GUARDIANSHIP

69% of parents have not named legal guardians for their children. Of the 31% who have, most have made one of 6 common mistakes. That means that if you have minor children at home (or children who have special needs), it’s time to review your plan for their care, if and when something happens to you.

If you and your spouse/partner cannot agree on who would be the ideal guardian(s) for your kids, that’s something we can help with.  We have special training from the Family Wealth Planning Institute on helping parents work through this critical decision.

If you do nothing, the decision about who would raise your children (if something were to happen to you) would be left up to a judge to decide.

A judge who doesn’t know you, doesn’t know what’s important to you, and doesn’t know your children will make all the decisions about who cares for the people who are most important to you in the world.

We know that’s not what you want.

And, truth is …  there may never be a perfect solution for you, but there is definitely a solution that is better than your children being raised by someone you didn’t choose. 

Perhaps you think the way so many parents do, “if we don’t anticipate it, it will never happen, right?” 

If that was true, you wouldn’t need things like insurance or any other type of protection since bad things never happen to good people. Wouldn’t it be great if that were true?

Responsible parents protect their children, and that means you must think about the unthinkable. 

Fortunately, there is a sensible approach to the selection of a guardian for your children that makes it a lot easier. And we can guide you through this most important of decisions.

For many people, the basics of estate planning are simple enough, but for those families with loved ones who are disabled or have special needs, the estate planning process is more involved – and definitely more critical.

The latest statistics show that five percent of minor children have some sort of disability, and that caring for these children makes estate planning essential. In addition to specialized health care, these children may need special schooling and intensive therapy, all of which comes at a cost.

Here are some tips for parents facing the need to plan not only for their own financial future, but for that of a special needs child:

What kind of life do you envision for your child?

Parents need to think about the kind of life they envision for their child. Will he or she be able to work or live independently? The answers to these questions will form the foundation of your plan.

Determine eligibility for public benefits.

In order to meet eligibility requirements for Medicaid and Social Security Supplemental Income programs, a person with special needs or other disabilities must have limited income and assets. This makes it imperative that a child who could benefit from these services not have any assets titled in his or her own name – meaning they should not be listed as beneficiaries on life insurance policies, retirement accounts or plans, in trusts, wills or pensions.

Create a special needs trust.

A special needs trust, also known as a supplemental needs trust, can be established by a parent or grandparent for the care of a child or grandchild of any age in lieu of leaving an inheritance, which would likely disqualify a special needs person from receiving necessary government assistance.

Parents of a special needs child who also have other children are often tempted to leave their assets to the other children with the understanding that they will take care of their disabled brother or sister.  However, if one of those children gets a divorce, files bankruptcy or pre-deceases the disabled child, those assets could go to an ex-spouse, creditors or others.  To prevent this from occurring, parents should divide assets among all their children equally but place the disabled child’s assets in a special needs trust and possibly add to it with a permanent life insurance policy.

Assets placed in a third-party special needs trust are not counted as assets toward public benefit program eligibility, but these trusts are governed by strict rules so the counsel of an experienced estate planning attorney in establishing this trust is necessary. Parents do not need to fund a special needs trust with cash while they are alive; they can do so through other assets after they die.