|
|
 |
|
| Best Practices: Matters of Trust |
Best Intentions
Danna Voth
12/01/2004
|
According to Ronnie Ringel, vice
president and trust counsel at Fiduciary Trust International in New York,
special-needs trusts can make distributions directly to third-party providers of
goods and services. For instance, they can pay for swim club memberships,
entertainment, restaurants, musical instruments and lessons, as well as the
requisite transportation to these activities. They may also pay money to people
other than the beneficiary child; such uses are often the compelling reason to
fund such trusts. According to Nadworny, trusts can secure vehicles, health
insurance and retirement benefits for our child’s caretakers. These bonuses help
us retain expert caregivers and preserve the consistent relationships that are
so important in our child’s life. Moreover, we can use the trust to provide
money to enable our child’s relatives and friends, as well as the necessary
extra staff, to accompany the child on trips.
TOP VIEW
A special-needs trust guarantees that our disabled children will be well cared
for after we die. By removing all assets from our children’s names, this
fiduciary vehicle maintains their eligibility for essential public services,
while seeing to it that their bills are paid and their needs are met. |
Planning and Procuring
Nadine Vogel, director of MetDesk, a special-needs
estate planning division of Metropolitan Life Insurance in Jersey City, N.J.,
advises parents to work with an attorney with expertise in this area. Doctors,
child psychologists, counselors and other specialized advocates can help us
identify our child’s needs at various stages of development, and help us
pinpoint the important investments we can make to ensure his or her well-being.
Clinical social workers, special-needs consultants ranging from physical
therapists to technology experts and various other service providers can assist
us in ascertaining the future medical, residential, educational, vocational and
social costs. Finally, a qualified financial planner can incorporate this
information into the trust and allocate necessary resources.
A bank often
administers and manages a special-needs trust, and family members or friends
typically serve as trustees. “To find the right bank, you have to meet with the
trust officers and talk to them about what their fees are, what their experience
is with special-needs trusts, as well as the company’s rate of return on
investments,” Varnet advises. “You want to be sure that this trust department
understands government benefits.” Some advocacy groups for people with
disabilities employ professionals who can serve as trustees, which can be a very
helpful service in the event that we eschew our family members.
Parents
usually fund special-needs trusts with a testamentary gift, through either a
will or a life insurance policy. According to Nadworny, we should resist
temptation to begin funding the trusts prematurely. “When people start to fund
trusts early, they get taxed.” However, Ringel notes that early funding gives
parents an opportunity to see how the trust may work and to become comfortable
with the trustees at a time when they can still easily alter the terms of the
trust.
| Our child cannot receive any cash or checks from the trust, even as
pocket money. |
If we have established a trust for a child before he or she becomes
disabled, or before we become aware of a disability, we can restate it as a
special-needs trust, assuming the original trust is revocable. If the trust is
irrevocable and has been funded, we may need to petition a court to amend
it.
Letters of Intent
Even with attorneys and trustees at our side, our
disabled child will depend primarily on us for his or her development and
well-being. The more we can do to see that specific—even very personal—needs are
met after we are gone, the more serenity we will have now. A letter of intent is
a helpful tool for identifying and planning for such needs.
Although not a
legal document, a letter of intent provides written instruction to the person
who will be providing primary care for our child after we die. Varnet recommends
creating the letter first as a digital document so that it is easy to update,
both on an annual basis and when major changes occur. Software can remind us
with an alert to edit the document on a regular basis; Varnet uses her
daughter’s birthday as a trigger date.
|
|
|
|
|
|
|
