What to Know About Special Needs and Disability Planning in Connecticut

Use these links to jump to different sections:

• Why You Should Not Leave Money or Property to a Loved One with Special Needs
• A Special Needs Trust Provides a Solution
• Exploring the Attorney-Client Relationship

Every adult in Connecticut should have an estate plan. Alarmingly, a recent survey cited by the AARP concluded that 6 in 10 U.S. adults lack even a basic estate plan. To provide the proper level of protection to you and your family, your estate plan should be customized to meet your needs.

There are specialized estate planning issues that must be addressed if you have a child or other loved one with special needs or a disability. In this article, you will find an overview of the key things to know about special needs and disability planning in Connecticut.

Why You Should Not Leave Money or Property to a Loved One with Special Needs

Did you know that leaving money or property directly to a special needs family member could actually cause problems for them? Many people are shocked to find this out—and some do not learn about it until it is too late. Here is the issue: Many state and federal programs that individuals with special needs and disabilities rely on have strict income and asset limitations.

For example, Medicaid is a major source of support for those with disabilities. The Connecticut General Assembly explains Medicaid eligibility is based strictly on financial need. The same is true with Supplemental Security Income (SSI) and other types of government programs. When a person with a disability person is left assets directly, they may have too many assets to qualify for benefits.

A Special Needs Trust Provides a Solution

There is good news: Estate planning tools are available that you can use to leave a generous gift to a vulnerable loved one without undermining their ability to receive Medicaid benefits, SSI benefits, or any other type of government assistance. A Connecticut estate planning lawyer can help you set up a special needs trust for their benefit.

“The special needs trust would not disqualify them for benefits,” says Elizabeth Leamon, an estate planning & probate attorney in Madison, Connecticut. “It would provide funds over and above what’s already being provided for with the government benefits.”

Leamon is a huge proponent of the special needs trust.

“It’s a trust that’s set up, inter vivos by the parents and can be funded with assets at death,” she says.

The trust can be made the beneficiary of a second-to-die life insurance policy, with life insurance taken out on both parents, as a less expensive option to provide funds for the trust.

Here are two things to know about special needs trusts:

1. Not Counted as “Assets” or “Income”: You can leave money, property, and assets in a special needs trust without worrying about accidentally disqualifying your loved one from their benefits. A special needs trust is not counted as income or an asset.
2. Customizable to Meet Your Loved One’s Needs: You can structure a special needs trust in Connecticut in a number of different ways. Beyond making sure that your generous gift does not prevent your loved one with disabilities from accessing their public benefits, you can set up the trust in a way that works effectively for their specific situation.

Before beginning the process to set up a special needs trust or supplemental needs trust (also known as a third-party special needs trust), Leamon says you should consider who the trustee is going to be.

“Something to really start thinking about is, ‘Who is going to be an appropriate trustee?’ And that’s a difficult decision, I find, for parents,” she says.

Leamon suggests sitting down with any siblings to talk about who would be able to continue to manage the funds, make distributions and understand what the needs of the loved one with disabilities is going to be.

Sometimes, the trustee is a sibling or family member, and sometimes it’s an attorney. “I’ve been named a trustee of a special needs trust,” Leamon says. “For whatever the family dynamic was, I was the best person.”

“But it does take a little bit of know-how,” Leamon adds. “And if you don’t know how, you need to reach out. There are some nonprofit out there that can help you best manage the funds based on that particular disabled person’s needs and what types of benefits they’re getting. So sometimes it’s just making sure that you get the right team and network together.”

Some people want to leave all the money to a sibling with the informal notion that the money is there to take care of the sibling with a disability, but Leamon says she almost never advocates for that.

“You can imagine all the horrible, horrible things that happen,” Leamon says, including incidents like the death of the sibling, a divorce or civil suit. “So it’s not the best means of taking care of a disabled child, and it’s fraught with all sorts of landmines.”

Exploring the Attorney-Client Relationship

Special needs trusts can provide peace of mind and improve your loved one’s quality of life through long-term care. That being said, special needs/disability planning is complicated. You will want to make sure that your estate planning is truly set up properly to provide the maximum level of support and protection to the people you care about most. If you have any questions about special needs planning, an experienced Connecticut estate planning attorney can help provide legal advice. To learn more about this area of law, see our overview of estate planning and trusts, or reach out to a law firm.

Attorneys can help you walk through the options and properly assess all your assets to structure an estate plan, Leamon says.

“The attorney can make sure that assets are getting directed where they need to go in an efficient manner; make sure that you’ve really looked at the assets and the flow of the assets at your death; and make sure that that a special needs trust is going to be properly funded,” she says.

One saying Leamon has hear often is, “The best thing that parents can leave for their kids is a well-thought-out and well-structured estate plan.”

“And it just becomes 10 times more important when you have a child with special needs,” she says.