows Aaron very well and a professional trustee to handle accounting and appropriate distributions. This decision is not carved in stone.
Finally, remember the beneficiary discussion? Many families consider the job done once the trust is drawn up. Wrong! Once the trust is established, assets must be properly titled and beneficiary designations updated. Stay diligent and remember to review the plan on a consistent basis. (For more from this author, see: Providing for a Special Needs Child - Part I.)