There are many misconceptions regarding special needs planning that can result in costly mistakes in planning for special needs beneficiaries.
MISTAKE #1: Counting on siblings to use their money to take care of the special needs child.
Parents may be tempted to rely on their other children to provide, from their own inheritances, for a special needs child. This can be temporary if their other children are financially secure and have money to spare. However, it is not a solution that will protect a special needs child after parents have died or when siblings have their own expenses and financial priorities.
MISTAKE #2: Disinheriting the special needs beneficiary.
Many disabled people rely on SSI, Medicaid or other government benefits. Parents may have been advised to disinherit their special needs children to protect their children’s public benefits. But these benefits rarely provide more than basic needs. When a loved one requires, or is likely to require, governmental assistance to meet his or her basic needs, parents, grandparents and others should consider establishing a Special Needs Trust.
MISTAKE #3: Procrastinating.
Because no one knows when we may die or become incapacitated, it is important that parents plan for a beneficiary with special needs early, just as they should for other dependents such as minor children. However, unlike most other beneficiaries special needs beneficiaries able to compensate for a failure to plan. Minor beneficiaries without special needs can obtain resources as they reach adulthood and can work to meet essential needs, but special needs beneficiaries may never have that ability.
MISTAKE #4: Ignoring the special needs when planning.
Planning that is not designed with the beneficiary’s special needs in mind will probably render the beneficiary ineligible for essential government benefits. A properly designed Special Needs Trust promotes the special needs person’s comfort and happiness without sacrificing eligibility. Special needs can include training and education, insurance, transportation, entertainment, vacations and essential dietary needs.
MISTAKE #5: Failing to properly fund and maintain the plan.
When planning for a special needs child, it is absolutely critical that there are sufficient assets available for the special needs beneficiary throughout his or her lifetime. In any instances, life insurance can be used to provide this liquidity.