Estate Planning for Disabled BeneficiariesWhile any estate planning strategy requires considering a range of issues like tax consequences, probate avoidance, asset protection and more, the situation becomes significantly more complicated when the plan includes a beneficiary with special needs. When developing an estate plan that includes beneficiaries with special needs and disabilities, the nature of the disability, mental or physical limitations and government assistance being received must all be considered. Many people who are disabled qualify for public benefits programs but can easily become disqualified by an inheritance without proper estate planning.

Estate plans for beneficiaries with incapacitates must take into account both sliding scale type benefits as well as means based benefits. The spiraling cost of vocational programs, residential support resources and rehabilitation are increasing at a rate that most families cannot afford to provide for all of these costs without government benefits to subsidize the cost. When an estate plan is not thought out carefully the loss of Medicaid, Medicare, SSI, DHS and/or SSDI benefits may have a far more dramatic impact than the inheritance received as part of a poorly constructed estate plan. A well designed strategy under these circumstances will prevent disqualification for these benefits programs while making the inheritance available to improve the quality of life for a disable beneficiary by covering expenses that government benefits do not provide.

The challenges facing estate planning for incapacitated individuals may become more challenging with the growing fiscal squeeze facing state and federal government. The search for scarce resources to provide these benefits could lead states to limit the ability of individuals to leave their disabled children and other beneficiaries funds through special needs, income diversion & similar trusts. States may feel a need to limit the ability of parents to leave discretionary funds to a disabled child because of the limited resources available to provide free care and benefits to those with greater financial need. Some have speculated that states could adopt a policy that limits eligibility for government needs based benefits until trust assets are spent down. States might even pursue reimbursement from the trust if provisions in the trust indicate that it is for the “support or maintenance” of the disabled person.

Avoiding Mistakes When Designating a Beneficiary

The above information is designed solely to illustrate general principles of law, and does not constitute a specific legal opinion on individual cases. We suggest that you contact experienced legal counsel for a specific opinion tailored to your individual circumstances.

Admittedly, this is speculation based on the hard economic realities facing many state governments, but these are exactly the types of trends that experienced Santa Fe Estate Planning Attorneys follow so that they can evolve their estate planning strategies to meet changing legal and economic realities. If you have estate planning concerns, our New Mexico Attorneys at Jay Goodman & Associates, PC offer a free consultation in our centrally located offices in Santa Fe and Albuquerque so that we can discuss your specific situation. Call us today to schedule your free consultation at (505) 989-8117 to learn about your rights and options.


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