What makes special needs planning special? Unlike planning for most typical loved ones, special needs planning is intended to protect and provide for loved ones who may be facing unique, lifelong challenges and limitations, as well as participating in means-based benefits programs necessary to assist them with their limitations.
Is guardianship right for my child?
Whether you agree or not, your loved ones are legally adults when they reach age eighteen. It means that they may legally make healthcare and financial decisions for themselves. This may be problematic for someone with special needs, who may have unique concerns, such as government benefits, care services, health care and legal decisions, and education. Proper planning can ensure a smoother transition and peace of mind.
“My daughter’s doctor will not talk to me.”
“The high school said I was not allowed to participate in my child’s IEP meetings anymore.”
How do you protect or advocate for your child who has become a legal adult? A couple of options are a Power of Attorney or Guardianship:
Through a Power of Attorney, an adult with special needs may authorize another to make decisions on his/her behalf, such as:
Powers of Attorney are a less restrictive alternative to guardianship; however, they do not take away decision-making authority from your child, for better or worse, and are revocable. Consider this:
Unfortunately, sometimes they are not enough. While a Power of Attorney may provide authority to help someone, it does not stop that person from making bad decisions or working against you.
In those cases where the special needs adult lacks capacity to understand Powers of Attorney and/or is in need of protection, a guardianship may be appropriate.
Note, parents may commence the guardianship process for their incapacitated child as early as when the child reaches age 17 1⁄2, to become effective on the date the child reaches age 18.
If something were to happen to me…
How do I provide for my child and protect her benefits?
Who will take care of my child?
Do they know how?
Receipt of funds by a person who has special needs or receives means-based benefits can cause unintended problems. Common examples are gifts, inheritances, or a lawsuit settlement. Prior planning for potential inheritance or gifts can offer more flexible options to protect the special needs person and their benefits.
In other words, the receipt of funds may affect eligibility for which common benefits
| Benefit | Means-based |
| Social Security | No |
| SSDI | No, but earned income limit |
| SSI | Yes |
| Medicare | No |
| AHCCCS | Income only |
| ALTCS | Yes |
| VA AandA | Yes |
| Snap | Yes |
| Section 8 Housing | Income Only |
| DDD | Yes (service paid by ALTCS) |
For more information on government benefits programs, check out az.db101.org.
First-Party Special Needs Trust
A trust established for the sole benefit of a disabled person. It must be funded before the person reaches age 65. It can be established by the disabled person (who has capacity), a parent, grandparent, guardian, or court. The administration of this trust is complex and allowable distributions may be complicated. The trust must provide for reimbursement on the termination of the trust to any states whose Medicaid programs paid for any medical expenses of the disabled trust beneficiary.
Pooled First-Party Trust
This trust is very similar to the First-Party Special Needs Trust, except it is administered by a trust company. On the death of the disabled beneficiary, if the remaining funds are not paid to the state, they might be retained by the trust company to benefit that organization.
ABLE Account
For those who were disabled before age 26, they or their legal representative may open an account which may hold fund that are not counted toward their eligibility for certain means- based benefits. Anyone may contribute to the account, up to $15,000.00 per year, with a maximum amount of $100,000.00 (to remain exempt for SSI purposes). Growth of the funds are also tax-free if spent on qualified disability expenses (which are also important for means-based benefits eligibility purposes). Funds remaining in the account on the owner’s death are to be paid to the to any states whose Medicaid programs paid for any medical expenses of the disabled person. For more information, check out www.ablenrc.org.
Third-Party Special Needs Trust
This option is the most favorable and can be used for a disabled beneficiary of any age. However, it requires advanced planning. Rather than give a gift or inheritance directly to someone on means-based benefits, third parties can give those assets to a trust to be used for that disabled beneficiary’s benefit. With the proper trust terms and administration, it should not impact the disabled beneficiary’s eligibility for means-based benefits. The trust does not include a payback provision for the beneficiary’s Medicaid expenses.
| Type Trust | Source of $ | Rules / Supervision | Payback to State |
| 1st Party SNT | Disabled person | Strict | Yes |
| Pooled SNT | Disabled person | Strict | Yes |
| ABLE account | Disabled person | More Relaxed | Yes |
| 3rd Party SNT | Another person | Relaxed | No |
What if I just omit my special needs child from my estate plan and leave money to her siblings to take care of her?
Risk that the sibling will be able or willing to use the funds for your disabled child’s benefit. For example, if the sibling went through a divorce, bankruptcy, or lawsuit, the funds intended for your disabled child may be at risk. Or, if something happened to the sibling, how do you ensure your wishes are fulfilled?
You may designate a preference for your child’s guardian in your Will. As an adult, your child may be able to sign a Health Care Power of Attorney, in lieu of a guardianship, if appropriate.
You also need to train someone how to advocate for your child. (See the Letter of Intent.)
This is the parenting guide for your child’s unique needs. If something happened to you, what would someone need to know to properly care for your child? Write it down! Consider the following subjects, for starters:
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