Raising children is neither easy nor inexpensive. When your child has special needs, raising that child can be more difficult and more expensive, but can also bring even more joy and happiness to you and your family. Protecting and providing for your child with special needs is likely to be important to you long after your child becomes a legal adult. To accomplish these goals, you need a comprehensive estate plan in place that includes a special needs planning component. That component will likely include a special needs trust. The Long Island attorneys at Eghrari Law Firm explain why you should include a Memorandum of Intent with your Special Needs Trust.
What Is Involved in Special Needs Planning?
Ideally, every adult has a comprehensive estate plan in place that does much more than simply arrange for the distribution of assets upon their death. The additional components found in a comprehensive estate plan will depend, to a large degree, on the needs and objectives of the plan’s creator. If you are the parent of a child with special needs, for example, you should include a special needs planning component in your overall estate plan.
Special needs planning is necessary, in part, because your child is likely to continue to depend on assistance from state and federal programs such as Supplemental Security Income (SSI) and Medicaid as an adult. As a parent, you may want to also continue to provide financial support to your adult child and you certainly want to leave behind assets to help support your child if something happens to you. Most assistance programs, however, include an asset limit as one of their eligibility requirements. Consequently, making direct gifts to your child while you are alive or in your Last Will and Testament could inadvertently cause your child to lose crucial assistance from these programs. Fortunately, special needs planning within your comprehensive estate plan can help.
What Is a Special Needs Trust?
Also called a Supplemental Needs Trust, a Special Needs Trust (SNT) is an irrevocable living trust that is specifically designed to provide “supplemental” financial assistance above and beyond that which is provided by government assistance programs, including SSI and Medicaid. Necessities should be covered by government assistance programs, but assets held in an SNT can be used to purchase “extras” that increase the quality of life for your child. Things such as a vehicle, travel expenditures, and items that make your child more comfortable can be purchased using assets held in an SNT.
Like all trusts, your SNT is administered by a Trustee who is appointed by you when you create the trust. To ensure that the assets held in the trust are not counted for purposes of eligibility for assistance programs the trust must contain very precise language. This is one reason to work closely with an experienced special needs planning attorney when you create a Special Needs Trust.
Why Should I Include a Memorandum of Intent with My Special Needs Trust?
A Memorandum of Intent (MOI) is not required when you create a SNT; however, it is a highly recommended addition to your SNT. Much like a Letter of Instruction that accompanies your general estate plan, a MOI is not a legally binding document, but can be extremely helpful to your Trustee during the administration of your SNT.
Your Trustee is responsible for deciding when to approve a disbursement from the SNT and what the funds should be used for, making your Trustee a vital component in your overall special needs plan. A MOI allows you to provide your Trustee with invaluable insight into your child and his/her needs, likes and dislikes, wishes, capabilities, and interests. Ultimately, you can include any information you wish in the MOI that you create; however, some common information passed on in an MOI includes:
- An explanation of your child’s diagnosis, prognosis, and medical needs.
- Your child’s capabilities, both in and out of a traditional academic setting.
- What your child’s interests are and what your child likes to do (and doesn’t like to do).
- Religious beliefs and overall parenting philosophies.
- Description of important relationships in your child’s life.
Are You Ready to Create a Memorandum of Intent?
For more information, please join us for an upcoming FREE seminar. If you want additional information about including a Memorandum of Intent with your special needs trust, contact the Long Island special needs planning attorneys at Eghrari Law Firm by calling us at 631-265-0599 to schedule your appointment.
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