Every parent worries about whether their children will be well cared for if tragedy strikes. But the worries are compounded for parents of children with special needs who lack the capacity to communicate their needs to caregivers.

As a parent of a special needs child, you know their needs and desires, likes and dislikes and information relating to the care and services they are receiving. But what happens if you are no longer living? How can you ensure that your disabled child will be well cared for by the person who assumes the role of their guardian when you’re gone?

Although a Special Needs Trust can provide for your disabled child’s supplemental financial needs, it will likely not contain information that is vital to ensuring continuity in their care. That’s why all parents of children with special needs should also prepare a Letter of Intent.

What is a Letter of Intent?

A letter of intent is not a legally-binding document. Rather it is letter that provides valuable information about your disabled child’s life to help guardians, trustees and courts understand your hopes and desires for him or her.

What Should Letter of Intent Include?

A letter of intent should include information such as:

• Names, addresses and phone numbers of people who should be contacted in the event of your incapacity or death.
• Your child’s family history, as well as names and contact information for family members who have a good relationship with your child.
• The names, addresses and phone numbers of close friends who have a good relationship with your child.
• Facts relating to your child’s medical condition and names, addresses and phone numbers of those actively involved in your child’s medical care.
• Your child’s interests, personality traits, likes and dislikes, including the types of social activities your child enjoys.
• Your child’s day to day routines such as mealtimes, bedtimes, and extracurricular activities.
• Information about your child’s education and your hopes and aspirations for future education.
• Information about any paid or volunteer positions that your child had held and/or what types of jobs he or she might enjoy.
• The location of medical records or other important documents
• Your child’s religious beliefs, including where he or she attends religious services, the names of ministers who are familiar with your child and your hopes for his or her religious upbringing.
• The environment in which you would want your child to live as an adult, such with relatives or in a group home.
• Any other information you believe is relevant to your child’s care.

Does My Letter of Intent Have to Be In Any Specific Format?

The Letter of Intent does not have to be in any specific format. It can be handwritten or typed, although typing it can make it easier to keep it regularly updated as your child’s needs change.

How Often Should I Update my Letter of Intent?

A letter of intent should be updated on a regular basis throughout your life to ensure that it is current. Make it a habit of revisiting it once a year, perhaps on your child’s birthday, or New Year, and noting any changes. A current copy should be kept with your estate planning documents so that it can be found when needed.

As a constant in your child’s life, you know him or her better than anyone. Providing a Letter of Intent to the person who will assume the responsibility for your child’s care will ensure that he or she is up to speed a lot more quickly and better able to provide for your child’s needs.

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Unlike a support trust which which direct that funds be used for the health, welfare, and support of a beneficiary, a Special Needs Trust (SNT) is a discretionary trust created to supplement the beneficiary’s basic needs. By being structured in this way, the trust both preserves the public benefits available to a beneficiary and enhances the quality of a disabled beneficiary’s life.

Below is a non-exclusive list of some types supplemental disbursements that are appropriate for a trustee of a special needs trust to make on behalf of a beneficiary:

• Health and dental treatment and equipment for which there are not funds otherwise available
• Rehabilitative and occupational therapy services
• Medical procedures, even though not medically necessary or lifesaving
• Medical insurance premiums
• Supplemental nursing care
• Supplemental dietary needs
• Eyeglasses
• Travel
• Entertainment
• Companionship
• Private case management
• Cultural experiences
• Expenses associated with bringing relatives or friends to visit with the beneficiary
• Vacations
• Movies
• Telephone service
• Television and cable equipment and services
• Radios
• Stereos
• Training and education programs
• Reading and educational materials

Source: The Arc of Texas Master Pooled Trust

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1. Special Needs Trusts FAQs

If you are a parent of a child with special needs, you need special estate planning. Why? Because if you leave assets directly to your special needs child, either in a will or through the intestacy statutes if you die without a will, the inheritance your child receives can jeopardize his or her ability to receive benefits under government programs such as Supplemental Security Income and Medicaid.

A special needs trust can help preserve your child’s eligibility for public benefits while providing for supplemental needs that will enhance his or her life. Below are answers to frequently asked questions about special needs trusts.

What is a Special Needs Trust?

A Special Needs Trust (SNT), also known as a Supplemental Needs Trust, is a discretionary trust created to hold the property of a disabled beneficiary and distribute supplemental funds to that individual in a way that preserves his or her eligibility for public benefits.

What is the benefit of a Special Needs Trust?

Supplemental Security Income (SSI), Social Security Disability Insurance (SSD), Medicare and Medicaid are government programs that offer support to disabled individuals.  SSI is a needs-based program that is only available to people who meet certain income and resource limitations. In most states including Texas, people receiving SSI are automatically entitled to Medicaid.

To qualify for SSI and Medicaid, a single person must own less than $2,000 of countable assets. Those with countable assets greater than $2,000 can lose their eligibility for benefits. That’s why it’s generally a bad idea to give assets, either as a gift or inheritance, directly to a loved one who is disabled and receiving government assistance.

Won’t any trust work?

Not all trusts will work to preserve a disabled beneficiary’s benefits. Support trusts, which direct that funds be used for the health, welfare, and support of a beneficiary, can disqualify a disabled beneficiary because the assets in a support trust are counted as the beneficiary’s resource.

A Supplemental Needs Trust is a discretionary trust that allows a trustee to use trust funds to supplement, not replace, a beneficiary’s government entitlements. To maintain eligibility for needs-based support, the beneficiary cannot have control over the assets in the SNT. The beneficiary cannot manage the assets, have the right to demand distributions of income or property from the SNT, name the Trustee or change the terms of the SNT. The use of the SNT’s assets for the benefit of the beneficiary is determined at the discretion of the Trustee.

Beneficiaries of properly drafted special needs trusts do not have legal claim to the property in the trust. That means that the trust assets are not countable resources and do not affect the beneficiaries’ eligibility for benefits. As a result, the beneficiaries are able to continue receiving government benefits, while still enjoying the benefits of the property in the trust for supplemental needs.

Who can serve as trustee of a Special Needs Trust?

The Trustee can be a family member, friend, or private professional Trustee. In the case of a stand alone special needs trust, the person making the gift can also serve as trustee.

A special needs trust can help you provide for your child without jeopardizing his or her eligibility for benefits under SSI and Medicaid. If you are a parent of a child with special needs, a special needs trust should be an essential part of your estate planning.

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1. What Supplemental Expenses Can Special Needs Trusts Pay For?

Estate planning is important for all families, but especially so for families with a special needs child.  This is because without appropriate estate planning, a well-meaning parent can inadvertently disqualify his or her special needs child from receiving government benefits.

Government Benefits for Special Needs Children

Supplemental Security Income (SSI), Social Security Disability Insurance (SSD), Medicare and Medicaid are government programs which offer support to disabled individuals.  SSI is a needs-based program available to persons who meet welfare limitations with respect to both income and resources.  In most states including Texas, people receiving SSI are automatically entitled to Medicaid.

A disabled person may be disqualified from receiving SSI and Medicaid if he receives cash or other assets through a will or as a beneficiary of a retirement account or life insurance policy.  The loss of these government programs may be devastating to a person with significant disabilities.

How Estate Planning Can Help Protect Benefits for Special Needs Children

A Third Party Special Needs Trust, also called a Supplemental Needs Trust (SNT), is a trust that allows a third party to leave assets to a disabled beneficiary in a manner that both preserves the public benefits available to that beneficiary and enhances the quality of the disabled beneficiary’s life.

Support trusts, which direct that funds be used for the health, welfare, and support of a beneficiary, can disqualify a disabled child because the government can require that trust funds be distributed from the trust to replace government benefits.

A Supplemental Needs Trust, however, is a discretionary trust that allows a trustee to use trust funds to supplement a beneficiary’s government entitlements.  Although money from a SNT cannot be used to pay for the beneficiary’s basic needs, it can be used to pay for things such as vacations, summer camps, computers, haircuts, tickets to sporting events, and medical and health costs not covered by Medicaid, thereby enhancing the quality of the disabled child’s life.

Because the beneficiary has no control over disbursements or the authority to revoke the trust, a SNT is not considered a resource for purposes of SSI eligibility.

If you have a special needs child, a Supplemental Needs Trust is essential to preserving his or her government benefits. Supplemental Needs Trusts are not just for wealthy people. They can be funded by bequests from a will, or with insurance money, allowing you provide for your special needs child after you die.

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