Remember how satisfying it was setting up a trust for your child with special needs? You named a trustee, signed the paperwork, and then you rested easy at night knowing you had put a plan in place for your child. Done!
Well, not exactly. Because things constantly change, whether over time or suddenly. It’s easy to throw your special needs trust into a drawer and forget about it, especially if you are not planning on funding it until you pass away.
While having a plan in place is a great start, it needs to be maintained. You wouldn’t buy a new car and then never change the oil. When it comes to special needs planning, even small changes in
circumstance can have significant legal repercussions. Here are a few examples of the types of changes that can impact your special needs trust.
Trustees and successor trustees: A significant life event such as divorce, physical incapacity, or job loss may make your chosen trustee or successor trustee unavailable.
Health care agent: Is that person still able to jump in at a moment’s notice in the event of an emergency, or have they moved to another state or country? Do they still have the capacity and willingness to perform this critical role?
Finances: Think of significant changes in your financial picture, such as an inheritance, the liquidation of a family business, the purchase of a life insurance policy, retirement, bankruptcy, or litigation. You may consider transferring additional funds to the trust, adjusting the language to add an extra layer of protection, or rethinking how the fund’s assets are managed.
Major life events: Any significant changes in your own life will impact your dependent with special needs. These include losing a spouse to death or divorce, remarriage, the birth of another child, retirement, or relocating to another state where the laws governing special needs trusts are different.
Changes in the beneficiary’s situation: Your special needs dependent could develop more capacity through therapies and medical innovation, or conversely, your child may need more support and assistance as time goes by. An inheritance or a settlement from a lawsuit will have an impact on how the trust functions in the beneficiary’s life. Does the language in the trust even allow provisions to be added or changed to meet any new requirements?
Then there is the ever-changing world of federal disability benefits, which can be challenging to keep track of. Your special needs planner should monitor shifts in disability benefits law and new policies on a local, state, or federal level. Such new policies may have a direct impact on your special needs plan.
The good news is that special needs trusts are living documents that can be updated and changed regularly. But whatever happens,
• Put off reviewing the trust’s provisions. Everything can change when you least expect it, whether as a result of global pandemics, extreme weather events, financial crises, or other emergencies. Don’t wait for such an event before reviewing the plan; check it at least once a year to ensure everything is the way you want it.
• Think you can do it yourself by making handwritten changes in the margins. Changes must be properly noted and executed through your attorney. If done incorrectly, without a legal review, such amendments could complicate matters for your special needs beneficiary down the line and lead to expensive litigation.
• Assign successor trustees based on assumptions. Do not presume that a trustee’s spouse will take over if the trustee passes away. Always plan for contingencies when making decisions. If it has been a while since you took a peek at your special needs plan, take it out, dust it off, and schedule an appointment with Andy Deaver, a member of the Academy of Special Needs Planners, at [email protected].