Planning for a Special Needs Child? Avoid These Common Estate Mistakes
Did You Know? Most of us are better at talking than listening — and the science proves it! DID YOU KNOW WE FORGET UP TO 75% OF WHAT WE HEAR? Dr. Ralph G. Nichols, one of the pioneers of listening research, found that people typically remember only 25%–50% of what they hear — and that’s just minutes after hearing it! DID YOU KNOW WE LISTEN MORE THAN WE SPEAK? We spend about 45% of our communication time listening, compared to 30% speaking, 16% reading, and 9% writing. But despite being the most used skill, it’s often the least taught. DID YOU KNOW MOST PEOPLE LISTEN AT ONLY 25% EFFICIENCY? While we’re capable of processing up to 400–500 words per minute, most people speak at only 125–175 words per minute. That mental gap leads to distraction, daydreaming, or tuning out, reducing listening efficiency.
Planning for your family’s future means every detail counts — especially when you have a special needs child who needs lifelong support. Well-meaning decisions today can lead to costly problems later without the right estate and retirement account structure. Let’s take a closer look. THE RISK OF SIMPLY DESIGNATING YOUR SPECIAL NEEDS CHILDREN AS BENEFICIARIES When a parent lists a special needs child as a direct beneficiary of an IRA, 401(k), life insurance policy, or bank account, it may feel like the most straightforward path. But in practice, this decision can create long-term financial consequences for the child. A direct inheritance could disqualify the child from critical public benefits, such as Supplemental Security Income (SSI) and Medicaid, which often have strict income and asset limits. Some parents try to avoid complications by leaving their special needs child out of beneficiary designations, assuming siblings will step in. However, this approach depends on goodwill rather than legal assurance, lacks enforceability, and removes control from the child’s support system. Estate plans should never rely solely on good intentions. STRUCTURING YOUR RETIREMENT ACCOUNTS TO CARE FOR SPECIAL NEEDS CHILDREN A more secure and sensible approach involves naming a properly drafted special needs trust as a beneficiary to your accounts, or designating your revocable trust “for the benefit of” your special needs child as the whole or partial beneficiary of your accounts. A stand-alone special needs trust, or revocable trust with special needs provisions, can hold assets for the benefit of your child without causing disqualification from means-tested government programs. If you have multiple children, you might name your spouse as the primary beneficiary and your children as equal contingent beneficiaries. A special needs child’s share can go to a trust “for the benefit of” (FBO) them, ensuring equal treatment while preserving access to vital services. Retirement accounts require careful coordination due to their tax implications. Naming a trust as a retirement account beneficiary used to allow stretched distributions across the child’s life. While recent tax law changes (like the SECURE Act) have altered some rules, trusts can still play a pivotal role in long-term planning. PROTECTING YOUR LEGACY AND YOUR FAMILY You deserve a legal strategy that protects your business, supports your loved ones, and honors your intentions. We work with California families and business owners who want more than a one-size-fits-all plan for their estate and legacy. Contact Dahl Law Group to start building the right structure for your family.
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