Special Needs Trusts: Estate Planning Is Crucial for Ensuring the Future of Your Autistic Child (continued)

The Money Issue
Although there is no bright line rule for when a parent needs a special needs trust, many families should
have one. Special needs trusts are probably not necessary for parents living at the poverty level, which was $18,100 for a family of four in 2002. These families are already on government assistance and the kids will continue on this assistance even after their parents' death.

But for the majority of American families - those earning about $65,000 a year for a family of four - a special needs trust is crucial. These families typically have very little in tangible assets, second mortgages on their homes, and little to no savings (likely due to paying for costly therapies). But even though they not wealthy, their children aren't used to relying on government assistance. And they often have life insurance (mostly term life insurance or employer provided), which may be valuable. Estate planning vehicles like special needs trusts can ensure that this life insurance will in fact be available to retain their child's quality of life.

Special Needs Trust
A special needs trust is a vehicle that provides assets from which a disabled child can maintain his quality of life, while still remaining eligible for needs-based programs that will cover basic health and living expenses. Here's how it works: the Ramsey's create a special needs trust to benefit Jimmy that provides instructions as to the level of care they want for him. They also create a will that leaves certain assets to the special needs trust - no assets are left directly to Jimmy. After they are gone, the people they have chosen to manage the trust (trustees) can spend money on certain defined expenses for Jimmy's benefit without compromising his eligibility for needs-based programs.

In general, basic living expenses such as food and shelter may not be provided for through the special needs trust. But essential quality of life expenses such as clothing, vocational training, facilitative technologies and travel (both around town and long distance) may be provided. Certain health care expenses that are related to the person's disability (occupational therapy, speech therapy, etc) may also be provided for by the trust. However, more universal health care expenses such as nonprescription
vitamins and antibiotics may not be provided. Parameters vary from state to state so parents should check with a qualified attorney in their state. (See Side Bar for questions to ask a prospective
attorney and information on how to find an attorney in your area).

Crucial choices you will need to make in establishing a special needs trust include:

Trustee
The trustee can be a family member or close friend who knows your child and who is organized, financially savvy and above all ethical. Some families opt for a professional trustee (usually working for
banks or financial institutions). Whatever the choice, it's crucial for the trustee to understand the expenses that can and can't be provided for under the special needs trust.

Purpose of the Trust
This provision should enumerate all of the reasons for establishing the trust and might include the
following issues:

* Where should the child live? (i.e., a group home vs. assisted living at home)
* What specific social activities should be supported by the trust? (e.g. special Olympics,
choir, religion)
* What specific technologies or treatments should the child have access to?
* With whom should the child have regular contact facilitated by the trust? (e.g. plane tickets and other travel arrangements)

Revocable
Special needs trusts may be completely revocable (altered) at any time. But there are disadvantages to revocability. Revocable trusts can create higher taxes at death since they are included in the parents'
gross estate for purposes of the estate tax. Also revocable trusts can create a problem should circumstances change, like one parent dies and the new spouse wants to change the terms of the special needs trust. One solution might be to make the trust irrevocable when formed such that it cannot be changed. But parents should consider putting an irrevocability trigger provision into the revocable trust. Basically, the irrevocability trigger kicks in when the change occurs - such as death of a parent, divorce, or when the trust's assets reach an amount that is likely to cause a huge estate tax burden.

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