Trusts for special needs children
If you care for a child or other loved one with a disability you have definitely thought about what will happen when you’re no longer able to give that care.
Fortunately, with the introduction of trust law, estate and financial planning for a person with a disability can be addressed through a special needs trust, which makes it possible to appoint a trustee to hold property for the benefit of a disabled child both during the parents’/guardians’ lifetime and more importantly after these are gone.
Whereas, in the past, the problem used to be addressed by parents by bequeathing the estate to one or more of their healthy children, relying on them to use the funds for the benefit of their disabled sibling, today, parents and guardians can have the peace of mind that the funds can be held by an independent and impartial trustee.
Having a special needs trust (SNT) will ensure that such funds will not fall prey to judgments or personal separation settlements against the sibling, lost in bankruptcy or lost to the heirs of the sibling who would be holding the funds or assets in his name, thus leaving the disabled person penniless.
But civil law provisions relating to minors are not sensitive enough to minors with a disability, whose dependence on their parents/guardians might go beyond the age of majority.
Once a minor with a disability, whether mental or otherwise, reaches majority, the parents terminate their parental authority or curatorship and, thus, a vacuum is created.
In fact, a curator will be appointed to administer the property of a person only on the incapacitation or interdiction of the said person.
However, this will be subject to the continuous supervision of the court, which has to authorise any transfer of the said assets that might result in costly and long-winded procedures to the detriment of thebeneficiaries.
Due consideration has to be given to what would happen if the parent/guardian of the disabled person passes away, in which case a new curator would be appointed by the court to administer the property of the said person. It is a major concern of the court that the appointed curator should have the best interests of the child at heart.
Moreover, given that in most cases the curator would be an heir at law, this might involve a conflict of interest because the curator would be aware that the less s/he spends for the disabled person, the more is going to be left after his demise for him/her to benefit from.
Even the most carefully constructed special needs trust can’t be expected to account for all contingencies.
In this respect, a system of checks and balances should be incorporated in the trust agreement, whereby someone, such as a trust protector, could review the trust’s performance independently and have specific powers to amend or revise the trust to meet the disabled beneficiary’s changes in circumstances.
Other than a trust protector, parents may elect to appoint a trust advisory committee, composed of a family member/s, family friend/s and a trust adviser (such as a professional care manager and/or social worker) to assist the trustee on the beneficiary’s care and needs.
The most popular model is to have a licensed corporate fiduciary, such as a bank or financial institution, to serve as trustee under the direction of the trust advisory committee as this offers permanence.
It is imperative for parents of children with special needs to write a letter of intent – which could be reviewed periodically –outlining the specific and unique needs of the child/adult with special needs.
The letter of intent would be given to the trustee either during their lifetime or at the time of their death.
A letter of intent would typically include biographical information, financial details, medical history and needs, social contacts, any negative influences one would like to guard against, personality traits, skills, hobbies, recreational activities the child enjoys, day-to-day routines, the environment in which one would want the child to live as an adult, such as with relatives or group home, physical abilities and goals the child is working towards.
Although writing a letter of intent may be an emotional experience, once the process is complete, parents would have the peace of mind of knowing they have left a detailed road map for later care providers and trustees to ensure the highest quality of life for their child and the fewest interruptions in his/her daily routine.
With some careful planning, one can make one’s disabled child’s future brighter.
Andrew Chetcuti Ganado is executive head at Bank of Valletta plc’s trustee services unit.