Caring for a child with disabilities or special needs has rewards and challenges. Depending on your child’s needs, caring for them may not leave a lot of time for other things—including estate planning. But if you are responsible for a family member with disabilities, estate planning isn’t just important: it’s critical.
A lot of your energy and resources go to making sure your child has the best life possible. You give them love, provide for them, meet their daily needs, and advocate for them. Your child depends on you for so many things. What will happen to them if something happens to you? If your child’s disabilities will make it necessary for them to have lifelong assistance or government benefits, you must plan ahead for a life that someday will not include you.
Whether or not you have a child with special needs, you want to plan for their financial security in the future through estate planning. With most children, the expectation is that eventually, they will become self-supporting. For a child with disabilities, that may not be possible. You may need to plan for their support over a much longer time frame.
Depending on your child’s health issues, you may also need to plan for someone else to give them the day-to-day care and assistance you now provide. But just saving up a lot of money, or having good life insurance, is not going to be enough to take care of their needs, especially if your child will need government benefits.
Here’s why: many government benefits, such as Supplemental Security Income (SSI) and Medicaid, are means-tested. That means applicants may have only very limited assets and income in their own name to qualify. If your child receives an inheritance from you, or gets proceeds from a life insurance policy, that money could make them ineligible for important government benefits. They would have to “spend down” those assets in order to qualify (or re-qualify) for benefits. With a sudden inheritance or life insurance award, your child could also become vulnerable to predators who offer to help them, but then take advantage of them.
Fortunately, a little advance planning can avoid these outcomes, and offer your child the protection and security you work so hard to give them.
Government benefit programs exist to provide for the basic, essential needs of people with disabilities. But you probably want your child to have more than just the bare minimum they need to survive. Special needs trusts, also called “supplemental needs trusts,” are designed to allow disabled beneficiaries to keep assets and maintain eligibility for government benefit programs. Supplemental needs trusts are structured differently than an ordinary living trust. A typical living trust will not preserve eligibility for SSI, Medicaid, housing assistance, and other benefit programs.
There are two main types of supplemental needs trusts. First-party trusts are funded with assets that belong to the disabled person. For instance, if your child’s disability was the result of an injury and they received a settlement from a personal injury lawsuit, those funds (as well as funds received as a gift or inheritance) could be used to fund a first-party supplemental needs trust.
A third-party supplemental needs trust, on the other hand, is funded with assets from a third party, like a parent or grandparent. One important difference between the two types of trusts is what happens when the primary beneficiary (the disabled person) dies. With a first-party trust, any money left in the trust when the beneficiary dies may have to be used to “pay back” the government for some of the benefits received. With a third-party trust, any money left in the trust when the disabled person dies can be paid to other beneficiaries chosen by the third party who created the trust.
In order for a supplemental needs trusts to do what you intend it to, it must be properly drafted and properly managed. Parents of children with special needs should work with an estate planning attorney for special needs issues.
In addition to being an attorney, I am also a parent, and I understand personally how important it is to make sure your child’s future is secure. If you have a child with special needs, you need an estate planning attorney who will work with you to create a plan to protect your child’s interests, now and in the future.
In addition to helping you create special needs trusts, I can also help you appoint a guardian for your child, get powers of attorney to assist a child with disabilities after they reach adulthood, and address other issues unique to families with special needs.
If you have a child with disabilities and you don’t have an estate plan to address their needs, don’t put off planning for one more day. Contact Bashirah Martin to schedule a consultation and get the peace of mind you deserve.
The type of business entity you choose will depend on how many owners the business has, potential exposure to liability, and how you want to pay taxes on the business. Available business entities include C corporations, S corporations, partnerships, limited partnerships, and limited liability companies. If you own the business by yourself, you can run it as a sole proprietorship.
It’s best to discuss the pros and cons of each type of business entity with a business law attorney who understands your circumstances and goals and can direct you to the form that is right for you (as well as preparing the documents needed to establish your business and register it with the state).
You may be able to avoid getting an employer identification number (EIN) for your business if you have a sole proprietorship or a single-member limited liability company (LLC), but most businesses need to have an EIN, which functions as a tax identification number with the IRS. Your business uses this number to file tax returns, open business bank accounts, and apply for various licenses. If you are not required to have an EIN, you may be able to use your Social Security number, but this may expose you to identity theft. It’s better to obtain an EIN for your business; your attorney can help you with the process.
Whether someone who does work for your business is an employee or an independent contractor depends on the level of control your business exercises over the relationship. For instance, can your business control what the worker does and how they do their job? Does your business reimburse the worker’s expenses, or provide tools and supplies? Does your business offer the worker a retirement plan, vacation pay, insurance, or other benefits? Does the worker perform similar work for other businesses, or only for your business?
Whether a worker is an employee or an independent contractor makes a difference from a legal and tax standpoint. Employment and labor laws do not apply to a worker who is an independent contractor, and no taxes are withheld from an independent contractor’s pay. Employees, on the other hand, have Social Security, Medicare, and income taxes withheld from their pay.
Yes, you do! Planning for a business after the death or retirement of an owner is called succession planning, and it is essential to making sure the business is successful after a smooth transition to the new owner. If you have put a lot of effort and resources into building your business, don’t let it all go to waste by failing to plan—especially if you want the business to keep providing for your family after you’re gone.
Contact us to discuss your legal issue and learn how we can accomplish your goals and protect your interests.