Attorney Stephen Yim, founder of Yim & Yempuku, joins producer/host Coralie Chun Matayoshi to discuss what to do to ensure there is someone to care for your child physically and financially when you are no longer able to do so, how to make sure that your special needs child can take advantage of government benefits, Supplemental Needs Trusts and what they are used for, appointing a trustee, and major recent law changes that impact special needs planning. Q. When you have a child with special needs, you worry about them your whole life and what will happen after you die. You work with parents in this situation - what do they worry about most? Parents of children with a disability have about the same concerns as any parent - make sure their children always have a place to live, enough food to eat, and can grow and develop and have a meaningful life.  In addition, because through no fault of the child with a disability, the child may not be able to sustain a full-time job and become independent, parents of children with a disability want to make sure that there are sufficient resources to pay for food, shelter and health care for the rest of their child's lifetime.  And, parents want to make sure that there are trusted persons managing, protecting, and using the resources for their child's benefit. None of us live forever and if you are a parent of a special needs child, what can you do to make sure there is someone to care of your child physically and financially when you are no longer able to do so? Begin financial planning early. Begin financial planning in order to develop a plan to ensure that the child has enough resources available. This can include considering life insurance - this is leveraged liquid money, that is more affordable the younger and healthier the parent is. Long-term care insurance, so that the parent doesn't have to worry about using their resources for their long-term care and can make sure that they leave their child with disability more assets. And plain old saving on a continued basis. Make an Estate Plan. The definition of Estate Planning is "building relationships."  Rather than leaving it up to judges and lawyers as to who will take care of the adult child with disability, parents can predetermine the most trustworthy person and successors to manage assets and help their child with disability. For example:  establish a Will to appoint a Guardian to care for your child with disability if you die; establish Supplemental Needs Trusts to hold assets you intend to transfer to your child with disability which allows you to appoint a trusted person to hold, manage, budget, protect, invest, and spend on behalf of your child with disability and can help to protect the governmental assistance, including Social Security Income and Medicaid (Quest here in Hawaii).  When your child reaches age 18, consider Guardianship or alternatively, Financial Power of Attorney and Advance Heath Care Directive and consider applying for Supplemental Security Income (SSI) and Medicaid. Build a community of trusted, capable , and willing friends, family, and advisors.  Build an interdisciplinary team that knows one another and can work together collaboratively to act in the best interest of your child. This team includes a CPA, financial advisor, attorney, fiduciary (trustee), family members, therapists, social workers, and health care professionals. Q. The federal government provides benefits designed to support individuals with disabilities, including special needs adults and children. What are some of these benefits, how do you qualify, and are there any limitations on these benefits? There are two major categories of Public Benefits potentially available to persons with disability: Needs-based benefits including Supplemental Security Income (SSI) and Medicaid.  SSI is monthly financial assistance, for food and shelter, to individuals with limited income and resources. They must have a disability that significantly limits their ability to perform basic work activities and is expected to last at least one year or result in death.  They can't have more than a certain amount of cash and other assets that can be converted into cash like stocks, bank accounts and property (e.g. 2024 limit is $2,000 in 2024). Parent's income and resources count until the child turns 18.  For similarly situated persons, the State of Hawaii provides Medicaid which provides medical, health coverage, and long-term care services. Entitlement benefits such as Social Security, or Social Security Disability Insurance (SSDI), and Medicare. It is the needs-based benefits that we must concern ourselves with in special needs planning. There are income and asset limitations with regard to these needs-based benefits (for example if a person with disability owns more than $2,000.00 in assets this could jeopardize governmental assistance and benefits). Q. How can you make sure that your special needs child can take advantage of these government benefits? Estate planning for special needs children involves legal and financial strategies to take care of their long-term care and financial security without jeopardizing their eligibility for government benefits. For many, for most governmental benefits, your adult disabled beneficiary child cannot receive governmental assistance if he/she has more than $2,000.00. Leaving assets directly to your disabled child will jeopardize these benefits.  These governmental benefits are extremely important for most families. A major goal of most parents who come in for special needs planning is to preserve these governmental benefits. To the point that parents ask if they can leave the child with disability's inheritance to a family member to hold and spend, or intentionally disinherit the child with disability. Parents do not usually want to do this as they want to treat their child with disability the same as their other children.  The better alternative is to create Supplemental Needs Trusts. Q. There are two kinds of Supplemental Needs Trusts.  What are they and how do they differ? Third-Party Special Needs Trust - established by others like parents and grandparents using their own assets. No payback requirement so any remaining funds after the beneficiary's death can be distributed to other family members or heirs. First-Party Special Needs Trust (also referred to as an "Obra '93, Oops, 42 USC 1396pd4a or d4a, or payback trusts) - funded by assets of the special needs individual (e.g. any assets received directly in the child's name including inheritance, personal injury settlements, savings). Must include a payback provision so when beneficiary dies, the remaining funds are used to reimburse the state for Medicaid benefits received. Practically only grandparents or parents can establish these First-party trusts. Q. What can funds from Special Needs Trusts be used for? Most importantly is not to give the child with disability monies directly. This could jeopardize governmental assistance. Then, make sure that you do not use trust assets to pay for things that the Government provides, this can also jeopardize benefits. Beyond these considerations, there are many things the supplemental needs trust can pay for including paying for Clothing, Entertainment, Electronic equipment such as a cell phone, television, cable, internet, vacation expenses, recreational activities, hair, nail and other personal care, and any supplements to medications, dietary supplements, non-necessary medical care, services, and procedures, rehabilitation and physical therapy, psychological services. Q. How do you decide who to appoint as Trustee of the special needs trust? Selecting and appointing the appropriate trustee for the Supplemental Needs Trust is one of the most important considerations in establishing an estate plan.  Administering a Trust, especially an on-going trust, is a complicating and often stressful job. It requires someone with a broad array of skills, including knowledge of taxes, investments, and law. Add to that the complexities of the special needs rules, you will want to consider options including a third-party trustee other than a sibling. Q. Are there any major recent law changes that impact Special Needs Planning? Yes, Congress recently legislated the SECURE ACT which significantly impacts how we plan with retirement accounts such as IRAs and 401(k)s. Historically, advisors would recommend not leaving retirement accounts to persons with a disability. Due to major changes in the law, now advisors are recommending directing retirement accounts to Supplemental Needs Trusts for the tax benefits. I would recommend if you have not reviewed your estate plan recently, that you touch base with your estate planning attorney and review your plan. To learn more about this subject, tune into this video podcast. Disclaimer:  this material is intended for informational purposes only and does not constitute legal advice.  The law varies by jurisdiction and is constantly changing.  For legal advice, you should consult a lawyer that can apply the appropriate law to the facts in your case.