Legal Planning is an essential element of a Comprehensive Special Needs Plan and is likely one of the areas you’re most familiar with. It’s vital to get this step right, but Legal Planning is not where I begin planning conversations with my clients. And it’s not where I encourage you to begin your planning process either.
Traditionally, the purpose of Financial Planning (which I discussed in my blog post yesterday) for your child with special needs was to make sure your child was taken care of financially if something happened to you and your spouse. Similarly, your Legal Plan protected your assets and ensured that the finances you’d set aside to care for your child were allocated appropriately, when you are no longer around to oversee the transfer.
Transition planning and preparing for the “What Ifs…” in life are absolutely essential. And you would be wise to give them ample time and attention as you plan. However, if those things become your main focus and you start there when you create Financial and Legal Plans you’ll find yourself approaching the planning process with a limited, DISability-based mindset. If your only purpose for creating a Financial and Legal plan for your loved one with special needs is to prepare for these negative scenarios, you’ll miss out on providing your child with so many amazing opportunities to realize his or her full potential.
Instead, let’s approach our Financial and Legal Planning with the same optimistic, abundant, ability–focused mindset with which we’ve approached our Vision, Life, and Resource Planning. I encourage you to view Financial and Legal Planning as strategies, along with your Life and Resource Plans, which are going to help your child fulfill the hopes and dreams of their Vision Plan.
Because you’re creating a Comprehensive Special Needs Plan that begins with Vision, Life, and Resource Plans, the sole focus of your Financial and Legal Plans is no longer preparing for what’s going to happen in the future when you and your spouse aren’t around. Instead, you’ve freed yourself to think about and plan for the best possible life your child can live — today, tomorrow, and 50 years from now.
So Why SHOULD You Plan Financially and Legally?
Financial Planning provides the means to pay for the goals you have created in your loved one’s Vision Plan and it also addresses the challenges of how to provide the needed resources that are determined by your Resource Plan. Legal Planning ensures that all of these plans are carried out based on your wishes.
What Might My Legal Plan Include?
Legal Planning will allow you to control and protect your assets and transfer them to others as you wish during your lifetime and after your death. Your discussions with a trusted attorney should revolve around how your assets and insurance can be used to take care of your family members now and in the future.
At minimum, your Legal Plan will likely include THREE components. Depending on the complexities of your family’s situation, you may need additional documents. Your attorney should understand your unique needs so that he or she can guide you through the planning process.
- Will: A will has four purposes in a Special Needs Plan. First, it appoints someone to handle your affairs and manage your estate after your passing. Second, a will transfers your assets to the individual(s) who you wish to take care of. Third, a will directs the payments of debts and taxes from the cash in your estate. The fourth and most important part of a will in a special needs plan is to appoint someone as guardian over your child with special needs who is committed to fulfilling the goals and aspirations described in your child’s Vision Plan.
- Power of Attorney: A power of attorney is a document that appoints someone to make legal, financial, and healthcare decisions for you when you are not able to. In regards to your special needs plan, it is important that this document names someone who will be able to make decisions for your child when you are not in the capacity to do so.
- Special Needs Trust: Many people think trusts are confusing. In basic terms, a trust is a legal agreement between an individual and a trustee to manage assets for a designated beneficiary. A Special Needs Trust allows money to be set aside for an individual with special needs without causing him or her to lose eligibility for government benefits. Currently, $2,000 is the limit that an individual with special needs can hold in his or her own name while still receiving government benefits. The Special Needs Trust was designed to supplement government benefits. In order to do this, the individual with special needs is the trust’s beneficiary. This individual does not have control over any part of the trust, including distributions. The trustee manages the trust. He or she is also responsible for making distributions from the trust to the beneficiary. It is critical that the attorney who creates your Special Needs Trust is very familiar with the exact language that needs to be included when they draft this document.
Remember, every decision you make as you create legal and estate plans can affect your Financial Plan. For this reason, it is essential that your financial professional and legal representative are both aware of your planning goals—including details of your child’s Vision, Life, and Resource Plans. It can be very helpful to work with an attorney recommended by your financial advisor or a financial advisor recommended by your attorney so that you know that both parties are connected to each other and can easily stay apprised of your situation and needs.
Next Up: Take the Quiz: How Well Planned Are You?
The FIVE areas of Special Needs Planning can seem overwhelming, frustrating, and confusing at times. Sometimes negative emotions, such as these, can prevent us from moving forward with our planning. Your Special Needs Planning professionals should have the personal and professional experience necessary to help you overcome any negative emotions that arise as you plan for your child. He or she should know the questions to ask and the strategies to recommend so that your planning process is as easy, efficient, and impactful as possible for your family’s unique situation and needs.
Now that you’re familiar with all FIVE areas of Comprehensive Special Needs Planning it’s time to evaluate how you’re doing with your own planning process.
Don’t miss tomorrow’s post – the last post in this seven day series: Day 7: Take the Quiz: How Well Planned Are You? where I’ll provide you with a link to our quick and easy 12-question self-assessment tool that will allow you to evaluate how well planned you are, including areas where you’re well planned and areas where there may be room for improvement.
You definitely don’t want to miss this! Look for that post tomorrow around 2pm ET on my website (www.enablesnp.com/blog) or Facebook page (@ENABLEsnp)!
And as always, if you have any questions or would like to speak directly with a member of our team, feel free to contact us by visiting www.enablesnp.com/contact. We’d love to hear from you and learn more about your family’s unique situation.