For the month of March and in honor of Special Needs Awareness Month, we’re focusing this month on estate planning when it comes to planning for special needs beneficiaries. In December 2016, President Obama signed into law the 21st Century Cures Act, which expanded protections for people with special needs. In addition, many states continue to enact laws allowing for ABLE accounts.
Overall, 2016 was a year where the government expanded protections for people with special needs across multiple levels of government, and that impacted estate planning options for special needs beneficiaries, as well. The most crucial aspect of planning for a special needs beneficiary is ensuring their access to resources to provide for their needs while not affecting their eligibility for government benefits.
With the current political climate, there are likely to be challenges to the Affordable Care Act. Especially given the potential to allow pre-existing conditions to again factor into the cost of healthcare, the loss of government benefits could be particularly devastating to families with a special needs beneficiary. Any gifts or inheritances made outright to the special needs beneficiary could make them ineligible for government benefits and increase the risk for high costs of healthcare. That could be a big financial burden in addition to regular care and other expenses often related with special needs.
This month, we’ll also discuss how holding a family meeting to discuss estate planning can be beneficial for the whole family, but especially for a special needs beneficiary. Getting the whole family on board with a care plan and understanding the repercussions of gifting outright to the special needs beneficiary can make a difference long-term, especially with government benefits.
It’s also important to ensure your beneficiary designations are aligned with your estate plan. If you miss a beneficiary designation on an IRA, 401(k), life insurance policy, annuity, or any other asset, you could be risking giving those assets outright to the special needs beneficiary. You’ll want to ensure you’ve named a special needs trust as a beneficiary, not your estate or the special needs individual.
Tracking assets, their alignment with your estate plan and any changes over time is crucial to ensuring your estate plan works the way you intend. For more information on special needs planning, explore our website and contact us to schedule your consultation today!