With children living longer and 75% of adults with disabilities living at home, there are almost one million households with caregivers over the age of 60. A report from Family and Individual Needs for Disability Supports (FINDS) found that most caregivers have serious concerns about what happens to their child after they can no longer provide care. And for good reason. Consider these facts:
- About one in seven Americans over the age of 70 have some form of cognitive impairment. That figure increases dramatically as we age, with 37.4 percent of adults in the U.S. who are 90 and older having a level of diminished capacity.
- There unfortunately is a trend in financial exploitation of elders and individuals with cognitive impairments, such as Alzheimer’s or dementia, are especially vulnerable.
- Most individuals interested in estate planning are focused on providing for their loved ones after death, but an essential aspect of overall plan is ensuring the individual themselves are covered during life.
As a caregiver, it makes sense to consider the “what ifs” of a decline in your own capacity and evaluate extra steps needed to safeguard future care of a child with disabilities. In addition to the natural aging process, consider the many unexpected situations, such as a serious accident or illness, that could render you incapable of performing the critical daily tasks of a primary caregiver. (Speaking of care provisions, preparing a letter of intent can be an invaluable instructional tool for those assuming the role of taking care of your child in your absence.)
Regardless of your ability to care for your child, if you haven’t yet started planning for their future needs, now is the time. Setting up a special needs trust is a good place to start so that an inheritance can be set aside to ensure your child’s needs are met, while government benefits are preserved. An ABLE Account also may play a role in managing funds during your child’s lifetime, and often provides additional flexibility in covering basic expenses (like food or shelter costs), and ABLE Accounts have the added benefit of being directly owned and controlled by the beneficiary or the beneficiary’s parent or guardian.
However, these steps alone may not be sufficient to protect your child should you become incapacitated. You’ll want to thoroughly understand your own options for planning, and the available types of trusts you can establish (irrevocable or revocable), so inheritance and special needs planning is tailored to the family. If a special needs trust is needed to hold a child’s inheritance and preserve essential public benefits, it is important to choose the right persons to manage the trust and its assets. The trustee is the individual or entity who serves as a fiduciary, making decisions concerning investments and future distributions to benefit the child (trust beneficiary). Sometimes, a trust protector might be named to hold rights or powers to participate in the trust administration. Trust protectors can be close family members who know the trust beneficiary well, or third parties who bring other expertise to the table, such as financial advisors or attorneys. The role of a trust protector is tailored and can address any type of check and balance the makers of the special needs trust want to place on the trustee. For instance, the trust protector might help the trustee with distribution decision, advocate for the beneficiary’s interests if a child’s caregiver is failing to do so due to their own needs, or might be given the power to replace a trustee who may not be doing a good job for the trust beneficiary. Because a trust for a child with disabilities may be long-term, it is important to consider all possible protections for a trust beneficiary and build the best possible team for success.
Is naming a trust protector for your special needs trust a good option for you? Perhaps, but it is only one small part of the overall planning picture which starts with understanding your options and the tools available. We urge you to periodically review all aspects of your long-term financial and care planning for your family, and we are available and happy to help you do so.
We’ve put together a helpful guide to planning for you and your child, “6 Milestone Ages of Special Needs Planning.” Download your complimentary copy here.