February 6, 2008

Ten costly mistakes to avoid when planning for your special-needs child
Part 1 of 3

By Robert P. Bergman
Special to the Times

This article is the first of a three-part series examining estate-planning requirements of families with children, grandchildren or other family members with special needs. It has been adapted from material provided by the Academy of Special Needs Planners, of which I am a member.

There are many misconceptions resulting in costly mistakes in planning for special-needs beneficiaries. Here are the first of 10 of the most common costly mistakes that can be made when planning for beneficiaries with special needs:

Number 1: Disinheriting the child. Many disabled people rely on SSI, Medicaid, MediCal in California or other government benefits to provide food and shelter. You may have been advised by otherwise well meaning individuals or advisors to “disinherit” your disabled child, the child who needs your help most, to protect that child’s government benefits. But these government benefits rarely provide more than basic needs, and this “solution” does not allow you to help your disabled child after you become incapacitated or deceased. When a child requires, or is likely to require, governmental assistance to meet his or her basic needs, parents, grandparents and others who love this child need to consider establishing a Supplemental Needs Trust.

Planning Tip: It is unnecessary and poor planning to disinherit a special-needs child. If you have a special- needs child or other beneficiary, you need to consider a Supplemental Needs Trust to protect public benefits and care for the child during your incapacity or after your death.

Number 2: Procrastination. Because none of us knows when we may die or become incapacitated, it is important to plan for a beneficiary with special needs early, just as you should for other dependents. However, unlike most other beneficiaries, a special-needs child may never be able to compensate for a failure to plan. A minor beneficiary without special needs can obtain more resources as he or she reaches adulthood and can work to meet essential needs, but a special-needs child may never have that ability.

Planning Tip: Parents, grandparents or any other loved ones of a special-needs child face unique planning challenges when it comes to that child. This is one area where you simply cannot afford to wait to plan.

Number 3: Failure to coordinate a planning team effort. It is critical that special-needs planning be conducted, as much as possible, with a team of advisors such as an attorney who is experienced in this planning area, a life insurance agent who can ensure that there will be enough money to maintain the benefits for the special needs child, a CPA who can advise on the Supplemental Needs Trust’s tax return; an investment advisor who can ensure that the trust fund’s resources will last for the child’s lifetime, and other key advisors that may support the goals of the trust going forward, such as a care manager for the child...

Planning Tip: Special needs planning dictates that you have advisors that work together to ensure that there are sufficient trust assets to care for your child throughout his or her lifetime.

Number 4: Choosing the wrong trustee. During your lifetime, you can manage your child’s Supplemental Needs Trust. When you are no longer able to serve as trustee, you can choose who will then serve as trustee according to the instructions that you have provided. You may decide on a team of advisors and/or a professional trustee. Whomever you choose, it is crucial that the trustee is financially savvy, well organized, and, of course, ethical.

Planning Tip: The trustee of a Supplemental Needs Trust should understand your objectives for your special-needs child and be qualified to manage and invest the assets in a manner most likely to meet those objectives.

Next month, I will present more of the these mistakes.


Robert P. Bergman is a San Jose estate planning attorney and counselor who devotes his law practice exclusively to assisting individuals and couples plan for incapacity and the eventual transfer of their property to their heirs. Bob specializes in working with parents who have minor children. Bob gives a regular monthly seminar at the Jewish Community Center in Los Gatos entitled “Everything You Wanted To Know About Estate Planning, But Were Afraid to Ask!” Visit his Web site at www.lawbob.com where you can learn more, get on his mailing list, register for an upcoming seminar, schedule a consultation, and read other articles on estate planning topics that Bob has written. You can also reach him by e-mail at rpb@lawbob.com or telephone at (408) 247-0444. All inquiries are confidential. This column is intended to provide general information about estate planning ideas, concepts, and laws, and is not to be relied upon as rendering legal advice about your particular situation. No attorney-client relationship is created by these articles. The laws concerning estate planning, wills, trusts, and estate taxes are very complex, often state-specific, and change on a regular basis. Consult with an experienced attorney before taking any action that would affect your personal or business matters.