Facing one's own mortality while planning an estate can be challenging, particularly for those with family members who have special needs. Cathy Walker, senior manager of Trust and Philanthropic Solutions at RBC Wealth Management–U.S., highlights the emotional nature of such planning. "Clients are understandably concerned about what will happen to their family member when they’re gone," Walker notes.
Traditional estate planning might not adequately address the unique requirements of individuals with disabilities. This group includes children with physical or cognitive disabilities, adults injured in accidents, or those disabled later in life due to various conditions. Effective planning must ensure long-term financial stability and quality of life for these individuals.
The U.S. Census Bureau reports that nearly 45 million Americans live with a disability, which is 13.6 percent of the population. Many families may not fully understand the importance of documenting future plans for their loved ones' care. Walker explains that some parents assume non-disabled siblings will take on caregiving roles without considering the complexities involved, such as managing government benefits.
Expert guidance is essential in navigating the intricate rules governing disability benefits. Special needs trusts can help manage payments based on a beneficiary's need for government assistance. Walker advises collaborating with specialized attorneys and advisors to develop comprehensive strategies.
Families often face challenges distributing funds among heirs with varying needs. "Everything doesn’t have to be equal," says Walker, suggesting that parents may need to allocate more resources to beneficiaries with special needs.
An estate plan for someone with disabilities should cover detailed aspects beyond financial distribution, including long-term care arrangements and guardianship designations if necessary. Legal documents like wills and powers of attorney are crucial components of such plans.
A letter of intent can provide personal insights into a family's wishes for their loved one's future care, although it is not legally binding.
To create an effective plan, families should:
1. Develop a vision encompassing both short- and long-term support needs.
2. Build a supportive network involving professionals and local resources.
3. Understand aid programs like Medicaid and Social Security Disability Insurance.
4. Design a financial strategy incorporating budgeting and investment strategies.
5. Regularly review and update the plan as circumstances change.
Early planning offers families multiple options to ensure dependents' needs are met regardless of future uncertainties.
RBC Wealth Management provides further guidance through its Wealth Insights report titled "Special Needs Planning: Securing a Future of Opportunities." The company clarifies that trust services are offered by third parties and advises consulting independent tax or legal advisors for specific advice related to investments.
RBC Wealth Management operates under RBC Capital Markets, LLC as a registered investment adviser and Member NYSE/FINRA/SIPC.