Special Needs, Special Planning

By Anthony Cloutier

There are few things in life as difficult as having a loved one with special needs. As a former Special Education teacher at a residential care facility, I saw first-hand the struggles that are dealt with. As a parent or grandparent the first reaction is always to provide love. Unfortunately, often times love isn’t enough. The need or desire to offer financial support also arises.

Regrettably, the rules governing the financial support of individuals with special needs are very rigid and specific. The pitfalls are numerous and attempting to navigate them correctly is nearly impossible. What may start as a generous gift can quickly become a bureaucratic nightmare as this case study will illustrate.

Peter was a 25 year old who suffered from traumatic brain injury since the age of 11. Due to the severity of his condition, he received Medicaid benefits. Initially, Peter lived at home with his parents but as he grew his needs increased and soon his parents were no longer able to meet his daily requirements. After endless research and multiple visits, they were able to find Peter an assisted living facility near home. Here he was able to receive the specialized care he so deeply needed and allowed his family to visit him almost every day.

Quite suddenly, Peter’s grandmother died. In her will she left a portion of her estate to all of her grandchildren. She made it a point to include Peter in everything even her will. After all she loved Peter just as much as her other grandchildren and she knew his parents would know what to do with his share.

Sadly, Peter’s grandmother’s kindness undid years of hard work. By leaving Peter money she forced him to forfeit his Medicaid status. All of the expenses from the facility were now paid for by his inheritance. Eventually, his inheritance was exhausted. Unfortunately, this lead to a gap in coverage because Peter was not able to reapply for Social Security benefits until his funds were effectively depleted.

The interruption in coverage forced Peter to return to living at home with his parents. To make matters worse, the facility was at capacity and had to put Peter on their waiting list. It took his parent’s over a year to get his benefits reinstated and him back in the assisted care facility. This clearly was not what Peter’s grandmother ever wanted to happen.

Regrettably, this situation could have been avoided with careful and informed planning. Peter’s grandmother should have disinherited him. Although, this sounds cruel there are other effective ways to provide for an individual with special needs. His grandmother should have left the money to his parents (with an understanding of its purpose) or established a Special Needs Trust. This would have allowed Peter to profit from her generous gift without surrendering his benefits. A SNT (Special Needs Trust) can be used to pay for an individual’s incidentals while providing insulation between the beneficiary and the funds. This basic but essential tool would have been enough to avoid the forfeiture of his benefits while allowing his grandmother this last charitable gesture.

For more information on Special Needs Trust and other fundamental planning strategies for individuals with Special Needs, please contact me, Anthony Cloutier at 603-539-6560.