ESTATE PLANNING FOR SPECIAL NEEDS CHILDREN
A. Will
- A declaration to have the legal effect of carrying out the desire/instruction of the testator after her death.
- Cover on all types of estate matters – eg residuary, general, specific bequest.
- Prescribe on the appointment & allowance of the caretaker/guardian to look after the special needs child.
- Can be supplemented with a letter of intent containing a list of daily routines and personal preferences of the child which can be written as a guideline to the caretaker/guardian to carry out his responsibilities. This letter can be placed in a sealed envelope and attached together with the will.
- However, the application for a grant of probate may take months to be obtained, thus the immediate needs of the child will not be met through the will.
- Triggered only upon the death (not if testator is incapacitated or goes missing).
B. Trust
Parties
- Settlor – absolute owner of the property
- Trustee – hold the property on trust in compliance to the terms set out by the settlor
- Beneficiary – receives the equitable title from the settlor
- Can specifically prescribe and detail the management of the assets and instructions of the testator in regards to the child’s :
- Education needs
- Daily needs
- Medical needs
- Investment of funds
- Vacation/entertainment allocation
- Others
- Commencement of trust – not limited to death. Can specify triggering event – eg death, when the settlor becomes incapacitated, missing or etc.
- Trust period – may last for as long as the child live or until a specified event.
- Can prescribe on the end of the trust beneficiary plan – what happens to the trust fund after the demise of the child – eg to donate to charity or given to other surviving siblings etc.
SOLUTION
To appoint a Trust Company under the Association of Trust Companies Malaysia (ATCM) to set up a trust fund and appoint to act as a trustee.
WHY?
Individual trustee may not survive the beneficiary, may be careless or dishonest. Got risk factor. In contrast, Trust Companies are professionally run, free from bias, will not die or fall sick.
2 types of Trust Fund in regards to special needs child
1.Trust Fund operated/funded using the life insurance/disability policy money of the settlor (if any)
- This method is applicable if the child is nominated as the nominee of the life insurance policy.
- Alternatively, the settlor could nominate the trust company as the nominee to hold the policy money in the capacity of a trustee for the benefit of the child.
- An assignment of policy/rights will be entered into between the settlor and the Trust Company. Thus, when the triggering event takes place (ie death or incapacity), the Trust Company will be able to intervene and subsequently manage the policy money according to the instructions of the settlor.
2.Trust Fund operated using the money from the assets/bank accounts of the settlor
- No need to open up a separate bank account as a Power of Attorney will be signed between the settlor and the Trust Company. Thus, when the triggering event takes place (ie death or incapacity), the Trust Company will be able to intervene to close the account and subsequently manage the funds according to the instructions of the settlor.
C. Life insurance policy / disability insurance policy
- The settlor is encouraged to sign up for a life/disability insurance policy (if possess the available funds and resources).
- Can be used to fund the trust upon the death of the policy holder.
- Rationale : It is expensive to maintain a trust fund, hence the policy money can be utilised to fund the special needs child, pay the caretaker/guardian and pay the trust company for their services.
D. Register child as a Person with Disability (OKU) to gain access to any services/facilities which may be offered by the government
Access to gain benefits such as:
- Housing
- Education
- Employment
- Financial
- Tax relief
- Transportation
As a form of safeguard for the special needs child in the event the funds are exhausted after the parent passes away.
In accordance with the Persons with Disabilities Act 2008 (PWD), “PWD, encompass those who suffer from long term physical, mental, intellectual or sensory impairments, preventing their full and effective participation in society when faced with challenges. There are 7 categories of PWDs under which they can be registered namely:
- Hearing Disabiity / Impairment
- Visual Disabiity / Impairment
- Speech Disabiity / Impairment
- Physical Disability/Impairment
- Learning Disability – individuals whose intelligence is unbalanced with the biological age. Eg down syndrome, autism, ADHD, development delay etc
- Mental Disability / Impairment – individual who has severe mental disorder and have undergone treatment or receive diagnosis by psychiatrist for at least 2 years. Eg schizophrenia
- Multiple Disabilities / Impairments – individuals who have more than 1 type of disability as abovementioned or has impairments that do not fall under any one of the above categories
Registration with the Department of Social Welfare Malaysia (Jabatan Kebajikan Masyarakat Malaysia) will act as a future measure to register the child into the system. It is also for when the parents are no longer alive and the child is left to fend alone. Thus, it will entitle the child to enjoy the additional benefits given to those with disabilities.
